Random portfolios have the power to revolutionize fund management.
There is no convincing evidence that more than a handful of funds have consistently outperformed. This should tell every active fund manager on the planet that the present form of performance measurement is inadequate.
Performance measurement via a benchmark is hopelessly noisy — it takes decades to get a real answer.
A fund manager that can outperform should do better when the tracking error constraint is removed. Much better to use random portfolios to measure the performance of active funds to see if they are adding value. Funds should be judged with minimum tracking error constraints. It is in the investor’s best interest for the active funds they invest in to be as uncorrelated as possible with the indices that they invest in passively. That means a large tracking error.
(edited and amalgamated by me, without adding anything substantial)
(Source: portfolioprobe.com, via isomorphismes)
"If the mopping of reserves was ever to become necessary in anticipation for a rate-increase, any credible attempt would begin with the Fed’s latest gender-bender toy, the Full Allocation Fixed Rate Reverse Repo Facility (FAFRRRF, or “Death Star” to the initiated), which promises to to provide the invisible floor IOER failed to and bridge us as we take the leap of faith across the impassable ravine from quantity to price."
— What’s that lever over there marked “rates” do?
A huge amount of your personal economics that is actually applicable to today boils down to whether you think it is the government’s responsibility to create an environment that facilitates the unemployed being able to find a way to find productive employment or whether you think it is the government’s responsibility to directly or indirectly (through spending) employ the unemployed
Thinking about he flat corporate tax rate as a source of structural unemployment: incentivizing investment through a sloped corp income tax rate structure.
Slope can be through marginal corporate income tax rates that promote SME formation or eliminating dual tax in favor of income pass-through
Thinking about incentivizing capital formation and giving traction to SMEs by making investment and entrepreneurship more attractive vs rentierism and asset accumulation.