The statistician George E.P. Box once made this observation: “All models are wrong,” he said, “but some are useful.” This certainly applies to finance, where many of the concepts are imperfect but can nonetheless still be useful. Below are four such examples. Market valuation. Are stocks [...]
Three market lessons
Last week, I referenced the seventeenth century Dutch tulip bubble. No doubt, there’s a lot we can learn from history. But sometimes, current events can teach us just as much. I see three valuable lessons in today’s market. 1. Myopia. Open any finance textbook, and you’ll find that most of the [...]
Famous investments
Last week, bitcoin hit a new high, topping $112,000 for the first time. Over the past 12 months, it’s gained an impressive 55%. What’s driving these gains, and what should you make of it? There are, in my view, three key factors. Two are new. One is not. First was a policy change last year: The [...]
Boring but important
If the name Liz Truss sounds vaguely familiar, there’s a reason for that. Truss was once the prime minister of the U.K.—but for just 45 days. How did Truss lose public confidence so quickly? In short, the bond market forced her out. Shortly after taking office in the fall of 2022, Truss proposed [...]
The Clements Family Financial Lab
When his children were little, Jonathan Clements often joked that he had a special incentive to see them succeed financially. As The Wall Street Journal’s longtime personal finance columnist, “it would be a tad embarrassing,” he said, if his children “grew up to be financial ne’er-do-wells.” For [...]
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