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The Economist October 25-31st 2025 edition featured an article about weather forecasting. In the article titled “Meteorologic rise: AI weather models and their predictions of India’s rains” the authors tell the story of how computers can predict with greater accuracy when the vital rains needed for agriculture success will arrive and where.  Imagine a three-dimensional grid of the world with each micro-segment of the grid measuring variables for temperature, pressure, wind sp

Viewing 150 years of returns in a pyramid format helped me better abstract the arbitrary nature of the market’s performance.  Ranging from -50% to +50%, the market has clustered in the range of losing 20% to gaining 20% the majority of the years.   However, note the different emotional reaction you get when you see the same information depicted in a graph with Index Value and Year on the two axis. In this view, our brains are inclined to see patterns and trends. But when we s

Liquidity in finance is defined as the relative ease with which an asset can be converted into cash without a significant loss in value.  In broader terms, it refers to both the availability of cash and the ability to sell an asset quickly for cash.  For these purpose, we will look at liquidity through the lens of availability of cash. Consider the image below from the Bank for International Settlements. Illustrated is the amount of credit outstanding to non-financial borrowe

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time, which decreases the purchasing power of money. In other words, it takes more money to buy the exact same goods or services, in the future.  If one item is in short supply and sees a high demand, the new holiday toy for example, and the price for that toy goes up, is that inflation? Technically, no, one item seeing a high price increase is not inflation.  Rat

An American economist, Hyman Minsky, developed a set of theories that he felt explained behavior in speculative markets. Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. In broad strokes, price and market stability (e.g., good times) lead to excessive risk taking via debt issuance, and that stability then leads to instability as recency bias of good times c

In a recent publication by the Visual Capitalist, a visualization and an analysis of 30 years of Central Bank demand for gold was presented. The timeframe covered is 1992 to 2022.  In this piece, a clear visual split from the periods of 1992 until about 2010, whereby Central Banks were net sellers of gold. Then, markedly in 2010, Central Banks became net buyers.  And the pace at which buying occurred saw a sharp increase in 2022, with a record setting 1,136 tons of gold purch

Cybersecurity or the ability to protect one’s information and technology is becoming more and more vital. Artificial Intelligence (AI) and the promises of growth, prosperity, and leisure for the world are growing by the day. But what if the AI, or financial system, or critical infrastructure supporting us in hacked and compromised?  In prior blog entries, I often start with the negatives against an idea.  I am at a loss to find the downside of preventative investments in safe

Humans are terribly fearful of losing money in the stock market. The 1929 Great Depression, the Great Financial Crisis, and numerous other deep drawdowns from the past strike terror in those that lived through the events. Fortunately, and unfortunately, I have lived through a period in time where the markets have not corrected deeply, and over prolonged periods of time. Rather, we have seen quick drawdowns followed by sharp recoveries. In other words, it looks like the letter

In my prior entry on the fantastic book, The Unincorporated Man, I mention the importance of rare earth metals. In this entry on rare earth, I would like to explore what they are, determine if they are in fact rare, and what the future may hold for them. Rare, which means uncommon, seldom seen, or having few of its kind.  Earth, the third planet from the sun which is comprised of land, water and atmosphere to supports life. And metals, the group of elements that are hard, opa

I recently found myself in a vacation house with limited connectivity to the outside world. No internet. No television. But I had access to books. The book called The Unincorporated Man written by Dani Kollin and Eytan Kollin, published in 2010 caught my eye. So between walks to the beach and trips to the grocery store, I dove into the Science Fiction novel set 300 years in the future.  In addition to the futuristic tech and changes in society, I found the economic aspects to

Bitcoin and Ethereum are often considered a poor investment because it is a non-productive asset; an asset that does not generate income such as interest or dividends.  The list of reasons typically given by investors against Bitcoin and Ethereum invariably involves some version of: Speculative - limited industrial or practical uses, producing no earnings or interest. Not a guaranteed inflation hedge - crypto price may not keep up with inflation in all situations. Storage and

ranium faces extreme price volatility, high regulation and political risk, significant environmental and safety concerns, and yet has had ‘glowing’ investment returns (pun intended). Plagued by fragile supply chains and high costs for mining operations, uranium has seen price and sentiment change. The Fukushima Japan disaster in 2011 caused the price of uranium to plummet, taking over 10 years to recover. Political instability in key uranium-producing countries such as Kazakh

Gold is often considered a poor long-term investment because it is a non-productive asset; an asset that does not generate income such as interest or dividends.  The list of reasons typically given by investors against gold invariably involves some version of: Limited utility - limited industrial or practical uses. Not a guaranteed inflation hedge - gold’s price may not keep up with inflation in all situations. Storage and security costs - insurance, safety deposit boxes, phy

Is civilization focused on the wrong threat? Is AI a greater threat than Nuclear Weapons? I would like to explore the possibility that AI is a greater threat to civilization than that posed by Nuclear Weapons. The idea is simple: Nuclear weapons can’t design better and more lethal weapons, but AI can. AI can decide when to use them, and without human intervention.  Biological weapons, especially after Covid impacted so many lives in 2020, became a huge concern. AI has the abi

Eurodollars are unsecured, dollar-denominated accounts at foreign banks or foreign branches of American banks.  Because these ‘eurodollar’ accounts are held outside the United States, eurodollars are not subject to the same regulatory regimes as those in the US, namely the requirements for loss reserves to be held.  Historically, these US dollar denominated deposits were held almost exclusively in Europe, hence the name, they can be held anywhere outside of the US.  So while

Petrodollars are a system in which US dollars are earned from crude oil exports by oil-exporting countries.  Petrodollars play a vital role in the global economy since the 1970s. To give some context, the Bretton Woods system which preceded Petrodollars, was international monetary management system established in 1944.  The intention following WWII was to create economic stability and growth, which would be enabled through four key features: Fixed but adjustable exchange rate

So, how can someone invest across asset classes without having the capital to do so (e.g., buy the stock or ETF directly)?  The answer is the option market of ‘calls’. A call option is a contract granting the buyer the right, but not the obligation, to purchase an underlying asset at a set strike price on or before a specific expiration date.  I can buy an option call when I believe the underlying asset price will increase. Conversely, I can sell an option call when I believe

I have noticed a negative correlation between the US dollar and the S&P 500/Nasdaq 100 reflecting the earnings of the largest publicly held US companies. In other words, when the market indices go up, the dollar value was going down. And as the dollar value dropped, the markets went up. This got me interested in researching the concept of purchasing power. Purchasing power is the value of a currency expressed in the amount of goods or services it can buy. Purchasing power dec

Asset managers are compared to the indices, things like the Dow Industrial Average, the S&P 500, and the Nasdaq 100.  These indices reflect the performance of the basket of companies that make up that given index. Some are added over time, while the same number are reduced, automatically re-balancing with companies that are doing well, getting rid of the poor performing companies. It is with this in mind that professional asset managers have been compared. Did the asset manag

Markets appear to have a tendency to follow the emotional sentiment of investors. They occasionally revert back to the mean, factoring in the fundamentals of the businesses and the economy. As the old saying goes, in the short term the market is a voting machine, and in the long run a weighing machine. But is it true? And what drives the feelings of euphoria and greed, and the converse feeling of despair and fear? In Daniel Blumstein’s book, The Nature of Fear: Survival Lesso