Archive for February, 2010

The Season for Buying – and Selling

Tuesday, February 23rd, 2010

To everything, there is a season – and a time for every purchase under heaven. No, that‘s not a misprint – just an economist’s reworking of the Biblical passage.
Every recession brings with it a curious phenomenon. Non-professional investors exit the stock market like a herd of lemmings with an appointment at the edge of the cliff. Eventually, the same people stampede into the stock market during the expansion phase of the cycle. Typically, net stock-market inflows peak at or around the apex of the cycle.
This is no way to run a railroad.
The general idea behind portfolio investment is to make [...]

How is the Municipal Bond Market Like the Grocery-Checkout Line?

Sunday, February 14th, 2010

Bonds are big these days. They’ve always been big among fixed-income investors – older people who have begun to prize the return of their money more than the return on their money, in Will Rogers’ immortal phrase. These security-conscious people are also the same kind of people who buy annuities. Nowadays more people are thinking about safety in investments than at any time in living memory.
Municipal Bonds – a Paragon of Bond Safety
Municipal bonds enable cities and states to borrow to finance big projects like roads and bridges. Sometimes municipal bonds are backed by the general revenue collected by the [...]

What Is It With Insurance Companies, Anyway?

Tuesday, February 9th, 2010

A film about insurance companies could aptly be titled Rashomon. Commentators and public figures each paint a different picture of insurance companies, each one viewed through a special-interest lens.
 Politicians cast insurance companies as characters in a morality play. The companies are villains who earn monopoly profits at the expense of their customers. Only the efforts of idealistic lawmakers and well-meaning regulators prevent the insurance companies from defrauding their policyholders.
 Internet savants portray insurance companies as clever malefactors who profit from knowledge denied to the rest of the world. Fortunately, the savants are on the job telling us the “things the insurance [...]