What we’re reading (9/21)
“Incentives: The Most Powerful Force In The World” (Morgan Housel). “[P]eople are not calculators; they are storytellers. There’s too much information and too many blind spots for people to calculate exactly how the world works. Stories are the only realistic solution, simplifying complex problems into a few simple sentences. And the best story always wins – not the best idea or the right idea, but just whatever sounds the best and gets people nodding their head the most. Ben Franklin once wrote, “If you are to persuade, appeal to interest and not to reason.” Incentives fuel stories that justify people’s actions and beliefs, offering comfort even when they’re doing things they know are wrong and believe things they know aren’t true.”
“Inflation Is High. How Will Rate Increases Fix That?” (New York Times). “[T]ime is of the essence when it comes to controlling inflation. If price increases run fast for months or years on end, people could start to adjust their lives accordingly. Workers might ask for higher wages to cover their climbing expenses, pushing up labor costs and prompting businesses to charge more. Companies might begin to believe that consumers will accept price increases, making them less vigilant about avoiding them.”
“Some WFH Employees Have A Secret: They Now Live In Another Country” (Vice). “Even more than the average person, Daniel dislikes video calls with the boss. That’s understandable, because Daniel is hiding a big, complicated secret: He doesn’t live in Birmingham, England, like his entire company believes that he does. In reality, for the past two years, he has been living 5,600 miles away—in Chiangmai, Thailand.”
“Why Index Funds Could Fade” (Barron’s). “Index funds have had a spectacular run. They collected $8.5 trillion in retail investment dollars by the end of the first quarter of this year, according to Morningstar, more than all active strategies together. Along the way, they became the dominant investment idea. Yet the stock market’s recent dip into bear-market territory raises new questions for these popular funds. Will indexing recover and go on to scale new heights? Or has the time come to consider its defects as well as its virtues?”
“Fed Raises Interest Rates By 0.75 Percentage Point For Third Straight Meeting” (Wall Street Journal). “Fed officials voted unanimously to lift their benchmark federal-funds rate to a range between 3% and 3.25%, a level last seen in early 2008. Nearly all of them expect to raise rates to between 4% and 4.5% by the end of this year, according to new projections released Wednesday, which would call for sizable rate increases at policy meetings in November and December.”
