People who know I used to be an investment advisor do not ask me whether they should buy or sell. Most people want to know why the market is doing what it is doing. And they are right to ask that; if the cause is seen as temporary, they would probably hold. If the cause appears to be more fundamental or “secular,” they consider reducing exposure to falling stocks. Okay, so why is the market falling? The single biggest reason stocks are falling right now, is because China’s economy is stalling out. Some context first: China has been the fastest growing major economy in the world for years. Their contribution to global growth has eclipsed even the US for years now because even though their

[Important: This post is for education and entertainment only. Investment decisions should be made on the basis of suitability and risk tolerance and with the help of a professional] Anyone who makes predictions about the stock market without admitting that they could be very wrong is either a liar or a fool. And anyone who listens to predictions about the stock market is hoping to get an easy solution to a very difficult problem; there is no such thing. I know a man who invested a year’s earnings (six figures) based on a conversation at Starbucks. My best guess is that he’s still down over 75% eight years later. Investing takes work and self-study (I don’t mean studying by yourself; I mean knowing yourself). Having

(Disclaimer: The following piece is educational and entertainment only. It does not constitute advice of any kind. Investment advice should only be taken in the context of an individual (or household) examination of suitability and risk tolerance by a professional advisor.) If there is one strategy that is anathema to the vast majority of investment advisors, it is electing to reduce exposure to stock and bond investments and increase holdings of short-term CDs or “cash.” There are several reasons they hate this: They usually don’t get paid when you go into cash: advisors typically do not charge a fee on cash holdings. Their bosses don’t like this either. One of the commandments (there probably aren’t ten of them) of modern investment theory is that you

If you don’t follow the stock market, you might not know that after a few weeks of declines, global stock indexes surged north for five days (if it stays up today). You might not even think that it was unusual, unless you watch the market daily, as I do.  Let me assure you: After twenty years of watching and sometimes trading the markets, this is some very odd stuff! Though I have seen about five market “bubbles” (and nearly as many crashes) in my career, I am still amazed when I see markets do things they are not supposed to do. When I am amazed, I become curious. I want to know “Why?”  And even if I have to resort to conspiracy theories to get

The Burj Khalifa in Dubai, begun in 2004 and completed in 2009, soars skyward for more than half a mile. You can make a lot of comparisons between the fact that we erect structures and edifices ever taller and ever more dazzling in that they soar skyward from progressively smaller bases, and the fact that we use financial engineering to try and create greater asset wealth from an existing economic base of activity. The two concepts are certainly related; the use of lighter and stronger materials and the application of better science have helped us overcome natural forces that thwart our attempts to build Olympus on Earth. And it’s also true that financial engineering has made our economies more efficient; the advent of derivatives, which