Blog Posts on capital markets

Historical Costs, Alternative Concepts In Income And Positive Accounting Theory by Thinking Made Easy on Dec 26, 2011Part A Accounting generates summary measures of transactions and events that occurred during a period and of net assets at the balance sheet date. This process involves a great deal of aggregation, which is done via the recognition and measurement of...

England and Germany: The reasons of Success or Collapse of their Capital Markets by Thinking Made Easy on Apr 11, 2011Abstract The paper provides a discussion of two economically diverse nations, England and Germany. It is a discussion on the...

What is PPP? by FOO Law and Economics on Oct 12, 2010It’s not purchasing power parity, a theory used to explain exchange rates.  But PPP was once called the BOT scheme.  So says the Philippine News Agency: MANILA, Sept. 13 (PNA) — President Benigno Aquino III has issued an executive order...

That uncertain double dip by FOO Law and Economics on Oct 10, 2010Economists don’t really know what will happen next.  How do I know?  Because Frank and Ernest said so. And from the cartoon (left part), it seems that when economists think, they tank.  (We should be thankful!) But of course it is quite poss...

The Holy Grail of investments – Part 2 by FOO Law and Economics on Oct 2, 2010In an earlier post, I outlined the conventional wisdom on what drives the business cycle, and how stock and bond markets react to the cycle. What if the stock market can by itself induce the business cycle?  In this case, the conventional wisdom no...

Idiots and “normals” by FOO Law and Economics on Sep 28, 2010I thought the “new normal” was just a PR gimmick.  At one level it justifies how supposedly smart folks didn’t call the 2007-08 crisis, so that now it is ok to do some Monday morning QBing to say, ok, the world changed after 2008.

Investment advice by FOO Law and Economics on Sep 4, 2010from a columnist, Chuck Jaffe, on C. There’s a nod to the Great Buffett: But as Warren Buffett once noted, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” [1] The key sent...

The Holy Grail of Investments by FOO Law and Economics on Aug 20, 2010There is a latent sentiment “out there” that there is something wrong with mainstream economics, at least insofar as it is used for generating investment advice. The conventional wisdom on the capital markets starts with the idea that the real ec...

Are we in bubble territory? Divining the mind-set of the Philippine central bank by FOO Law and Economics on Aug 12, 2010From the conclusions of a paper written by Bangko Sentral staff in 2004: It is even more difficult to determine the right magnitude of interest rate to burst the bubble. For this reason, monetary policy need not be preemptive during the boom period.

Investment advice by FOO Law and Economics on Aug 11, 2010from economists is cheap.  Most of the time they are wrong, very wrong.  PIMCO wants inflation (I think so that bond yields will rise, which means PIMCO is short bonds). The question of the day is:  With bond yields at all time lows, what do you d...