November 2013

Is Monitoring Leverage the Key to all Crisis Avoidance?

A new paper by economists John Geanakoplos and Lasse Pedersen posits that if it is leverage that puts the whole financial system at risk, then it is leverage that we must monitor if we ever hope to predict or avoid crisis… Systemic  crises tend to  erupt when  highly  leveraged financial  institutions  are forced to deleverage, sending the economy into recession; leverage is a  central element of economic cycles and systemic risk. While traditionally the interest rate has been regarded as the single key feature of a loan, we argue that leverage is in fact a more important measure of systemic risk. We discuss how leverage can be monitored for assets, institutions, and individuals, and highlight the benefits of monitoring leverage. Our main conclusions are:  Monitoring …

Buy Wood.

GMO is out with its latest monthly asset class real returns forecast for this month. The system is largely predicated on mean reversion and so you’ll typically see the most loved sectors projected to have the worst returns (US small caps this go-round) for the future period. Barry and I are huge fans of Jeremy…

2013, basically

Buy a Tesla with Bitcoins, drive it to Potbelly, twerk through the front door as you take a selfie to share on SnapChat. – 2013, basically — Downtown Josh Brown (@ReformedBroker) November 19, 2013   See Also: My most favorited tweets (FavStar)

361 Capital Weekly Research Briefing

361 Capital portfolio manager, Blaine Rollins, CFA, previously manager of the Janus Fund, writes a weekly update looking back on major moves, macro-trends and economic data points. The 361 Capital Weekly Research Briefing summarizes the latest market news along with some interesting facts and a touch of humor. 361 Capital is a provider of alternative…

The Media, Like the Market, is a Two-Way Street

You don’t get the good without the bad in this world. There are no free lunches and everything costs something. Elon Musk is getting an education on that very subject as we speak. The brilliant inventor and entrepreneur was given a full year in the spotlight as his Tesla Model S became the darling launch…