But firms don't try to maximise short term profits
It's a standard enough trope, that modern capitalism fails because companies only ever try to maximise short term profits. Not enough is done to think of the long term. Many things we value are not bought or sold, and so have no visible price
One aspect of economic research I think is especially powerful is the ability to measure or monetize the things that humans clearly value but for which a market price is not necessarily apparent.Let a Thousand Home Businesses Bloom
Home industry is particularly important to the poor for at least four reasons. First, the business overhead is usually low. Second, it allows people to use their labor as equity to develop a business for which financial or capital equity is not available. China: Future Migration Hotspot?
Will China always be a sending state, or will it soon begin to receive net immigration? Immigration is already an important facet of the Chinese economy, and there is reason to suspect that China, like Western Europe and the United States, will, down the road, become a receiving state.Every Central Bank for Itself
Whether the FOMC can actually turn the taper into a true exit strategy ultimately depends on how much longer households and businesses must deleverage and how sharply our old-age dependency ratio rises, but markets seem to believe this is the beginning of the end. For now, that’s what matters most.Thomas Piketty and Millennial Marxists on the Scourge of Inequality
Socialism and capitalism seem like natural antagonists, but their rivalry is Oedipal. To many, the relationship appears straightforward. Capitalism, they would argue, created the modern industrial working class, which supplied the socialist movement with its staunchest recruits.Jason Zweig & Jonathan Clements: Financial Advisor Fees-video
The Wall Street Journal's two top personal finance journalists, Jonathan Clements and Jason Zweig, both now at The Wall Street Journal tackle the three greatest financial challenges facing Americans.China’s steelmakers have branched out into shadow banking—which is funny since they owe $484 billion
In its boom years, China’s status as the world’s biggest steel maker was an emblem of its industrial might. Now, it symbolizes the dangers of dried-up demand. Bad Investor Behavior: Overemphasizing Experience
Behavioral finance researchers have discovered that our personal experiences disproportionately impact our investing behavior. Nelli examines the evidence and implications of this bad investing behavior, and what investors can do to overcome it.The booming business in behavioral finance
Meanwhile, businesses see opportunities for higher profits. To grab more attention and dollars from consumers, companies as far afield as banks and fitness-app makers carefully design their offerings with consumers’ decision-making quirks in mind.Hussman Weekly Market Comment: Margins, Multiples, and the Iron Law of Valuation
The Iron Law of Valuation is that every security is a claim on an expected stream of future cash flows, and given that expected stream of future cash flows, the current price of the security moves opposite to the expected future return on that security. Cognitive Dissonance on Minimum Wages and Maximum Rents
Both the minimum wage and rent control, despite the fact that the first forces prices up and the second forces prices down, reduce the quantity of the good in question exchanged. That makes them counterproductive “solutions” to the problems faced by those who are unable to sell enough of their labor services or unable to purchase enough housing services. The many failures of Manmohan Singh
Sanjaya Baru’s memoirs only confirm what Indians have suspected for long.The moral power of curiosity
This book is about how a small number of Wall Street-types figured out that the stock markets were rigged by high-frequency traders who used complex technologies to give themselves a head start on everybody else.Book Review: Systemic Risk: The Dynamics Of Modern Financial Systems
In Systemic Risk: The Dynamics of Modern Financial Systems, Prasanna Gai, professor explores new ideas in the study of financial crises, systemic risk, and contagion. In the wake of the global financial crisis, there is a critical need for a substantial reassessment of the fundamental workings of financial systems, their interactions with the real economy, and the circumstances that tip such systems from stability to instability.Inflation: The Silent Killer?
In the world of economics and investing, it can be difficult to get a clear picture of current economic conditions. It is even more difficult to predict what will happen. There is no shortage of opinions. You can find optimistic and pessimistic interpretations of what is happening and what might happen.Are we competitive?
"REAL economists don't talk of competitiveness," so remarked Paul Krugman. This may seem rather rich coming from a Nobel laureate in economics. But real businessmen and real politicians do talk of it. Competitiveness matters.Bad Investor Behavior: Overemphasizing Experience
John Keats once famously noted, "Nothing ever becomes real till it is experienced." Modern finance theory usually assumes that people are fully rational, incorporating all available information instantaneously into their expectations. Manipulated: The rise of behavioral finance
Where many people need the biggest nudge, if not a shove, is with making financial decisions. The effect of emotion on investment decisions is usually negative — good old fear and greed, as well as paralysis from being overwhelmed by choice.Is selloff time to go with active manager?
An increasing number of financial advisors and high-net-worth investors are paying up for downside protection rather than eye-popping performance. That's notable amid current market volatility.