What we’re reading (2/7)
“My Column On The Stimulus Sparked A Lot Of Questions. Here Are My Answers.” (Lawrence Summers, Washington Post). “…I know firsthand the difficult choices his [President Biden’s] officials are being forced to weigh in a critical moment in our history. There are no easy answers here. In my view, there is nothing wrong with targeting $1.9 trillion, and I could support a much larger figure in total stimulus. But a substantial part of the program should be directed at promoting sustainable and inclusive economic growth for the remainder of the decade and beyond, not simply supporting incomes this year and next.”
“Zero-Commission Individual Investors, High Frequency Traders, and Stock Market Quality” (SSRN). “Contrasting with recent evidence that retail traders are informed, we find that Robinhood ownership changes are unrelated with future returns, suggesting that zero-commission investors behave as noise traders.”
“Treasury Secretary Janet Yellen Says Regulators 'Need To Make Sure' Investors Are Protected Following Gamestop Frenzy” (Business Insider). “Treasury Secretary Janet Yellen said on Sunday regulators are still examining whether new policies are needed to address recent market volatility spurred by retail investors in forums like Reddit's Wall Street Bets.”
“The Price-Value Feedback Loop: A Look At GME And AMC!” (Musings on Markets). “In the real world, there are very few people who believe in absolute market efficiency, with even the strongest proponents of the idea accepting the fact that price can deviate from value for some or many companies. When this happens, and there is a gap between price and value, there is the potential for a feedback loop, where a company's pricing can affects its value. That loop can be either a virtuous one (where strong pricing for a company can push up its value) or a vicious one (where weak pricing for a company can push down value).”
“Unfortunate Investing Traits” (Collaborative Fund). “Most of this industry [investing] is devoted to finding greatness, which is inevitable because it’s what captures attention. But an occasional great decision can quickly become irrelevant unless you consistently avoid the blunders that move the needle even more. It’s not exciting, but we should spend more effort on ensuring we’re capable of doing the average thing all the time before we spend a moment trying to do a great thing some of the time.”
