The Importance of Entry/Exit Points when Investing

This graph on the NYT is very interesting in showing the importance of entry/exit points of investing in markets.

I wonder what investors that bought US stocks in 2010 will get in 20 years.

Another Interesting Graph

One of interesting (and bad) features of this recession in the US is the much larger increases in unemployment. This graph here from calculatedrisk.com is interesting:

Not only employment fell by more than other recessions, but it is been taking longer than others to recover.

There and Back Again

The usually great Emmanuel Derman has a nice description of how the financial crisis turned into a "real economy" crisis. For all incoming students of the Capital Markets course, this is one of the things we'll discuss in class:

° After the financial crisis everyone got scared about the future and stopped buying the crap they don't really need.

° The companies that make the crap people don't really need, anticipating a decline, laid off people, sometimes preemptively.

° The laid-off people then had to stop buying not only crap they don't really need but some of the things they actually do need.

° That affected the companies who make things people really need, and so they laid off people too.

° If everybody would just start buying stuff they don't really need then pretty soon everyone would be able to buy the stuff they really need.

Even will all the talk of the emergence of the BRICs The world economy stilldepends a lot on a healthy US economy. The last round of indicators showed that the sky is more cloudy than it was last quarter. Will the US come up with another large stimulus package? Is this going to rattle ond markets or are we still going to see the low yields observed today?

Financial Bets

This is funny: the directors of the Indianapolis Museum of Art waged an online bet with the New Orleans Museum of Art which depends on who wins the Super Bowl this Sunday (the Indiana Colts play the New Orleans Saints). The losing city will lend a good paiting to the winning one for three months (Indianapolis waged a Turner, while New Orleans waged a Claude Lorrain).

Here is a quick suggestion for how to solve the problem with the Chinese yuan overvaluation: if the US has more medals than China during the next Summer Olympic Games, the Chinese agree to revalue their currency by say 20%. If they lose, the US government refrains from calling for a revaluation for at least 20 years...

Myth of the American Over-spending

I enjoy seeing a statistic that changes my preconceptions about an issue. Over this decade I've read many articles about the excess spending by American consumers and how people were buying cars, flat-screen TVs, etc...

This article by Doug Henwood shows the share of consumption relative to GDP with and without medical expenses. I guess the UK picture would look completely different given the impact of NHS.

I guess this yet another good reason to improve the health-care system in the US.