Links for Thought — November 27, 2010

Happy Thanksgiving to everyone!  Hope you all had a wonderful holiday with your families and a nice little break from the grind.  Here are this week’s most insightful links for thought:

The Instability of Moderation (NY Times)–On his blog, Paul Krugman writes an incredibly insightful piece on macroeconomics.  Here Krugman outlines the need for a different mindset when approaching macroecon compared to micro.  Too often these days you hear “we need a businessman running the economy” and while in theory that sounds all good and well, economies cannot be run like a business.  It simply doesn’t work that way.  Here Krugman incorporates the thoughts of Keynes, Friedman, Samuelson, Minksy and others in putting forward his vision of what the macro landscape should look like, while in the end concluding that over time, the correct approach has proven too vulnerable to political instability.  I’m not as cynical, but the ideas here are worth reading.

Behind Gold’s New Glister: Miners’ Big Bet on Fund (Wall Street Journal)–This WSJ article takes a look at the history of the GLD ETF (NYSE: GLD) and how it was created as a way for the gold miners to generate some demand in a slumping industry.  Over time that desperate attempt to revive gold demand ended up becoming “the fastest growing major investment fund ever.”  Throughout the entire financial crisis I had held some gold in the form of the GLD and just this week I finally sold the entire stake.  The tipping point came when Glen Beck stepped up as the world’s biggest gold bug.  Reading this article makes me feel even better about my decision.  (I feel like my thoughts surrounding that decision deserve their own blog post, so maybe if enough of you are interested in hearing what went into making that choice I will oblige…).

The Real Story Behind those “Record” Corporate Profits (Harvard Business Review)–This week we learned that corporate profits hit an all-time record in the third quarter.  Hearing such a headline evokes completely different reactions depending on the audience.  Justin Fox here takes one of the more interesting approaches in response to the headline number by doing some simple Excel math.  In doing so, he shows us all how these “record” profits are increasingly driven by overseas profits and shrinking tax burden.  This is a must read that also opens up the debate to important questions about our economy in the end.

Give and You Will Receive (The Altucher Confidential)–It’s officially the festive time of year where we get to kick back with our families and enjoy the holidays.  Each year as we turn the calendar to the next, people become more reflexive and think reflexively about the past and internalize their wishes for the year(s) ahead (i.e. all those New Year vows that no one keeps).  Well here James Altucher offers his “13 ways that giving can help you receive more” and many are lessons with value in more contexts than one.

Zombie Bears: Time to Admit the Recession is Over (The Big Picture)–Barry Ritholtz takes aim at those bears who refuse to go into hibernation now that winter is upon us and the summer is over.  Too many people believe that Bull or Bear needs to be a permanent label rather than a fluid mindset.  Ritholtz is one person who greatly exemplifies that fluidity.  He was Bearish and right, Bullish and right, but neither Bull nor Bear and just a strategic opportunist at the end of the day.  Here he tries to help others see the light as well.

I Don’t Pick Stocks, Stocks Pick Me (The Reformed Broker)–Josh Brown gets into his investment philosophy here in discussing why he doesn’t sit around buying and selling and ranting and raving over every move, tick by tick.  Instead he attempts to identify the “biggest wave” of longer-term trends and ultimately falls into the right stocks accordingly.

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Disclosure: No relevant position.