Monthly Archives: August 2010

Behavioral Finances’ Daniel Kahneman Speaks

Often called the father of Behavioral Economics, Daniel Kahneman started studying human behavior in the 1950s during a stint in the Israeli Army. Over the course of his career his curiosity took him into many areas, and his pioneering work on behavioral finance earned him a Nobel Prize in Economics in 2002. The announcement of his Nobel noted that,  “His work has inspired a new generation of researchers in economics and finance to enrich economic theory using insights from cognitive psychology into intrinsic human motivation.” Continue reading

Chinese Bubbles

Chinese bubbles have been a topic of hot debate this summer. Most of the discussion is continued speculation about real estate with apartments in Shanghai now going for $200,000 plus (in a country where the average wage is $4,000). Informed opinions vary widely. Either China’s real estate market is based on speculation and teetering on the brink, or proactive government policy has successfully cooled it down. Continue reading

Portfolio Investing 101: David Neubert

How would you build a portfolio?

We put that question recently to David Neubert.

A man of wide experience, Neubert spent ten years at Morgan Stanley in a number of trading roles including head of Global Portfolio and Program Trading. Then he moved on to Lehman Brothers where he was Head of Equity Trading Strategy and Technology for a couple of years.  He knows how the big institutions on the Street trade. After retiring (early!) in 2005, he spent a few years working on investor education initiatives. Continue reading

Global Equity Investing With ETFs

More investors are getting global exposure through Exchange Traded Funds (ETFs).  News that China is for the moment the world’s second largest economy is a reminder — probably unneeded – that the growth these days is global. (The darkest green in the map below represents real GDP growth over 10%. The US, taupe, is in the negative 2 to 4% bucket.) Continue reading

The Rise of The Female Investor

Women are taking a more active role in investing, and there’s evidence that may be to the good.

Earlier this year, for the first time ever, more U.S. women were employed than men. That’s unfortunately not because of huge gains for women, but rather enormous job losses for men. Continue reading

Warren Buffett Positioning for Rising Rates

Warren Buffett is the guy who said “be fearful when others are greedy, and greedy when others are fearful.”  In today’s environment, fear is reflected by the ridiculously low bond yields that investors are prepared to accept rather than investing in equities or other risky assets.  It is not terribly surprising then, that Buffet is tweaking Berkshire’s bond portfolio to reflect an expectation of inflation and rising interest rates.  This article notes that Berkshire’s bond portfolio has shifted towards shorter-maturity bonds, which are less sensitive to a rise in rates than longer-maturity bonds. Continue reading

Implications of a 1% Yield for Bonds and Stocks

IBM just sold 3-year bonds at a 1% yield, providing historically-low returns to investors.  This level of yield on corporate bonds has substantial implications for long-term investors.  First and foremost, yields this anemic make it hard to generate reasonable levels of income from a portfolio.  Granted, this level of yield is about twice what you can get with a short-term government bond index fund which invests in bonds with average maturities of 1-3 years, but this is hardly an attractive situation. Continue reading