What we’re reading (6/30)
“Be Careful When Declaring an Asset Class Is Dead. It Might Just Come Roaring Back” (Institutional Investor). A new practitioner study points out that “‘pundits, prognosticators, and even investment boards’ are quick to [incorrectly] declare an asset class or investment strategy broken based on backward-looking data.”
“The (Near) Cashless Society Arrives” (Axios). ATM use is down 32 percent and active credit card use in e-commerce is up 30 percent per Visa. 63 percent of consumers say they’re using less cash. So-called “contactless cards” are purportedly the next big thing in payments.
“‘Black Swan’ Author Says That if Investors Don’t Use a ‘Tail Hedge’ He Recommends ‘Not Being in the Market’: ‘We’re Facing a Huge Amount of Uncertainty’” (MarketWatch). Taleb told CNBC that investors need to be especially worried about a potential “black swan” event right now. But if said black swan event is predictable now, ex ante, isn’t is not a black swan event by definition?
“Chesapeake Pushed Into Bankruptcy by Plunging Energy Prices” (Bloomberg). This is ostensibly a story about energy markets, but it is also a story about prudent investments behave broadly. The combination of (1) highly leveraged investments in (2) highly volatile assets without (3) strong liquidity safeguards is (4) a very deadly mix. Don’t borrow to buy risky assets unless you have the reserves to service your debt through downturns. That goes for buying a home, for managing your own portfolio, et cetera.
“If You Get An IRS Letter That Says Your Tax Payment Is Overdue, Don’t Panic” (Washington Post). Confusing, but good to know.
