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Affluent Investor | June 23, 2017

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Posts ByRoger McKinney, Author at Affluent Investor - Page 4 of 5

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

September 9, 2015 |

Don’t Drink the Schwab Kool-Aid

The Schwab Center for Financial Research recently published an article intended to tranquilize investor nerves after the latest volatility and keep them shoveling funds into the stock market. “Schwab’s Perspective on Recent Market Volatility” begins with

“Global markets may have … Read More

August 31, 2015 |

US Stock Market Predicting Recession?

After the stock market stumbling through the past two weeks, you will hear top mainstream economists repeat the old joke that the market has predicted ten of the last eight recessions. The point of the joke is to belittle the … Read More

August 25, 2015 |

Training the Chinese Dragon in Economics

The story of China’s great leap forward to slightly freer markets is well known. Around 30 million people starved to death in the 1960s and the West fed the Chinese in the 1970s. Deng Xiaoping took over after Mao died … Read More

August 19, 2015 |

Retired Greenspan – Talks Like An Austrian Economist

The government reported recently that productivity in the US rose 1.3% from the last quarter, but that was little comfort to the Maestro, Alan Greenspan, who is worried about the collapse in productivity. Investors should be worried as well. StreetInsider.com … Read More

August 11, 2015 |

Why Mainstream Economists Can’t Even Predict the Past

Mark Twain once said,”Prophesy is a good line of business, but it is full of risks,” and “It is difficult to make predictions, especially about the future.” In the Bureau of Economic Analysis’ (BEA) recent statement that the GDP of the US … Read More

August 5, 2015 |

Value Investing and Austrian Economics Beat the Market

The Efficient Market Hypothesis (EMH) teaches that no one can beat a general market index over the long run because the market instantly adjusts to all new information. The EMH has been mainstream dogma for longer than Warren Buffet has … Read More

July 31, 2015 |

The Money Horror Picture Show

All is not well with the economy in spite of rising home prices and soaring car sales. The disturbing news comes from money. Losing velocity with money is like losing altitude while flying. It can be hazardous to your health.

Read More

July 22, 2015 |

Driving Off the Cliff: Auto Sales Back at Bubble Levels

The worst recessions in history have all followed excessive investment in housing, personal transportation and the stock market. Today, the US is hitting two out of three. Take a look at the auto sales graph below. US sales have … Read More

July 16, 2015 |

China Market Collapse: The Snowflake Which Triggers the Global Avalanche?

Markets that climb to dizzying heights over extended time periods are known as bulls for a reason: they buck. I titled my book on investing Financial Bull Riding for that reason. A bull has been breaking things in China’s stock … Read More

July 9, 2015 |

How Banning Risk Makes This Market Riskier

Mainstream economists, excluding those at the Bank for International Settlements, have stuck with their ancient superstition that recessions are random events, each with its own special cause, known technically as shocks that send the economy spinning out of equilibrium. Central … Read More

July 2, 2015 |

This Ratio Signals Recession

In past articles I have reviewed sound models signaling the Fed’s money printing has made the economic expansion unsustainable. Those included Spitznagel’s Misesian Index, Shiller’s Cyclically Adjusted Price Earnings (CAPE) ratio, and others. I just discovered a new one, … Read More

June 19, 2015 |

Mainstream Economists Have Learning Disorder

After the onset of the Great Depression, many economists radically changed their views and adopted Keynes’ “revolution,” which was not a revolution but merely a resurrection of mercantile economics. Mainstream economists don’t understand that because they don’t take economic history … Read More

June 11, 2015 |

Fed to Raise Rates? Not If This is a Recession

The bond market fell last week, wiping out gains for the year. Some blame it on Mario Draghi’s comments after an ECB meeting in which he expressed indifference to volatility in bond markets. If it is true that Draghi’s statements motivated … Read More

June 5, 2015 |

Why The Fed Can’t Raise Rates

The VIX (volatility index) is in a coma, so most investors are dozing while danger signs about the current stock market pop up. The idea that the Fed causes recessions by raising interest rates has relaxed many investors. Some … Read More

May 29, 2015 |

Corporate Buybacks Keep Market Airborne

The stock market has surged lately and a lot of analysts credit it to stock buybacks by corporations. As the chart here shows, buybacks have reached dizzying heights. Corporations are purchasing their own stocks because corporate profits hit record … Read More

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