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Economic Theory

Category

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October Stock and Fund Picks

Before I list my picks and review the state of the economy, I'd like to add a comment on trade protectionism and the negotiation strategy of the Trump administration with China. The problem is that China is an unfair trader and its communist government's strategy is to steal as much technology as is possible. Something must be done to counter a development strategy such as this. Unfortunately, Trump's trade protectionism and attempts at negotiation will ultimately fail as a countermeasure.…

December Stock and Fund Picks

Isolationism and increasing inefficiency that results will continue to push output down. Already it has reduced investment, which in turn reduces productivity growth, as well as both exports and imports which account for about 40 - 45% of our economy. Let me illustrate how this works. Two nearby islands routinely trade with each other because island 1 has resources and technology better suited for making clothes while island 2 is more suited to making food. Each islands specializes by producing…

Pugonomics 101 for Investors

I have two pugs.  I am not their master.  Instead, I work for them.   They are well cared for and appear grateful.  this is not trickle down economics, for which, by the way, there is no existing theory.  Given the arrogance and outright laziness of my pugs it seems more like trickle up economics. The analogy holds for investors.  When you buy a fund or stock you are using your financial capital to hire firms and fund managers to…

Flow Theory of the Stock Market

Flow theory is about the flow of money into and out of stocks, economic sectors, and the overall stock market. I am going to focus on the overall stock market. Flows into and out of the stock market occur for different reasons in the longer-run period (greater than 1 or 2 years) versus the shorter-run period (less than 1 or 2 years). In the long-run money flows depend on: 1. Demographic trends 2. Long-run economic growth. 3. International portfolio capital…

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google.com, pub-2431335701173086, DIRECT, f08c47fec0942fa0