I don’t usually put much stock (literally or figuratively) in the old “sell in May and go away” adage, but that’s exactly what investors did in May of 2012. And who could blame them? The European debt crisis flared up again, the Facebook IPO was a gong show, and Wall Street golden boy Jamie Dimon and JP Morgan showed that they aren’t much different than the other big banks. The contrarian in me wants to speculate that the next bailout/LTRO/QE must be just around the corner. We’ll see. In the meantime, I found some great reading in the month of May. Enjoy!
1. Let’s get started by asking the question on most investors’ minds these days: Could the Eurozone Crisis Cause Another Lehman Moment? The answer of, course, is yes. It could. Whether it will cause that kind of carnage remains to be seen. This comprehensive article by Matt Stoller courtesy of Naked Capitalism showcases some of the factors you might want to feed into your crystal ball.
2. Continuing with the 2012 is so 2008 theme, Izabella Kaminska of the FT drew our attention to The Subpriming of Commodities. I wasn’t aware that things had reached this point in the commodities markets, but it’s definitely something to watch, especially for those of us who invest in the commodity-laden Canadian stock market.
3. Barry Ritholtz of The Big Picture wrote a mock letter from the FDIC to bankers dated 2015 that produces the following headline: FDIC Rule Change Ends Too Big to Fail. From your lips, Barry …
4. Staying with the general idea of misaligned interests, Nancy Folbre wrote a thought-provoking piece for the New York Times on Incentive Perversity. Go read it and see what she means. It’s pretty enlightening, if not a more than a little maddening.
5. The Biggest Driver of Equity Returns Since 1970? Dividends. That’s according to Dylan Grice of Société Générale. (Attention-grabbing headline courtesy of Business Insider.)
6. My Own Advisor described his Struggle with GDSR and TDSR. That’s Gross Debt Service Ratio and Total Debt Service Ratio. Mark found that the ratios the banks use made him feel like he was borrowing more than he could comfortably afford. As a result, he determined his own target ratios – not a bad idea for all of us!
7. Our own Jim Yih addressed one of the most important questions in finance at his Retire Happy Blog, concluding that Money Can Buy Happiness. Before you label Jim the next Ebenezer Scrooge, read the article. I think you’ll find it’s very well-balanced, and I happen to agree with him.
8. Here comes another controversial question from The Creativity Post: Is America Becoming an Idiocracy? Apparently, researchers have found that our brains are shrinking as we evolve. Unfortunately, it’s no longer as adaptive to think productively. Rather, we are conditioned to think reproductively. This is a great read for all of us, but particularly for educators, entrepreneurs, or anyone who cares about sustainable innovation.
9. Suppose you’re kind of a creative type. You know, you live outside the box. You’re uncomfortable with spreadsheets and formulae and anything remotely confining. Your focus and strengths rest more with your right brain than your left. Chances are, you have a tough time sticking to the rules of personal finance (and just about everything else) as they are conventionally taught. Luckily, Vanguard has a few ideas on Left-Brain Finances for Right-Brain People. One of my mantras on personal finance fits well here: There is no right way. Find your way.
10. On the topic of those creative types, I’d like to point you to an interesting article on Why We Need Music. This subject is near and dear to me as a lover of music and the mother of two musicians. Even the hard-core business world needs people who think like musicians.
I hope you found these articles unique, useful, and thought-provoking. Please feel free to comment on any and all of them below!