Test of the S&P 500-Based Implied GDP Model

Here is an example of how my model to translate changes in the S&P 500 into changes in GDP fits some data. These graphs present predicted GDP, both annualized and non-annualized, during the US financial crisis of 2008-09. The table of official GDP data is from the FRED. Note that the graphs would be more […]

Tautological Method for Determining Output Gaps and Natural Rates of Interest?

Here’s my hypothesized tautology, in English: In large, diverse, healthy economies, the rate of interest on government debt should roughly equal NGDP growth expectations. Otherwise, the demand for and supply of money are necessarily in disequilibrium. In monetary equilibrium, the opportunity cost of holding government debt is the nominal economic growth rate, given the zero-sum […]

The Fed Wants to INCREASE Unemployment

Here’s something I thought I’d never see.  It is from the Frederal Reserve Bank of San Francisco. Quoting from the third bullet point: The unemployment rate was unchanged in December from its November value of 4.1%. We expect the rate to fall below 4.0% in 2018 as the economy continues to strengthen. With the gradual […]

Don’t Trust Your Financial Adviser

Take it from me, as a former adviser and stockbroker: You cannot trust the expertise or intentions of most financial advisers. Let’s start with expertise.  The education and other credentials advisers possess vary radically, but most advisers simply aren’t good investors, whatever their credentials.  They aren’t worth listening when it comes to allocating a portfolio. […]

The Market Way of Thinking

There have always been people with a survivalist mentality who think some sort of supremely disruptive national emergency is just around the corner.  In the years following the financial crisis and Great Recession, more of these people have warned others to prepare as they do. It always pays to be prepared, but is it reasonable […]