Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
Better than it looks
An interview with economist Jamie Galbraith gives an alternative view to falling middle-class incomes:
The typical story is that median wages peaked in 1972 and have been stagnant and falling since then. As a result, it must be the case that people who are working now are much worse off than they were ten, fifteen, twenty years ago. That's not an accurate story -- at least not up until the crisis in 2008 -- because over that period the labor force became younger, more female, more minority, and more immigrant. All of these groups start at relatively low wages, and they all then tend to have upward trajectories. So there's no reason to believe that life was getting worse for members of the workforce in general. On the contrary, for most members of the workforce it was still getting better. Plus they had the benefit of technical change and improvement in the other conditions of life.
The Wall Street Journal shares an unconventional real estate indicator:
Google's (NASDAQ: GOOGL ) real-estate search volume was up 65% year-over-year in November, perhaps another sign of life in housing market.
False sense of security
Author Nassim Taleb argues that stability can be destabilizing:
Stabilization, of course, has long been the economic playbook of the United States government; it has kept interest rates low, shored up banks, purchased bad debts and printed money. But the effect is akin to treating metastatic cancer with painkillers. It has not only let deeper problems fester, but also aggravated inequality. Bankers have continued to get rich using taxpayer dollars as both fuel and backstop. And printing money tends to disproportionately benefit a certain class. The rise in asset prices made the superrich even richer, while the median family income has dropped.
Good work, if you can get it
The Economist sheds light on the poor performance of professional hedge funds:
Over the past ten years, hedge-fund managers have underperformed not just the stockmarket, but inflation as well. After fees, investors in the average hedge fund have received a return of just 17% ... Hedge-fund fees are usually 2% every year, plus 20% of all returns over a set level. It is, as a result, easy to think of people who have become billionaires by managing hedge funds; it is far harder to think of any of their clients who have got as rich.
The Harvard Business Review shares nine ways successful people deal with stress, including:
1. Have self-compassion.
2. Remember the "Big Picture."
3. Rely on routines.
4. Take five (or ten) minutes to do something you find interesting.
Most of these can apply directly to investing, too. More here.
The blog Calculated Risk shows nationwide home prices in real (inflation-adjusted) terms going back several decades:
On the sidelines
Bloomberg shares an unfortunate stat:
Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.
Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the [S&P 500 (SNPINDEX: ^GSPC ) ] 94 percent advance, according to data compiled by Bloomberg and Morningstar The proportion of retirement funds in stocks fell about 0.5 percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.
Forbes has a clever way to reduce gun deaths through the free market: gun liability insurance:
Who pays the least for gun insurance would be least likely to commit a crime with it. An 80-year-old married woman in Fort Lauderdale would get a great rate. A 20-year-old in inner-city Chicago wouldn't be able to afford it. A 32-year-old man with a record of drunk driving and domestic violence would have a similar problem.
Enjoy your weekend.