This is my review of a book that describes every type of hedge fund category.



There are a lot of things you don't "need" but that make your life better. A high yield mutual fund is very handy if you care more about generating income than upholding academic theories of portfolio design.

I wrote this article to explain: "Is High Yield Necessary?"



This is my review of a terrific new book about the New Deal financial reforms. Read about the extraordinary financial skullduggery surrounding Boeing's initial public offering.



Topic #1 at investor conferences is always: "When will the Fed raise interest rates?".

Here are some expert views on when it will happen and what it will mean for investors.



Economic forecasters fail to foresee recessions and are politically biased. Those who get the big calls right do a particularly poor job on routine ones. But the picture isn't entirely bleak. See my review of "Inside the Crystal Ball" by Maury Harris.



 Hi Vic,

Sorry I didn't get to say hello at the last Junto meeting, which was terrific.

Regarding the question you asked at the event: This is not a comment on the validity of Mackey or Teicholz's position. I think Gene was right about needing to do the marathon rather than the sprint, i.e., reading up in greater detail to get fuller knowledge of the topic. But you asked Teicholz whether she rejected the findings of epidemiological studies in the face of many experts who considered them valid.

My question is how you come down on The Phenomenon Formerly Known as Global Warming, i.e., climate change, and whether the skeptics (called "deniers," as in "Holocaust deniers," by the proponents) should bow to the opinion of the majority of experts, notwithstanding the fact that the 30-40 years ago the experts were very concerned about Global Cooling.

I think you or one of the other questioners raised the point that medical journals have 20 referees on an article. So perhaps the studies are more reliable than those in financial journals, where a professor at UMass assigns his grad students to study the results reported in articles and finds that 25% have serious errors. No need to write a treatise on this, but I'm interested in your thoughts.

Best regards,


Victor Niederhoffer replies:

The hazard rate is the gold standard in epidemiological studies. And the hazard rate for life expectancy in the typical studies of meat versus vegetable studies is about 2 to 1. You can imagine the significance of such a difference with 80,0000 subjects or so. The estimate of p has a binomial distribution. When you have a sample in the millions as the meta studies of such divergences have, there is no room for selective sampling. What are the chances that a million people are selectively different from the remained. The statistics of quota sampling are relevant here.

I would also point out that all the epidem studies use the cox hazards model as their statistical foundation. The cox model is like a standard multiple regression model but deals with probabilities instead of levels or changes. All such studies control for all measurable independent variables such as health status, smoking history , and weight. The chances that other independent variables mite affect the outcome with numbers this large in the meta studies is zero.

 You ask why science is sometimes wrong about such things, and I would say that the epidem studies with millions of subjects in many different counties with many different independent variable and selected groups are in a completely different kind of scientific category than climate change where the dependent variables are temperature changes over time, and the independent variables are chemical entities with say 10 or 20 observations and more independents than observations. There are no epidem studies possible in climate change.

I believe Nina is very out of her area of competence and it was dysfunctional to have her armchair rebuttals of highly refereed studies and statistically significant results in the one in a billion categories based on sampling errors and hypothetical differences in the groups studied.

Victor Niederhoffer adds:

 Another way of responding to this tomfoolery less statistically and more qualitatively and common sense is this. The differences between the groups that eat meat and eat vegetables in the many life expectancy studies are of the order of 5 to 10 years. Such differences are important to most human beings who wish to live. With samples in the millions in aggregate and attempts to control for all measurable independent variables there is a reasonable likelihood that the two groups are representative of the populations.

Now if there was a difference in these groups with respect to some other variable, like exercise or preference for risky activities, and somehow that was not covered by the other independent variables, then what could that variable be. Let us find it, because it would be the key to health. i.e. if it had so much of an impact by not being measured, it is truly important, much more important than the diet, and if it could be found it would be the open sesame.

But of course it can't be found because it would be statistically impossible to find something uncorrelated with the other variables that have been studies that has such an effect. It only exists in the armchair and the debunking retrospection and Monday morning quarterbacking. 



Economists missed the Swiss franc uncapping, the oil price collapse and the interest rate drop. They may burn you on GDP, too.



Are financiers and regulators deranged? The author of The Lunacy of Modern Finance Theory and Regulation derides empirical research and lauds surveys that come up with the finding that Sigmund Freud is to blame for our financial woes. Here is my review of the book.



 This is a link to my review of Money: How the Destruction of the Dollar Threatens the Global Economy and What We Can Do about It, by Steve Forbes and Elizabeth Ames.

Even if you don't accept the authors' prescriptions, this book will make you reexamine your assumptions about exchange rates, the gold standard, and other economic topics.



 I had a cab ride last night with a 53-year-old Romanian immigrant. He grew up milking cows manually and his father earned $1 a day. Driving a cab in New York is hard work. When this driver comes home at night, he has to go out for a walk twice in the evening to relieve the stiffness in his back and bottom. He jokes that he tells his wife, "You'll have to go with the milkman, because I'm too tired." But he now makes $400 a day, equivalent to the average monthly wage in Romania when he was growing up. He has saved his money, so that without going too heavily into debt he has bought a spacious two-level apartment in Queens with a garden and a parking space. His two teenage daughters have the whole second level as their rooms. He bought what he thought was a giant-sized flat screen TV for $2,000, but his daughter's room was so big that from her bed to where the screen is, she can barely see the image. He and his wife emphasize education, with the result that his elder daughter was one of 100 students accepted to a top school that had 15,000 applicants and his younger daughter has a 97 average. Summing up, he is proud that coming from a humble beginning, he has become a millionaire by owning his own cab and a medallion that he bought for $200,000.

A truly inspiring story: By being part of a government-operated conspiracy to suppress competition, he has amassed $1 million of wealth based on economic rents. Heavy lobbying perpetuates this scheme. Just one question: What will the value of the collateral he put up for his home loan as Uber becomes better established?

Paolo Pezzutti writes: 

This story shows once again how the generation of immigrants now 50 or so years old lived the American dream. The romanian taxi driver was able to arrive in the US penniless and end up sending his kids to good universities, buying a house and owning a very valuable medallion. The story of growth and success has occurred to millions of immigrants over the past decades. This is what really is fascinating about the US. The question is whether the US is still able to sustain the American dream. Will the new generation of immigrants find it harder to integrate in the society, find a good job and provide education to their kids?


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