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John Lounsbury  

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  • Retirement Strategy: ETF Portfolio Versus The Stock Only Portfolio, A Glaring Update [View article]
    RS, I am not surprised at your results in the first two months. I do expect that if you continue the experiment for three years or longer it may be the case that the cost of the higher return for the stock portfolio will be a greater volatility. And if that is the case then over the long haul there will be a number of short periods of time when the EFT portfolio outperforms. Nervous Nellies may have difficulty in living with that trade-off.
    May 3, 2014. 12:52 AM | Likes Like |Link to Comment
  • Health Care Expenditures Have Not Stopped Increasing [View article]
    My mother the same in the final stages of multiple myloma.
    Apr 1, 2014. 05:30 PM | Likes Like |Link to Comment
  • Impossible To Accurately Calculate Missing Workers [View article]
    David - - -

    I have taught college courses requiring the definitions of accuracy and precision for many years so obviously my previous discussion was very poor if the two terms appeared to be confused (or conflated).

    I will restate my point again as briefly, simply and completely as I can:

    The interpretation of the imprecise employment data by many each month when the BLS issues the Employment Situation Report is producing inaccurate conclusions.

    The lack of precision in measurement does not allow the inference of an accurate result from a single month of measurement. Only by the averaging of several (or many) months is accuracy improved.

    The example I provided in my comment addressed the interpretation of a single month's reading of non-farms payroll employment.

    The BLS statistics are not inaccurate. They are carefully and completely specified by the BLS to my satisfaction (with the exception of (1) seasonal adjustment which does have some questions associated and (2) the birth-death ratio for companies which sometimes requires significant backward corrections to the data).

    The use of BLS numbers by others is what I intended to criticize.
    Mar 18, 2014. 03:01 AM | 1 Like Like |Link to Comment
  • Impossible To Accurately Calculate Missing Workers [View article]
    David - - -

    The uncertainties of the BLS survey data are documented by the agency itself. For the non-farms payroll data the uncertainty each month is of the order of +/- 100,000. That makes a monthly change of 125,000 virtually indistinguishable from a change of 175,000. Yet the former can send the stock market into s spin and the later can spark a rally.

    The household survey, from which the unemployment rate is calculated, has measurement error uncertainty each month of the order of +/- 400,000. Many months the changes reported are within the measurement error uncertainty yet the whole world reacts to the insignificant results.

    A second area of concern is the fact that incomplete data is reported each month and is subject to backwards revision as final data details trickle in. Then longer-term adjustments are made to the data annually, sometimes extending backwards for several years.

    The final area which adds to the uncertainty about the real current situation are the application of seasonality corrections each month. The problem with this methodology is demonstrated by the frequent disagreement between year-over-year changes in the raw data compared to the seasonally adjusted data.

    The BLS data is quite good for historical review showing where employment was in years past for many decades back. It is not very good at assessing where employment actually is this month or even this year. Yet many treat the data as if it had all the precision and accuracy that it doesn't ultimately get until years later.
    Mar 16, 2014. 06:35 PM | 4 Likes Like |Link to Comment
  • Weighing The Week Ahead: What Is The Risk/Reward For Stocks? [View article]
    There seems to be a divergence in the area you bring up: healthcare cost growth has been trending down for several years and health care stocks have seen good appreciation. How can cost trends be negative and stock prices react positively? Perhaps productivity improvement? Or perhaps a divergence which will be resolved by change in one or both trends?

    I ask questions because I don't have answers.
    Mar 11, 2014. 04:31 PM | 1 Like Like |Link to Comment
  • Health Care Expenditures Have Not Stopped Increasing [View article]
    Jake - - -

    Before you make snide remarks you should read your reference (which you linked). That article and sources referenced by it indicate that the latest data represents a one-time drop in health care costs (January 2014). In addition, the article you linked and all the references it contains were published after the date of the article you have commented on here.

    The data graphed in this article is the latest from the sources used and is almost all through year-end 2013. This was the current data when the article was written the last day of February (published 01 March).

    Finally, you apparently have no idea what this author has written about healthcare costs, which he addresses on a regular basis. He has repeatedly written about the decline in the growth rate for healthcare costs over the past several years, including it in his regular economic forecasts and projections. He recently pointed out that the decline in the rate of healthcare costs predates the passage of Obamacare in 2010. Any cost reductions resulting from Obamacare are riding on a "wave" that was already starting. Hopefully the ACA can keep the wave rolling forward.

    The next time you want to point something out perhaps you could do so in a civil manner and start a useful discussion. Leading with your chin invites a knock-out punch rather than useful discussion.

    Perhaps you will be finished with of "nonsense"?
    Mar 11, 2014. 04:16 PM | Likes Like |Link to Comment
  • Retirement Strategy: The Future Dividend Champions You Must Own [View article]
    Alan - - -

    Yes GM is TBTF but GM stockholders were not in the last bailout. :-(
    Feb 21, 2014. 07:09 PM | 3 Likes Like |Link to Comment
  • Corporate Greed And Productive Use Of Money [View article]
    Alltee - - -

    Because of unfavorable demographics China will experience a shortage of labor over the coming 10-20 years. It has actually already started to have an affect on the country. The answer is, of course, increased use of automation. The question is whether China can handle the rapid increase in productivity any better than the west has. Sustainable income distribution is a bitch!
    Feb 11, 2014. 03:53 PM | Likes Like |Link to Comment
  • Watching The Chemical Sector To Forecast The Economy [View article]
    smakit - - -

    You wrote:

    "Like it or not, a currency has to be backed by SOMETHING just like the stock of a company must be backed by NET ASSETS."

    Agreed. Currency must be backed by something. And stock must be backed by something. There is a LOOSE relationship between the two, but the situation here is more like apples and oranges than it is two variety of apples.

    I will disagree that the stock of a company is backed by net assets. The stock of a company is valued by the market based on the expectations of future earnings. Book value is used as factor in assessing valuation levels but it is far from the primary factor. The present value of future earnings is the primary valuation factor and all other considerations are secondary.

    Of course future earnings estimates are not known so the valuation of a stock comes down to guesswork. Stock prices ultimately are governed by expectations of market participants and book value has little to do with it. Few buy a stock with a consideration of what they might get if the company was liquidated.

    What backs the value of a currency? It is the expectation of future production of the country issuing the currency. The currencies of the world today are existing in a floating exchange rate regime and countries (and their currencies) are competing for value based on expectation of future national production. And the reason that no country (or currency union) faces a challenge to its fiat currency is few market participants are willing to accept payment for something that will be taxed (and virtually all economic activity is taxed) with any currency that will not be accepted in payment of those taxes. If the seller (in the U.S.) of a product, service or financial instrument accepts something other than dollars they do so only with the expectation that the item accepted can be converted to dollars whenever the need arises.

    Yes, you are correct that stock prices (and assets prices in general) are susceptible to manipulation. People do pay far above any rational valuation based on possible future cash or earnings flows. But that is a different situation than the basis for rational valuation. Some assets fall victim to casino speculation, but that is different than the rational process of valuation.

    Yes, you are correct that internal changes in various indices over time make historical comparisons problematic.
    Feb 3, 2014. 04:46 PM | Likes Like |Link to Comment
  • Watching The Chemical Sector To Forecast The Economy [View article]
    smakit - - -

    Your analogy is missing one key fact: No one can pay taxes with Facebook stock. (Or Citigroup or any other privately issued security.)
    Feb 2, 2014. 06:57 PM | Likes Like |Link to Comment
  • The Time to Go Short the Yen Is Now [View article]
    Roger - - -

    You should have used bold (not available here, so caps then) for the statement:

    "To tax in a given denomination, the issuer first has to allow the taxee to get some of their monopoly currency."

    It is a disgrace of our society that many economists (and most with policy influence) do not recognize that in a fiat currency regime there is no money for taxes until the government first creates it.

    Because of this disgrace it is no wonder that a majority of the population does not realize that the fiat currency parameter that must be managed in fiscal policy is inflation (too much money) or deflation (not enough money). Deficits (or balanced budgets) are simply the tools for that management process.

    You explain that effect when you talked about Japan.
    Jan 5, 2014. 05:26 PM | Likes Like |Link to Comment
  • In Bed With Wall Street: A Book Review [View article]
    Hi Tom - - -

    I think you would enjoy the book.

    Based on feedback I have received to this article I have extended it by several paragraphs and posted at Global Economic Intersection:

    Maybe you should try the free book drawing. The number of books being given away has increased to three. With the number of entries received so far your odds are not terribly bad of winning one of them.

    Book drawing info and access to entry:
    Jan 4, 2014. 06:50 PM | Likes Like |Link to Comment
  • In Bed With Wall Street: A Book Review [View article]
    User 195396 - - -

    I have written a number of articles (, Seeking Alpha and Global Economic Intersection) about the conflicts of interest of FINRA and the debate over fiduciary responsibility rules and regulations. I am more familiar with the issues involved than 90%+ of financial services professionals. Yet even in those sections of the book discussing FINRA there was much material that was new for me.

    I am extremely impressed with the depth of research that went into this book.
    Jan 4, 2014. 03:55 PM | 1 Like Like |Link to Comment
  • Reviewing The 2013 Silver Bullet Awards To Writers Who Exposed Big Errors [View article]
    Jeff, let me add to your comment. Krugman has continued to present data (see NYT column New Years day). That led me to post another summary and discussion. Krugman offered a one sentence reference to Draghi and the ECB which raises a lot of questions.

    In the new post I did include an abbreviated bibliography for Reinhart and Rogoff (instead of requiring readers to track back through references in the Sources).

    Also included in Draghi's complete "whatever it takes" presentation from July 2012.

    This brief article is a good resource for those searching for original sources to read the context of the widely quoted one liners associated with R&R and D.

    This post asks a series of questions about just what the ultimate mechanics might be in the euro zone.

    A final note to Prof. Finkler: I disagree that the issues are settled. I believe a long research trail will proceed forward from this point. I would submit that the compilation of all the debt/gdp data for two centuries is useful in only one regard: It provides the data resource needed for ongoing research into the effects of money regimes, as well as international finance and trade relationships (among possible ancillary factors). The real value to emerge from future research will be in defining the theory of money, which is probably far more complicated than the simple two point debate between store of value and medium of exchange.

    The progression from the current situation will involve studies of the time progression of change, which goes far beyond the averaging of data over time. One question to be finally resolved will be: does high debt produce slower growth or does slower growth result in higher debt. Jeff mentioned this in his comment and provided a link.

    My guess? Both can occur and the parameters associated with each scenario depend on research not yet done which will define conditions for each.

    Ultimately monetary regimes will probably be among the most important factors. But probably far from the only important parameter.
    Jan 2, 2014. 04:47 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: The 2013 Review Of What Was Hot And What Was Not [View article]
    I can't resist butting in. John Hussman is a great analyst with (some) faulty assumptions. He finds many unique ways to look at macro data but doesn't always get to a conclusion that matches with what happens from that point forward.

    In a way, he is emblematic of problems with macroeconomics in general. There is a wealth of data but a deficient theoretical framework for useful interpretation.

    We all can fall victim to errors resulting from making generalizations using a small set of variables when the applicable variable sets are actually many fold larger.

    John Hussman may have been off-base in assessing economic and market direction but he should not be ignored. I have found many things over the years in his reports that were original insights and which I was able to use in making investment decisions, although sometimes not in the same way that Hussman did.

    Jeff Miller as been more on the right side of the market than most and kudos to him. But some of those on the wrong side of the market have presented good data, but simply misinterpreted it.
    Dec 22, 2013. 02:53 PM | 3 Likes Like |Link to Comment