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Scott Ludwig
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Scott Ludwig

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It's odd that active investing strategies implemented in an ETF can be more tax efficient than manual implementation of the same strategy with individual stocks (because of "in-kind redemption"). That essentially means when I pay an ETF provider the annual fee, Uncle Sam will give me a tax break. It's odd that the government is in effect providing a source of funding to the financial industry this way.
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In 1950 there were 16 workers per Social Security recipient. In 1960 there were 5 workers per recipient. By the year 2033, only 2.1 workers will support one retiree.
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I'd also support the proposals floating around for more portable tax-advantaged retirement savings, to increase participation rates in these programs. Especially given shifts in the workforce (contracting, start-ups, part-time consulting, sub-full-time hourly wage earners).

SSI as insurance and as a zero-volatility base component of retirement income will continue to work as long as it's adjusted to the new realities of the workforce and demography (e.g. people living to 100, and having good, productive quality of life well into their 70s).
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I worked with Brian McBarron for a few years on Google Talk. To say he's a talented developer would be an understatement. Check out the Kickstarter he just launched, watch the video, and donate! Vixle is looking great.
 
Today we launch our Kickstarter!  (http://vixle.com/ks)
In the post, Brian talks about why he created Vixle.
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I'm a fan of Kagen Schaefer's work.

http://www.kagenschaefer.com/Lotusbox.html
Lotus Box. I shrank a whole entire Lotus Table into a box. The Lotus Box has four hidden compartments. Each compartment will only open when rings on the top are aligned into the correct patterns. A fe...
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That is a good point and it makes sense. It may be that the general population doesn't think this way and instead are wired to experience this as a loss. 
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Interesting chart: search queries suggest there is less interest in financial planning since the crash.

http://www.google.com/finance?q=GOOGLEINDEX_US:FINPLN
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I wish this service wasn't shut down. It was very useful.

http://codesearch.google.com/
Sorry! Sadly, this service has been shut down. (please see the official blog post and the discussion for details.) Much of Code Search's functionality is available at Google Code Hosting including...
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Scott Ludwig

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CAPE (cyclically adjusted P/E ratio) right now is close to 26x, a high level by historical standards. If you treat 2009's low earnings as an outlier and replace it with the average of 2008 and 2010, CAPE comes out to a still high but interestingly lower number: 21-22x. From +Kevin Zatloukal l.


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That's an interesting and useful way of looking at it Michael.
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The EMH battle continues... Comments by Jeremy Grantham.


The latest GMO quarterly letter was recently released.* Below, I've highlighted some of Jeremy Grantham's thoughts on efficient markets, bubbles, and the 2013 Nobel Prize in Economic Sciences from his section of the letter: "Economics is a very soft science but it has delusions of hardness or ...
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This article is pretty unfair to Fama.

For one thing, they don't mention any of the work he did showing that value-based approaches beat the market. Of course, pointing out that he actually did significant work showing that you can beat the market would completely destroy the narrative of economics enamored with EMH and unable to even entertain the idea that it is false. Well, the most famous proponent of the EMH though you could beat the market, so I think this narrative is just a strawman.

I also think the article is unfair at criticizing Fama for saying "I don't even know what a bubble means". I, too, would love to see a precise definition for what a bubble is. If there actually were a generally accepted definition for "bubble", then there would be little little room for argument about when we were in one. Instead, it seems like, for each of these bubbles, there were plenty of people arguing at the time that we were not in one.

Finally, the article seems to be implicitly suggesting that, if the EMH were true, there would be no big drops in prices. (I think, by "bubble", they just mean "big drop in prices".) But this is simply a misstatement of what the EMH says.

Later in the article, he gets more precise and says that big drops happen much more often than predicted by the EMH. This admits that big drops are not inherently inconsistent with the EMH. However, the claim about how often big drops should occur does not come directly from EMH. E.g., EMH can claim that stock prices are taking a random walk, but you can't say how often big drops will happen without assuming a particular probability distribution for the walk. I would bet that he's saying a random walk using a normal distribution predicts big drops are rare. But I would also bet that a random walk using some fat-tailed distribution predicts big drops are not rare, so I do not think these facts really contradict the EMH.

If you really wanted to refute the EMH, you would need to show that you can predict (beforehand) that big drops are about to occur. It's not enough to predict that big drops will eventually occur; you need to give a timely prediction.

I would love to see real evidence that big drops can be predicted. Not just because we would learn something (the EMH is false) but also because I could use that information to short stocks and make big bucks! Of course, once I start doing that, the drops would go away. In fact, if anyone had figured out how to predict drops, then the drops would have disappeared already. And that's basically why people believe in the EMH in the first place.
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How to fold a shirt NEATLY and FAST!  : )
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Vehicle registrations in China over the next decade.
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It will be limited by the availability of parking spaces. Parking is already a disaster there.
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Dilbert explains the sub-prime mortgage crisis in terms of diseased livestock:

http://dilbert.com/strips/comic/2008-12-13/
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Have him in circles
266 people
Stuart Eccles's profile photo
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lincoln Shan's profile photo
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