Practical analysis for investment professionals
15 June 2018

Weekend Reads for Investors: Slight Hangover Edition

By now you know that the Swiss voted down the proposal to end fractional reserve banking in their country. To me, the Vollgeld Initiative was emblematic of just how much of a hangover effect remains from the global financial crisis, the first pangs of which are now a decade old

That Switzerland might consider ending central banking as we know it is strong proof that there are residual bubbles of discontent beneath the surface, bubbles that often burst into populist rants. I think, as an industry, finance is better and more ethical than it was than 10 years ago. But still, I believe we need to earn our license to operate with society every day.

So go out there and do your best for clients, your firm, and, of course, yourself!


Global stock markets are in the ninth year of a bull run, despite an abundance of earthquake macro stories. What am I talking about? The apparent end of the post–World War II global geopolitical and geo-economic alignment of Canada and the United States with Japan and much of Europe.

Volatility is remarkably absent given these givens. Surely this cannot persist, right? I have said so for years now, yet the world’s investors keep drinking from the returns punch bowl. But other voices are joining the “economic gravity will win the day” chorus. For example, Goldman Sachs described the US fiscal outlook as “not good” last month. That’s very interesting, given that Goldman is in the business of convincing you of the opposite.

Another story about stormy economic weather possibly raining out the party: Bloomberg believes that the world isn’t ready for retirement. That may, of course, be stating the obvious for those who understand the data of defined-benefit pension plans. And you do, don’t you? I hope so.

One of the conversations I often have with fellow investment pros is about who really moves the markets. This springs from a question I asked an intern years ago (Hi Matt S.!). That is, when the financial press anthropomorphizes markets, saying things like, “Today, The Market responded to geopolitical tensions,” what percentage of investors are actually the anointed representatives of The Market on that day?

Turns out it is a very low figure, well below 1%. So, The Market is really a mouse, not an elephant, even on the most actively traded days. Also, who is it that trades on short-term news and moves the markets?


One of the pillars of modern economics is that there is no such thing as a free lunch. Raise wages artificially through a union contract, for example, and it will lower overall employment. So strong is this belief that few business leader go against it. So it’s interesting that one company raised wages to $16 an hour. And guess what happened after two years? (Hint: Productivity is way up.)

I go out of my way to fight possible confirmation bias within myself, so here is a bullish story from this normally bearish man: “Are We on the Verge of a New Golden Age?”

Behavioral Finance

Those of you who know a bit about my biography know that I am a full-fledged lover of logic, reason, and analysis. I believe that the strength of my quant skills helped me succeed as an active manager back in the day. However, I also believe that qualitative information, including intuition and gut instincts, are important to investment success. Science seems to support this, though you wouldn’t necessarily know it given how taboo the topic is in light of the loud thunderclap emanating from Daniel Kahneman’s Thinking, Fast and Slow.

By the way, instinct is what Kahneman means by System 1 thinking even though he calls it intuition. Sadly, his choice of nomenclature diminishes something that really ought to be thought of as System 3 thinking. Put another way, intuition is not instinct. Even if I don’t have a Nobel Prize to support that claim.

Next, I hope you read here on Enterprising Investor the seismic story about emerging research that  demonstrates that myopic loss aversion is an illusion that results from how the questions were framed in the studies supporting this most famous of biases. Kudos to my colleague Lauren Foster for curating and sponsoring this story. Well done!

Quantitative Methods

Those drunk on quantitative research believe that unless something is in the data, it cannot be real. Likewise, if we see it in the data, we can safely claim to have insight about the underlying phenomenon and, possibly, its causes. Except that the math of causation is something of an enigma.


Machine learning and artificial intelligence (AI) intoxication seem to have eased up recently. In fact, there may be such a hangover, that the inevitable blowback has arrived. At least that’s what the next three stories suggest.

Fun Stuff

Why do some scientists believe the universe didn’t begin with the big bang? The title of this article may overstate the case, but the general theory is that the universe may, like matter, exist in three different states: solid, fluid, and gas. So what state are we in? The fluid state. Captivating stuff!

Last is a story I have been holding on to for a while. A company in Tokyo built an actual “Transformer” that can turn from a robot into a working car. Cool!

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

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.

Image credit: ©Getty Images/Creative_Outlet

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]

1 thought on “Weekend Reads for Investors: Slight Hangover Edition”

  1. Joanne Ott says:

    Excellant content and resources! Thanks for stretching the mindset to new evolving frontiers.

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