Practical analysis for investment professionals
08 July 2016

Weekend Reads for Investors: A Break from Brexit Edition

Posted In: Weekend Reads

Brexit is no doubt one of the most important geopolitical and geo-economic events of my lifetime. It ranks right up there with the fall of the Berlin Wall and 11 September 2001. However, since many others are doing an admirable job of covering it, I am, for now, only touching on it briefly and otherwise providing you with a slight break from Brexit! I promise to cover the story in more detail in the next several weeks.


What is the immediate European Union (EU) reaction to Brexit? Not surprisingly, the weekend after “The Vote,” leaders gathered for a private conference to discuss the ramifications and develop their response. At that meeting, a memo — “A Strong Europe in a World of Uncertainties” — was drafted and subsequently leaked to the press. The contents are very interesting and well worth reading since the minds behind the document are the minds leading the EU response to Brexit. (

I am a fan of innovation and true economic growth. I define true economic growth as generating more from the same set of resources or the same from a smaller set of resources. But growth just for growth’s sake, especially in a world with so much suffering, bugs me to the core. Here, a venture capitalist criticizes Silicon Valley because of its emphasis on wild-eyed crazy ideas devoid of context. (Medium)

By now you must know I am both a defender and a critic of active management. During a recent forum, I heard an interesting comment from a panel contributor, David Teten, who was asked how humans could compete with big, data-driven artificial intelligence (AI) engines. Teten said that humans will engage in a form of counterintelligence by identifying algorithms and then fooling those algorithms into acting in a way that favors human traders and investors. Guaranteed, this is already happening. Oh, wait, here is a story about that very thing: “Humans Strike Back against Stock Market Robots“! (Bloomberg)

Income inequality is growing. The data say so, without a doubt. But that does not mean that there is increased suffering. It just means that when things are evaluated relatively, you can create the appearance of suffering. Here, a nonpartisan organization publishes important research showing that the upper middle class in the United States is growing in size and income. (Urban Institute)

When I worked as a fund manager, the dominant bond index was the Lehman Brothers Aggregate. With the demise of Lehman Brothers, the index was carried on by Barclays. But now it faces a new competitor: a benchmark that tracks where fund managers are actually placing their money, since few bond pros actually buy the Agg, as the Lehman/Barclays index is affectionately known. As an aside, benchmarks lead to unintended consequences, and I hope this sparks a wave of innovation among them. (Wall Street Journal)

Last on the investing front, the incomparable wily genius Mark Mobius sits for an interview. (FinanceAsia)


Beyond Brexit, is there any greater economic experiment taking place than Abenomics? Apparently it’s not working for middle-class men when it comes to pocket money. (Bloomberg)

Nothing is more fundamental to an understanding of economics than supply and demand. You might think the grounds of this illustrious topic are fully mapped, but here is a fascinating new study that uses the 2000–2001 California electricity crisis as a means to a supply-and-demand insight end. (R&D Magazine)

Environmental, Social, and Governance (ESG)

In a truly exciting development, Thomson Reuters launched a new ESG data platform that provides huge amounts of ESG information to help analysts make more informed decisions. This is exactly what is needed. Even if you are not an ESG true believer, this filter does provide greater transparency into the risk management side of the equation. (Thomson Reuters)

Now for some not-so good news: A new study finds that executive personalities are key in shaping banks’ risk-taking behavior. In other words, the tone is set at the top. Why is this “not-so-good” news? Because the folks at the top show little inclination to change the culture of finance. This story about a study that claims executives purposefully manipulate earnings and investors for their own benefit is similarly depressing. Such deceptions are widespread, according to the study. (Financial Times, Bloomberg)

Behavioral Finance

Here is a classic example of why I do not think that AI is anywhere close to usurping human wisdom. Specifically, the writer offers extended commentary about a blockchain company’s “smart contracts” and how they were bereft of wisdom. (Bloomberg View)

I had a recent exchange with a thoughtful LinkedIn commenter on an accounting piece I wrote. He stated that he puts his faith in the wisdom of crowds (not the manias of mobs), as opposed to the wisdom of small committees of the cloistered. With that context, this piece I wrote about the wisdom and outperformance of smaller over larger crowds is especially applicable. (ResearchGate, Enterprising Investor)

Students of neuroeconomics know that the brain’s amygdala region is largely responsible for our “flight-or-fight” response. New research shows just how nearly automatic that instinct is, and, therefore, how difficult it is to keep it from firing . . . but not for meditators! (R&D Magazine, Enterprising Investor)

Fun Stuff

I certainly had way more fun over the last month than this post would indicate, and I hope you did too. If not, then perhaps a trip to a park might save your life! This is something I have long advocated — see my book The Intuitive Investor, for example. (Fuller Lab)

In the meantime, if you are feeling Brexit stress, remember: This moment too shall be discounted.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Voss also sub-contracts for the well known firm, Focus Consulting Group. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: [email protected]

2 thoughts on “Weekend Reads for Investors: A Break from Brexit Edition”

  1. Tano Porbandarwala says:

    Hey Jason, have a question on another article and wasn’t sure how to contact you. This is in regards to an Aug 2012 piece on S&P 500 Sigma Events. In it, you mentioned that Oct 13, 2008 was a 11.82 SD move. The S&P was at 899 the previous day and the VIX was at 70 indicating that a 104 pt, move the next day was approx. 3.2 SD. Where am i going wrong? Thanks, Tano

    1. Hello Tano,

      Easily explained. First, every time series is a living, breathing entity. So the numbers held for the day that I did the calculation. Second, and very much more important relative to your question. VIX is based on options prices that expire between 16 and 44 days. Whereas, the standard deviation that I used was for the entire time series of the S&P 500, from 1 January 1950 to the time of my calculation. That standard deviation is likely very different than that of VIX which is a short-term, and not very informative measure, in my opinion.

      Yours, in service,


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