The Lake Wobegon effect is the natural human tendency to overestimate one’s capabilities. The most popular real world example is that almost everyone believes they are an above-average driver. A similar level of overconfidence can be seen in the investing world where the vast majority of fund managers and individual investors believe they are above-average performers. This is of […]

Greed is Good?

January 26th, 2018 by Charlie Bilello

“Greed, for lack of a better word, is good” – Gordon Gekko, Wall Street (1987) Investors are feeling more than a little greedy today. A recent sentiment survey conducted by the American Association of Individual Investors (AAII) showed a spread of over 44% between the percentage of Bulls and the percentage of Bears. With data […]

  • Posted in Sentiment
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Let’s pretend you were living in a bunker since January 2009 with no access to the outside world. You come out of the bunker in January 2018 and are presented with the following facts: 1) The U.S. economic expansion that began in June 2009 is now eight and a half years long, 102 months and […]

  • Posted in Monetary Policy
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Every major developed country central bank in the world is maintaining negative real interest rates in what is now the 9th year of a global economic expansion. Source: and Pension Partners, as of January 12, 2018. Real interest rates = nominal interest rates minus the inflation rate (CPI = consumer price index). Why are […]

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