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Understanding the Trust Fund Baby

We are talking about the complex process through which infants and children are transformed from little beasts into responsible adults. More particularly, we are talking about how that process often goes wrong and never goes perfectly. In “Civilization and Its Discontents,” for example, Sigmund Freud proposed a…, well, a “Freudian” take on the issue. Freud pointed …

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Creative Capital

The Talk

No, not that talk. Talking to kids about sex is a walk in the park compared to talking to kids about their family’s money. The worst that can happen with the-birds-and-the-bees conversation is massive parental mortification. The worst that can happen with the money talk, however, is… Well, let’s look into that. For more than a century, …

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Creative Capital

Make your Plan Now (While You’re Calm)

“Would I say there will never, ever be another financial crisis? I hope that it will not be in our lifetimes and I don’t believe it will be.” –Janet Yellen. Last week I suggested six steps we could take to prepare ourselves for the next market crisis—which, Janet Yellen notwithstanding, will in fact happen. This …

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Creative Capital

What Will You Do in the Crisis? Part II

“I’m less interested in the return on my money than in the return of my money.” –Mark Twain Whether the markets crash next week or years from now, it’s not too soon to be thinking about how we will navigate the next crisis. With asset prices as high as they are and investor complacency (measured by market volatility) as low …

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Creative Capital

What Will You Do in the Crisis?

“The world is in the throes of a Bull Market in everything.” –The Economist. No, I am not—not, not, not—predicting a market crash. (On the other hand, if the market collapses just after I post this, I will naturally take credit for calling it.) If I don’t think the markets are going to crash any time …

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Creative Capital

The Trouble with the Elites

C. P. Snow titled his last book, written shortly before he died, “A Coat of Varnish.” What he meant, as he put it, was that “Civilization is hideously fragile.” Civilization, that is to say, is like a thin coat of varnish spread on top of human savagery. The varnish looks terrific, but scratch it and what …

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Creative Capital

Europe Fails to Build the New Man

Since human beings settled into communities—that is, since most of us stopped being hunter-gatherers—a primary goal of mankind has been to improve how we are governed. We wanted governments that were more representative, fair, and efficient, governments that could improve our economic circumstances and defend themselves (and us) from outside influence or destruction. We wanted …

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Creative Capital

The Instability of Europe

Between the first and second world wars, most of the European governments—Britain and, to a lesser extent, France, being exceptions—lived lives that were, to paraphrase Hobbes, weak, unstable, and short. The Weimar Republic in Germany faced existential issues from the beginning. Germany had been humiliated in World War I. It had been burdened with impossibly …

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Creative Capital

On Populism

Civilization is like a very fine suit of clothes that is just slightly too small for us. The term “populism” derives from the Latin, populus, meaning “people.” It doesn’t mean “people” in the sense of “There are a lot of people who don’t read my blog.” It means “people” in the sense of a nation, a …

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Creative Capital

Investing in a Rigged Market, Part IV

If we care about the health of free market economies, then we need to care about how efficiently capital is allocated in those economies. And if we care about efficient capital allocation, then we need to care about the health and efficiency of capital markets, because those markets are the principal instruments we have for …

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Creative Capital

Squeezing out the Investment Experts

The core problems with central bankers, which have led directly to the catastrophes of the Tech Bust, the Financial Crisis, the pathetically weak recovery from the Great Recession of 2008-09, and the near-destruction of the asset management business, are: groupthink, arising out of the fact that every central banker in the world went to the …

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Creative Capital

The Fed and Friends

We are talking about the traumatizing events that rocked the asset management business, to say nothing of the world, beginning in 2008, a calamity brought to us courtesy of the world’s central bankers. I’ve discussed elsewhere the bizarre strategies of the U.S. Fed and its various doppelgängen at other central banks around the world. But …

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Creative Capital

Investing in a Rigged Market

The asset management business as we know it today got started in the mid-19th century. The impetus for investment management firms separate from banks arose out of the awkward fact that banks often fail, while asset management firms hardly ever do. According to Nigel Edward Morecroft, who has studied the history of asset management, firms …

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Creative Capital

To Experts: a Few Words of Wisdom

“I would rather be governed by the first 2,000 names in the Boston phone book than by the Harvard faculty.” –William F. Buckley I began this series of posts by focusing on the annoyance ordinary people experience when they are constantly being told what to do by an ever-proliferating series of experts in almost every field …

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Creative Capital

Back to the Middle Ages: A Century of “Expertism” in America

The vast Federal regulatory apparatus that we know and love today got its start early in the 20th century under President Woodrow Wilson. Appropriately, Wilson was the only President in U.S. history to earn a PhD–he’d been president of Princeton University. At that time the world still believed that Great Britain was the globe’s most powerful …

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Creative Capital

It was a Good Idea in Theory…

Back in 1986 I launched a wealth management firm I conceitedly called “Greycourt”—it’s an anagram for my name. The firm met with modest success and in 1988 I incorporated it. I was probably the most hopeless, bumbling entrepreneur in the history of private enterprise, but somehow I’ve been with Greycourt for 31 years. For the …

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Creative Capital

Democracy, Populism, and the Tyranny of the Experts, Part XI

As far as reigning in annoying experts is concerned, Congress and the judiciary are a bust, albeit with a few tiny bright spots on the distant horizon, twinkling away like dying lighthouses on a storm-tossed sea. But what about the Presidency? As noted earlier in this series, Donald Trump was the candidate of people who …

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Creative Capital

When Experts Judge the Experts

In my last post we examined the (pathetic) attempts of Congress to control the tyranny of the experts. Fortunately, Congress isn’t the only weapon in the battle against expert oppression, even at the Federal level. Let’s take a look at the judiciary. But before we do, let’s pause to savor the delicious irony of what …

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Creative Capital

Democracy, Populism, and the Tyranny of the Experts, Part IX

“The complexity of modern life has steadily whittled away the functions the ordinary citizen can intelligently and comprehendingly perform for himself…When he sits down to breakfast and looks at his morning paper, he reads about a whole range of vital and intricate issues and acknowledges…that he has not acquired the competence to judge most of …

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Democracy, Populism, and the Tyranny of the Experts, Part VIII

Freedom is better, even when it’s worse. We might think about experts the way we think about stop signs (bear with me on this…) To understand the expert-stop sign analogy let’s begin with Arthur C. Brooks, who has written (in “Foreign Affairs” and elsewhere) about what he calls “the dignity deficit,” which he believes cost Mrs. Clinton …

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Democracy, Populism, and the Tyranny of the Experts, Part VII

Viewed through the lens of “the tyranny of the experts,” it’s easy to see that in the last election Hillary Clinton was the candidate of the experts, while Donald Trump was the candidate of people who were tired of being tyrannized by them. Clinton is an expert herself—she’s a lawyer who practiced with The Rose …

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Creative Capital

Democracy, Populism, and the Tyranny of the Experts, Part VI

Populism is an unsettling phenomenon in part because we don’t know where it will end. And we don’t know where it will end because populism isn’t itself a governing idea—it’s a response to the perceived failure of other governing ideas. On the other hand, looking back through history we can notice—as a matter of observation, …

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