Mostly investment/market focused this week:
- WCI on how to retire in 10 years: He’s focused on doctors, but really any high income professional has the option open to them to retire in 10 years. The catch, as is mentioned early and often in the article, is that to retire in 10 years requires retiring at a significantly lower standard of living than the typical professional lives at (because the typical professional both works for much more than 10 years, and probably doesn’t put away enough money to sustain that standard of living either). I share his optimism that it is never too late to save for retirement, at least while you can work.
If you really want to punch out of medicine in 10 years, you can’t live like a doctor now, and you can’t do it later. What you really need is a middle class lifestyle. And I’m not talking about the middle class where one spouse is a pharmacist and the other is an engineer. I’m talking about the middle class where the household income is $50,000.
- Morningstar on who was on the good side of bad market timing: The author, John Rekenthaler, opens with an interesting point about markets that often goes ignored, transactions are symmetrical. There is a buyer of a share for a seller of a share. Therefore, in a claim he quotes, for every bad timer, there is a good timer (whether intentional or not).
In 2009, I attended several investment conferences, some targeting institutions and others targeting advisors. The message was identical: stocks out, alternatives in.
- Giles Wilkes on the economic blogosphere: A personal piece from Giles — almost a stream of consciousness — about how he reads, interacts with, and feels about the ecosystem that is the economics blogosphere (one of the most vibrant, I would say). He strikes several chords that remind me of my own content consumption and distillation process.
But I also think that when the blogosphere is really on form, its interactions throw up insights of a depth and quality that the mainstream media simply cannot accommodate.
- Scott Sumner invokes the EMH: he does it to defend the idea of an NGDP market (some of the criticisms are asinine). It appears he agrees with my usual explanation when asked about the EMH – something like: “To a first approximation the EMH is true, to a second approximation it is obviously not true.” If that doesn’t make sense to you intuitively, then it is probably worth reading the post.
In fact, we do see lots of trading. We see speculation and arbitrage, even though asset prices are usually close to a position where risk-free arbitrage is almost impossible.
With apologies to my faithful subscribers, I think the links in my emails are broken, I am trying to fix it.