CERF Blog

Fourth quarter United States GDP contracted by about $5 billion dollars, which is 0.1 percent negative growth annualized. This is after 3.1 percent growth in the third quarter which was the strongest quarter in 2013. The largest drivers of the fourth quarter decline were a contraction in government spending of 6.6 percent and a change… Read more

In early 2007, before the financial crisis hit, author Naseem Taleb published his best-selling book “The Black Swan” in which he argued that extreme events occur more frequently than most of us are trained to expect.  We are trained to think in terms of the “normal” distribution, or bell-shaped curve, in which events more than… Read more

Forbes recently ran an article by William Baldwin titled “Do You Live in a Death Spiral State?” In the article, Baldwin calls states with declining economies Death Spiral States. (Confession: I really wish I’d come up that term) He correctly included California among his Death Spiral States. Then, he gives investment advice based only on… Read more

California has almost achieved zero population growth. According to the California Department of Finance (DOF), California’s population has stagnated at sub-one-percent rates for an unprecedented seven consecutive years. The slow growth was a result of negative domestic migration, declining international migration, and declining births. Unless we fix our education system and create opportunities for everyone,… Read more

Morningstar has published a research report that purports to show that a properly constructed financial plan can generate a meaningful increase in lifetime retirement spending.  The value added from a plan is referred to as “gamma” following in the line of Greek letters being used to assess investment returns.  The first Greek letter “alpha” is… Read more

This is a comment on the national November Employment Situation report released last Friday, and I use numbers from the report to calculate when the United States might reach the Federal Reserve unemployment rate goal of 6.5 percent. The unemployment rate fell from 7.9 percent in October to 7.7 percent in November which might appear… Read more

A central concept in Modern Macroeconomic theory is that capital stock will be accumulated through the process of saving for the future. A new country, starting with a low capital level, will accumulate capital for some number of years or decades until reaching an equilibrium level of capital stock. Progressive taxes on capital income imply… Read more

Actor, economist, humorist Ben Stein has written an innovative book1 on financial planning.  Instead of telling you what you should do to improve your financial position, Ben tells you 49 things you can do to impair your financial position – to reduce wealth, reduce income, and increase the chance of destitution.  Many of these things… Read more

T. Boone Pickens is famous as an oilman, corporate raider and energy investor.  He is also a graduate of Oklahoma State University (OSU) and an avid supporter of the University and its athletic programs.  Reportedly, he has donated nearly $500 million to support various OSU initiatives.  About five years ago he had the bright idea… Read more

The advance estimate of U.S. third quarter GDP was released this morning, indicating that the economy grew at 2 percent. Third quarter growth was driven by private consumption and government defense consumption. Investment expenditures were weak, and trade was a small drag on third quarter growth. Business investment expenditures actually contracted, while residential real estate… Read more

 How to become a Billionaire By Bill Ackman Hedge fund manager Bill Ackman has produced an interesting lecture on finance and investing.  It can be found at www.floatinguniversity.com.  It is one of twelve lectures on “big ideas” currently residing on the site.  Ackman’s lecture, titled “All you need to know about finance and investing in… Read more

The world’s horse population is estimated to not exceed 65 million, while the world’s population of people is estimated at 7.05 billion.  We have at least 108 people for every horse.  It wasn’t always thus.  In 1800, Europe’s estimated horse population was 14 million, while its people population was an estimated 150 million.  They had… Read more

I began my career as an economics professor (actually, assistant professor) at the Claremont Graduate School (now Claremont Graduate University).  In 1980, I joined with three colleagues at the Claremont Men’s College (now Claremont McKenna College) who had started an economics advisory company called Claremont Economics Institute (CEI).  CEI provided financial forecasting and consulting to… Read more

In his book “Unintended Consequences” Edward Conard1 not only supports the benefits of income and wealth inequality (as described in a previous post (August 7, 2012)), both as an indicator of past successful ventures and as an inducement to future ventures, but he also provides a diagnosis and remedy for financial crises. He denigrates the… Read more

A financial planning rule of thumb that you often hear is that the percentage allocation to safe assets (cash or bonds) should increase with age, and accordingly the percentage allocation to the risky asset (equities) should decline with age.  One popular version is that your allocation to equities should be no higher than 100 minus… Read more