Good reads from around the Web.
Never let it be said that the Scandinavians lack a sense of humour, or at least a strong sense of irony.
This week saw the Nobel Prize go to three famous economists who’ve done a lot of work on asset pricing.
But as Bloomberg reports:
Eugene F. Fama, Robert J. Shiller and Lars Peter Hansen shared the 2013 Nobel Prize in Economic Sciences for at times conflicting research on how financial markets work and assets such as stocks are priced.
No kidding! Whereas Fama’s work laid much of the framework for the efficient market hypothesis, Shiller has concentrated on the behavioural tendencies that I think undermine some of its key assumptions.
Writing in the FT, Tim Hartford wasn’t perturbed about this “all shall have prizes” approach from the Nobel committee, noting:
In the light of the financial crisis, the contribution of Prof Shiller to economic thought is obvious. Prof Fama’s is more subtle: if more investors had taken efficient market theory seriously, they would have been highly suspicious of subprime assets that were somehow rated as very safe yet yielded high returns.
Any follower of Eugene Fama would have smelled a rat.
We have our own modest version of the Fama/Shiller dichotomy here on Monevator. I actively invest quite a bit, despite believing it’s a bad idea for most investors, whereas The Accumulator (rightly) follows a pure passive approach.
Neither of us expect to win the Nobel Prize, of course.
A bit of financial freedom – one way or another – would be a good result for us.
From the blogs
Making good use of the things that we find…
- College endowment funds don’t beat the market – Rick Ferri
- Twitter-form notes from the Bogleheads conference – Wade Pfau
- Value Investing 101 – Oddball Stocks
- Social media companies are overvalued – Musings on Markets
- How to get a progressive income from shares – UK Value Investor
- When companies make too much money – Value Perspective
- Emerging markets: Not dead yet – Investing Caffeine
- When energy saving is an emergency – Mr Money Mustache
- How cheaper gasoline can cost you more – Len Penzo
- Becoming less productive and less competitive – E.R.E.
- “Strivers” in the UK are still behind in real terms – R.I.T.
Product of the week: As interest rates on savings continue to fall – latterly because of the government’s Funding for Lending scheme – more of my friends are asking me about Zopa. A quick recap. While I think it’s a decent bet for some of your money, especially since the introduction of the Safeguard guarantee, it’s not fail-proof. The Safeguard only aims to protect the expected bad loans (plus a buffer), not a catastrophe that raises the bad loan rate. Zopa is a welcome part of the mix, but it’s not equivalent to cash.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
- Average returns versus actual outcomes – New York Times
- Diversification is harder than it was – MorningStar
- Distinguishing good advice from entertainment – Huffington Post
- The impact of news events on market prices – Swedroe/CBS
- A new ETF tracks IPOs, if you think that’s a good idea – ETFdb
- Losing hedge funds are still bearish – Bloomberg
- How Neil Woodford turned £1,000 into £23,000 – Telegraph
- The danger with investment trusts – Telegraph
Other stuff worth reading
- The middle-class exodus from London… – New York Times
- …and here’s where you could move, with Help to Buy – Telegraph
- Student property looks a poor investment [Search result] – FT
- Some hedge fund managers feel poor people’s pain [Video] – CNBC
- How to invest like a psychopath – Motley Fool (US)
- Mistakes our brain makes and how to avoid them – Fast Company
- There will be 11 trillionaires within two generations [Video] – WSJ
Book of the week: Blame my inner-contrarian, but booming stock markets have me re-reading The Great Crash, J.K. Galbraith’s account of the 1929 stock market nosedive. It’s funnier than I remembered – Galbraith is one of those vanishing patrician dry wits – even if the events described weren’t a great laugh at the time.
Like these links? Subscribe to get them every week!
- Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.” [↩]