Running with the Bulls

Hard not to think of Pamplona, in the stock market we have now.

Quotes of the Day

"One of my few economic heroes, Kenneth Boulding, said that while mathematics had indeed introduced rigor into economics, it unfortunately also brought mortis."

"Being wrong on your own, as Keynes describes so eloquently in Chapter 12 of The General Theory, is the cardinal crime for an investment manager. To avoid this, the professionals try very hard to ensure that if they are going to run off any cliff they will: a) have a lot of company; and b) that most of the company will be one step ahead."

Both of these are from Jeremy Grantham's November letter to clients, available here as a PDF. An excellent letter from Ben Inker, a younger colleague of Grantham, is part of the same document. Both are well worth reading, as usual.

How Janet Yellen Misvalues the Stock Market

A careful argument by Andrew Smithers, at the PBS NewsHour's Making Sen$e page.

One hopes that central bankers will be better at spotting market excesses in the future than they have been in the past. I applaud Andrew for trying to keep them more focused on this important topic than they tend to be, and for backing his argument so thoroughly with data.

How Econometrics Got Used as a Weapon in WWII

Sounds surprising, but a set of econometric equations was essential to the wartime development of the gunsight of the B-29 bomber.

I recorded an interview a few months ago with Charlie Roos on this topic.

Charlie is an emeritus professor of physics at Vanderbilt University. His father, Charles F. Roos, was the chief economist of the National Recovery Administration under FDR, and one of the founders of econometrics (along with Irving Fisher and Ragnar Frisch).

The video I have linked goes for three minutes. There is a much longer interview with Charlie about his father's work and more, which you can get to via the pop-up at the end.

"Cash for Clunkers" was Clunky

As discussed here by Luke Froeb.