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  • The Statistics of Prediction

    Given the high level of ambiguity in the economy and markets at the moment (both gold and Treasuries rallying?), I thought it might be useful to revisit the concept of forecast error. Economic forecasters, even (perhaps especially?) the top, highest paid Wall Street celebrity economists, are egregiously poor predictors of stock market levels or direction over any meaningful time frame.…

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  • Macro Indicator Summary

    I am impressed with markets’ resilience in the face of China’s 6.7% sell-off overnight. Aside from Hong-Kong, global equity markets have shrugged-off the new Chinese bear market with a disinterested grunt. Here in Canada, banks are mostly higher on the day despite a 1.5% drop in the index, while the U.S. banking sector continues to consolidate sideways, off just 0.75%…

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  • Sirens in the Distance

    “The American Republic will endure until the day Congress discovers how to bribe the public with the public’s money.” –  Alexander Fraser Tytler “The hardest thing to explain is the glaringly evident which everybody has decided not to see.” – Ayn Rand Never in modern history has a voting majority confiscated so much from its children, by incurring so much…

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  • The Fallacy of Cash on the Sidelines

    Merrill Lynch posted the results of its most recent Survey of Fund Managers for August this morning. The survey covered 204 fund managers in 80 countries who control $554 billion in assets, and the data dispels the myth of excess cash on the sidelines.Barry Ritholtz at ritholtz.com summarized the findings. Note that U.S. markets peaked in September 2007: • Cash…

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  • Forever Blowing Bubbles

    Those tortured souls who have thus far clung faithfully to the rules of capitalism, finance and economics they learned in business school have surely been disillusioned by the markets’ most recent break to new highs. Like children who have finally relinquished the corporeal reality of Santa Claus, these poor souls may be searching for new rules and theories to legitimize…

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  • The Escherization of Bank Profits

    Yep, even more bankster chicanery. We knew that many of the banks have been taking advantage of the inscrutable fair value accounting rules by channelling reductions in the market values of their outstanding debt through income statements where they show up as earnings. If the value of outstanding liabilities declines while asset values are constant (under the revised fair value…

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GestaltU is a forum for research, opinion pieces, and educational material from the team at ReSolve Asset Management. Our views are driven by evidence based finance, with a special focus on asset allocation; factors and smart beta; retirement and endowment strategies, and; quantitative methods.