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Affluent Investor | April 28, 2017

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Posts ByRoger McKinney, Author at Affluent Investor - Page 3 of 5

March 23, 2016 |

Central Bankers Made Bull Riding Necessary for Survival

Bull riding has become a lucrative sport for those with the talent to ride, earning the top riders hundreds of thousands of dollars per year in spite of a few broken bones. Central bankers have made learning to ride … Read More

March 18, 2016 |

Rescuing Turtles – How the ABCT Can Help Trend Followers Part II

Last week I introduced readers to trend following strategies of Michael Covel. Those who follow trends are sometimes called “turtles.” Covel and others admit that trend followers have sailed into troubled waters lately.

The Austrian business-cycle theory can help trend … Read More

March 10, 2016 |

Rescuing Turtles – How the ABCT Can Help Trend Following Investors

Futures magazine wondered in 2013 if trend following as an investing strategy was dead:

In 2012, the aggressive and persistent actions by central banks and other authorities worldwide served to maintain an unfavorable market environment that began in 2009 for … Read More

February 29, 2016 |

Japan’s 4th Quarter Torpedoes Market Monetarism

Japan’s GDP fell 0.4 percent from the third to fourth quarters, which translates into an annual rate of -1.4 percent as it is commonly reported. The shrinkage dealt another blow to Abenomics, the term the press invented for the Prime … Read More

February 18, 2016 |

Year Ahead Forecast – Stormy

Austrian economists are not huge fans of forecasting as are most mainstream economists, especially those who add a decimal point to lure the gullible into thinking the forecast is accurate. But that doesn’t mean Austrians don’t forecast. Hayek wrote in … Read More

February 9, 2016 |

Oil Can Sink Lower Than We Think

Everyone is wondering how low the price of oil can go. It’s well below the profitable level in the US, but the pumps keep pumping. In this earlier post I showed that oil companies will continue to pump at … Read More

February 2, 2016 |

How the Fed Creates Bulls and Bears

If you grasp this you will be light years ahead of most economists. Bull and bear markets can’t exist without the Fed manipulating the money supply. Here’s why.

Assume the stock of money is fixed. For example, say there exists … Read More

January 22, 2016 |

Poking the Bear – What Happens Next to the Market?

The S&P is down about 9% for the year and 10% from the highs last year as of this writing. By the time you read this, the index may be even lower. The bear has been hibernating for seven years … Read More

January 18, 2016 |

Big Short – Good Movie, Bad Economics

The outlaw couple Bonnie and Clyde was not only famous for their bank robberies in the 1930s, they were popular. They lost some of their appeal when they began murdering policemen, but people loved the fact that they robbed banks … Read More

January 6, 2016 |

Market Crash Overdue Says Spitznagel

According to the legendary hedge fund manager and author of The Dao of Capital: Austrian Investing in a Distorted World, Mark Spitznagel, the stock market should follow Canadian geese and head south any day now. I reviewed his book here … Read More

December 29, 2015 |

How Christmas Ended Starvation and Enriched the West

The world was flat until 1600. Not the shape of the planet. According to the best economic history, standards of living even in 1800 AD hardly differed from those of 5000 BC. TV shows dealing with the ancient past assume … Read More

December 21, 2015 |

The Real Economy Will End the Expansion, Not the Fed

The Fed has done an excellent job of preparing the world for this rate hike so it was already built into market prices. Don’t expect much to happen.

Some economists expect rising interest rates to kill the “recovery” and plunge … Read More

December 15, 2015 |

US in Rut Like Old German Socialism

Mainstream economists and the Federal Reserve are trapped in a rut, condemned to repeating the mantra that monetary policy can save us even though it hasn’t for seven years. Germany after World War I faced a similar situation and the … Read More

December 4, 2015 |

Forget Lousy Christmas Sales, Manufacturing Was Already in Recession

The sales figures for Black Friday are out and they are scary. Brick-and-mortar store sales plummeted 10.4% over the weekend from last year’s levels.

Online sales increased on Black Friday by 14% over last year to $2.7 billion and on … Read More

November 24, 2015 |

Japan, Europe, and Mainstream Monetary Theory are Out of Gas

When a sailor hits a dead spot where the wind refuses to blow he says he is “in irons.” Japan’s economy sailed into the irons this past quarter when its GDP declined for the second quarter in a row … Read More

November 23, 2015 |

Debt Service Burden Signals Downturn

Investors can never have too many omens of disaster and the Bank for International Settlements has given us a new one to watch for signs of impending recessions – the corporate debt service burden.

Authors Mathias Drehmann and Mikael Juselius first wrote … Read More

November 9, 2015 |

How GDP Data Blocks Us From Seeing the Recession

Economists look to GDP to determine if the US economy is in a recession. Generally, it takes two quarters of the economy shrinking (economists call it negative growth, but they’re linguistically challenged) for the National Bureau of Economic Research … Read More

November 2, 2015 |

The Market Outruns Profit

I created a new model of the S&P500 that incorporates more variables and some nonlinear action. The chart at the left shows the results. The blue line represents the quarterly averages of the S&P 500 while the red shows quarterly … Read More

October 27, 2015 |

Fed Shuffles From ZIRP to NIRP

Inflation is fading; the economies of Asia, South America and Europe are collapsing; the people have tasked the central banks with fixing all things economic. Yet, reports by Fed economists show that the recent rounds of money printing through QE … Read More

October 21, 2015 |

The Academic Finance Myth: Markets are a Casino and Life is Random

Another fad in investing, like “smart” beta, is target date funds that allocate assets in an investor’s portfolio by the investor’s age. Target date funds follow an ancient concept: put most of your money, say 90%, in the stock market … Read More

October 12, 2015 |

Good Management Makes for Great Investing

Investors with the time will want to imitate Warren Buffet and invest in a few good companies rather than put up with a host of losers in an index fund, but analyzing individual companies in the way that Ben Graham … Read More

October 7, 2015 |

Currency Wars Round Three

I finally got around to reading James Rickards’ 2011 book Currency Wars: The Making of the Next Global Crisis and really enjoyed most of it.

The best parts are the history of the currency wars, Currency War I (1921-1936), Currency … Read More

September 28, 2015 |

Academic Financial Models Ignore Human Subjectivity

Discounted cash flow (DCF) is the adjustable wrench of modern financial mechanics. Essentially, the analyst forecasts the revenue and costs for several years out and applies an appropriate discount, or interest rate, to calculate what those future dollars are … Read More

September 18, 2015 |

Are New Manufacturing Decline Stats Recession Signs?

In the Ricardo Effect, Hayek’s chief contribution to the Austrian business-cycle theory (ABCT), the turning point in the cycle from expansion to recession happens when the makers of consumer goods and services employee more workers and buy less equipment. … Read More

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