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The Investor’s Guide to the Low Volatility Anomaly

Miller is out with an excellent post on this topic. He links to some research and graphs which illustrate his point.

Simply, accepted theory is that higher volatility stocks (ie riskier) should perform better than lower volatility ones over time. You know, the old risk-return tradeoff.

The thing is that in practice, they don’t.

There’s been a growing body of research and interest into this phenomenon and I thought it would be worthwhile to make some order out of this.

Read the article here.

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Bath Salts: Deep in the Heart of America’s New Drug Nightmare

After decades of misguided hysteria, the War on Drugs may have an epidemic worth freaking out about, and it’s spreading across state and demographic lines at the speed of the Internet. NATASHA VARGAS-COOPER travels the country to uncover the way-less-glamorous-than-it-sounds world of bath salts, which has already come to a strip mall near you.

Read the article here.

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Roubini: A Global Perfect Storm

The Dr. of Doom nails it:

Compared to 2008-2009, when policymakers had ample space to act, monetary and fiscal authorities are running out of policy bullets (or, more cynically, policy rabbits to pull out of their hats). Monetary policy is constrained by the proximity to zero interest rates and repeated rounds of quantitative easing. Indeed, economies and markets no longer face liquidity problems, but rather credit and insolvency crises. Meanwhile, unsustainable budget deficits and public debt in most advanced economies have severely limited the scope for further fiscal stimulus.

Read the rest here.

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Doctors Surveyed Show American Health Care System Coming Apart at the Seams

KEY FINDINGS

  • 90% say the medical system is on the WRONG TRACK
  • 83% say they are thinking about QUITTING
  • 61% say the system challenges their ETHICS
  • 85% say the patient-physician relationship is in a TAILSPIN
  • 65% say GOVERNMENT INVOLVEMENT is most to blame for current problems
  • 72% say individual insurance mandate will NOT result in improved access care
  • 49% say they will STOP accepting Medicaid patients
  • 74% say they will STOP ACCEPTING Medicare patients, or leave Medicare completely
  • 52% say they would rather treat some Medicaid/Medicare patient for FREE
  • 57% give the AMA a FAILING GRADE representing them
  • 1 out of 3 doctors is HESITANT to voice their opinion
  • 2 out of 3 say they are JUST SQUEAKING BY OR IN THE RED financially
  • 95% say private practice is losing out to CORPORATE MEDICINE
  • 80% say DOCTORS/MEDICAL PROFESSIONALS are most likely to help solve things
  • 70% say REDUCING GOVERNMENT would be single best fix.

SOURCE

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Visual History of Financial Crisis 1810 to 2010

This graphic is based on the New York Times and Wall Street Journal best seller This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart & Kenneth S. Rogoff. Using data developed by Reinhart and Rogoff, it maps the cyclical history of financial crisis from 1810 to 2010 for sixty-six countries representing 90% of world GDP.

See the graphic here.

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Why Smart People Are Stupid

In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake?

Turns out that people, and especially smart people, are not nearly as rational as they believe.
Read the article here.

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Rise in US Oil Supplies Haunts Opec Talks

Who would have thunk it?

At a seminar in the Opec headquarters in Vienna on Wednesday, the rise in US oil supplies was the shadow that fell over every discussion. Over the past three years, the US has accounted for the entire net increase in global oil output, excluding Opec members and former Soviet republics.

And what is causing the increase in supply?

Advances in the techniques of horizontal drilling and hydraulic fracturing, first applied to shale gas reserves, are now making it possible to develop US oil in reserves previously commercially unviable [sic].

DAMN that American ingenuity.

Read the article here.

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Austrian Minister says Italy too May Need Bailout

VIENNA/ROME (Reuters) – Raising the stakes in Europe’s debt crisis, Austria’s finance minister said Italy may need a financial rescue because of its high borrowing costs, drawing a sharp denial on Tuesday from the Italian prime minister.

Read the article here.

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Chicago Teacher’s Unions: 24% Raise Or We Strike

I don’t guess the teachers in Illinois have ever heard of Wisconsin, or California, for that matter.

Nothing screams relevance in today’s economic and political climate like a teacher’s union threatening a strike if their members aren’t given a 24 percent pay raise, and yet that is exactly what is happening in Chicago, the nation’s third largest school district.

Read the rest here.

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Clive Thompson on 3-D Printing’s Legal Morass

So really, the longer-term danger here is that manufacturers will decide the laws aren’t powerful enough. Once kids start merrily copying toys, manufacturers will push to hobble 3-D printing with laws similar to the Stop Online Piracy Act. “You’ll have people going to Washington and saying we need new rights,” Weinberg frets. Imagine laws that keep 3-D printers from outputting anything but objects “authorized” by megacorporations — DRM for the physical world. To stave this off, Weinberg is trying to educate legislators now.

Read the article here.

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Why Mike Daisey Had to Lie to Tell the Truth about Apple

Daisey is still a liar, and the American left’s love affair with Apple is still ridiculous, considering it is a very rich private enterprise, exemplifying everything the left hates about capitalism, right down to the utilization of questionable labor practices with third-world employees.

Read the article here.

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Jack Schwager Q&A: Setting Stops and Asymmetric Trades

Via Abnormal Returns, Tadas posts a recent interview with Schwager where he was able to ask some questions that he thought would interest the readers of Abnormal Returns.

Read the interview here.

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The Golden Dilemma

A new research paper about Gold yields some interesting conclusions:

We show that new mined supply is surprisingly unresponsive to prices. In addition, authoritative estimates suggest that about three quarters of the achievable world supply of gold has already been mined. On the demand side, we focus on the official gold holdings of many countries. If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels.

Read the paper here.

 

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