EWED Highlights: Investing

I noticed that finance and investing have become one of our recurring themes here, and so I recently added an investing category for our posts.

Posts from before last week weren’t tagged with it, but I’ll take the chance now to highlight some of our investing posts:

Alternative Investing Ideas:

Is Equity Crowdfunding Beating Adverse Selection?

Potent Portfolio Diversifier: Managed Futures Funds Go Up When Both Stocks and Bonds Go Down

Series 65 for Economists

Unfashionable Investing

50% Endowment Returns Driven by Private Equity Investments: How Rich Universities Get Richer (But You Can, Too)

Safer / Yield-Based Investing Ideas:

Tough Year for Investing (with one little-known, totally safe exception)

Get Easy Government-Guaranteed 4% Interest on Your Money with Treasury Bills

High Yield Investments, 1: Some Benefits of High Yield Stocks and Funds

High Yield Investing, 2: Types of Funds; Loan Funds; Preferred Stocks

Posts on Economic Conditions Affecting Financial Markets:

Work From Home Sours Financing for Office Buildings, Which Threatens Regional Banks

Bulls and Bears Spar Over Pace of Inflation Decline and Rate Cuts

A Cornucopia of Financial Data from J. P. Morgan, Relevant to Investors

Raging Inflation, Spiking Rates, Plunging Stocks, Oh, My!

QE, Stock Prices, and TINA

Crypto Posts:

Bitcoin’s Dramatic Comeback: Resurrection or Dead Cat Bounce?

The Great Crypto Market Meltdown of 2022

The NFT Market Is Mushrooming – Why??

Crypto Drama: $40 Billon Vaporized as Terra “Stablecoin” and Luna Implode; Bored Ape NFTs Break Ethereum

On Famous Investors:

Get rich or get famous? Edward Thorp vs Myron Scholes

Warren Buffett’s Secret Sauce: Investing the Insurance “Float”

Big Picture / Economics of Investing:

What kind of return do we want on our investment?

Though the Market Is a Winner, Most Stocks Are Losers

Minor Investment

Dow 1,000,000?

Avoiding Intertemporal Idiosyncratic Risk

Social Security: Not a Great/Terrible Investment

Drivers of Financial Bubbles: Addicts and Enablers

Why Short Selling Is a Good Thing for the Stock Market and Investors Large and Small

Tenure Reflections from Joy

Samford has voted to keep me around with promotion to Associate Professor. I am also pleased to have won a faculty Research award this year. You can see a list of my papers here. Tenure gives one an ability to plan for the future and be less focused on short-term publication success. I’m excited to keep at it with empirical research.

Five thoughts:

  1. It is a privilege to live when and where I do. Since we started this blog in August of 2020, several major events have changed the world. Through it all, I sometimes try to stay informed and offer thoughts here, and sometimes I block it out to focus on my research papers. I think about the young women in Kabul or Mariupol who started projects of their own in August of 2020. They don’t get to block it out.


2. James wrote a great inspiring tenure reflection post last year and pointed me to this quote: “I consider the “wasting of tenure” to be one of the aesthetic crimes one can commit with a wealthy life, and yet I see it all the time” –Tyler Cowen No aesthetic criminals here at EWED.

Continue reading

Buying Your New Home: Process and Strategy

I’m currently purchasing a new house and I want to share some insights. Baseline knowledge: Houses are unique goods on multiple margins that are imperfect substitutes. Let’s assume that both a buyer and a seller have real estate agents in the USA. The opportunity cost to the buyer is selecting another house that is not quite as desirable or finding a comparably desirable house after a wait (due to time searching and the appearance of new listings). Legally, the seller is not allowed to lie about the property details (though they can claim ignorance). The lending process makes it difficult for the buyer to lie.

Step 1: List and Bid

The seller chooses a price low enough that will permit a sale within their preferred timeframe, and high enough so that they earn a commensurate return. There is a tradeoff.

The buyer makes an offer. Before buying, I thought that the offer was, more or less, just bidding a price. That would make the problem nice and 1-dimensional. It would fit nicely into the auction theory that I learned in grad school. But that’s not the whole story. As it turns out, an offer specifies other details too. It specifies:

  1. The price.
  2. Earnest money. This is the amount that the buyers pays immediately in order to signal legitimate interest in the property. It’s often held in escrow by a 3rd party in order to improve credibility.
  3. The number of days until closing (signing the final contract).
  4. The number of days for ‘due diligence’. This is the period during which inspections must/can be done. The seller or their agent must make the house reasonably available for inspection during this period.
  5. The appraisal period. This is the length of time during which an appraisal of the property determines the value of the home insofar as a lending institution is concerned. Without a loan, this number can be zero is irrelevant.
  6. A lender’s pre-approval letter specifying the permitted size of the loan and the down payment. This is a signal of credibility that the buyer is able to pay. The buyer can request to be approved for a smaller loan in order to signal unwillingness to pay more.
  7. Any contingencies, such as whether another property must sell first, or a delay is requested. Really, this can be almost anything that the buyer wants. Some people get creative in their offers, like paying a higher price in exchange for a later closing date or rent-to-own contracts.

Given the above details, a potential buyer would like to craft the offer to meet the seller’s preferences while also acknowledging the scarcity of the buyer’s resources. As it turns out, not all resources are instantly convertible. One may be willing to move quickly but have a lower budget. Or, be willing to pay a higher price, contingent on the sale of another property.

Continue reading

More Ideas Pages

I’ve written here about my ideas page of economics papers I’d like to see.

After that post I heard from others who maintain similar pages. David Friedman has a small page here with research ideas, along with larger pages of short story ideas and product ideas.

HiveReview is a site where one can post or comment on both completed papers and paper ideas. The site does many things at once, but one use case is to post ideas in search of collaborators or to search for projects where someone wants a collaborator for their idea.

I learned today that Gwern Branwen maintains a large page of “Questions“, some of which could be research ideas, mostly outside of economics. He also has pages of research ideas and startup ideas. Some examples of Questions:

Given the crucial role of trust and shared interests in success stories like Xerox PARC or the Apollo Project or creative collaborations in general, why are there so few extremely successful pairs of identical twins?

Nicotine alternatives or analogues: there seem to be none, but why not?

Nicotine is one of the best stimulants on the market: legal, cheap, effective, relatively safe, with a half-life less than 6 hours. It also affects one of the most important and well-studied receptors. Why are there no attempts to develop analogues or replacements for nicotine which improve on it eg. by making it somewhat longer-lasting or less blood-pressure-raising, when there are so many variants on other stimulants like amphetamines or modafinil or caffeine?

Adam Smith in Taylor Swift

See my latest post for Adam Smith Works.


The song “Anti-Hero” by Taylor Swift was the number-one song on charts in the United States and globally when it was released in October of 2022. Based on the record-breaking and continued popularity of the song, Swift’s struggles with self-loathing resonates with us. 

 It’s me, hi, I’m the problem, it’s me
 At tea time, everybody agrees

The theme of the song is that Swift feels like a moral monster who is exposed to the watching eyes of society. She imagines proper people gossiping about her flaws at teatime. This reference to British tea culture makes a perfect segue to the moral philosophy of Adam Smith. Those who only think of Smith as an early observer of modern economies might be surprised, but regular readers of AdamSmithWorks won’t be. 

The impartial spectator is a key concept in Smith’s theory…

At the end I even quote the song “Shake it Off.”

Be Posting Always

James wrote about our posting philosophy in “Always Be Posting”. The regularity is the point. This strategy is not our original idea, but this specific manifestation of blogging is a kind of experiment that we are running in front of everyone. I’ll add a few comments on this practice.

  1. I blogged more than once a week at first. Although I believe in the benefits of writing, once a week is the right amount for me.
  2. Tyler recently asked Brad Delong about Substack. Delong says, “Substacking is blogging, except that Substacking is blogging where you have explicit permission to send things to people’s email inboxes, and also to have a rather large tip jar.” Tyler mentioned that Substack posts tend to be longer. Delong admits, “I thought blogging was more fun.” Delong thinks longer posts are better because they fight the trend of short posts that I earlier called Poastmodernism. I would say that if you are going to blog regularly for free like we do, it should be fun. That is also what Tyler said when I asked him if young people should blog regularly in “The New Econ Bloggers.”
  3. If you are going to blog, you might wonder when you should start. Society seems obsessed with young geniuses today. I started blogging before tenure but not when I was very young. I should not have started any earlier. Think about the research that shows your brain is still forming until you are about 25. If Leonardo DiCaprio would date you, then be careful about what you say on the internet. What I would hope for teens or undergraduates is that they would have smart safe people to bounce ideas off of. You certainly need to practice writing and questioning. Even though it nearly kills me at the end of every semester, I assign papers in my classes, because I believe that college students should be writing. I was and am lucky to have teachers and friends who I talk to one-on-one when I want to try out ideas. You should be “posting” in the most abstract sense when you are young, but a private paper journal is not a bad place to start.
  4. When the internet first started, I don’t think anyone would have guessed how much content people would create for free. People are posting so much. Despite worries that media pirating would lead to too little content creation, we have more content than ever.

Something fun about regular short posts is that you can put a stake down and then revisit it years later. Here are two of my posts that have turned out well.

  1. In 2022, I went to Disney World for the first time. Ross Douthat criticized Disney World in his book The Decadent Society. I like the book, but I thought that he clearly hadn’t been there. I wrote a whole blog about Disney being the opposite of infrastructure stagnation. Here is Ross now with his New York Times column saying “Wow, I had never actually been there, and the physical infrastructure is amazing.”
  2. In 2021, I wrote “I encourage parents to read fantasy with children. I see a lot of children’s books that promote science or STEM-readiness… Those games that try to trick 5-year-olds into “programming” are less valuable than reading and discussing fantasy stories… What your child will need to be able to do when they are 20 is read and comprehend a textbook that explains a totally new technology that no one alive today understands. Then they will need to think of creative ways to apply that technology to real world problems.” The developments in ChatGPT are making this look pretty good, even earlier than I expected.

We are a posting kind of species.

Always Be Posting

The key lesson, the thing I would impart to any aspiring bloggers, content creators, or newsletter proprietors, is that the cornerstone of internet success is not intelligence or novelty or outrageousness or even speed, but regularity. There are all kinds of things you can do to develop and retain an audience — break news, loudly talk about your own independence, make your Twitter avatar a photo of a cute girl — but the single most important thing you can do is post regularly and never stop.

Granted, “work hard and keep doing the thing you’re doing” is probably above-replacement advice for any kind of entrepreneurial activity. But it’s particularly true for online content creation. As Yglesias suggests, the internet and feed-based social platforms have constructed an insatiable demand for content, so if you can produce content mechanically, without requiring expensive resources (such as time, wit, or subject-specific knowledge), you’re in an excellent position to take advantage. But most importantly, this demand is so insatiable that there is currently no real economic punishment for content overproduction. You will almost never lose money, followers, attention, or reach simply from posting too much.

That is from an excellent post by Max Read. It is fairly short and has some good examples, so I recommend reading the whole thing. Tyler Cowen made a similar point back in 2019:

There’s a certain way in which on the internet you can’t be overexposed. There’s just a steady stream of you, it feels like being overexposed compared to the standards of 1987 or whenever, but in fact it’s not and people are picking and choosing. And you end up just dominating a particular space in a particular kind of way. And I think most older people have not made that transition mentally to understanding how you should exist intellectually on the internet.

Of course, this is also part of Joy’s idea with this site and why we write every day:

It’s just time to start writing more. This is a model that I have learned from Tyler Cowen, and most writers I admire write every day whether or not they have time for it. David Perell has tweeted that writing and thinking are the same thing. Thus, if you are a thinker, writing is not a waste of time. Writing is the thing you are doing anyway in your muddled head.

Thus: Always Be Posting.

Iterations of the Survivorship Bias Meme

If you are Online at all, you have probably seen the survivorship bias plane:

It has inspired new memes. They are funniest when posted without any explanation. Two recent examples are:


Sometimes the picture of the plane is used as a whole argument, without any words.

Continue reading

New Survey on Bootcamp Graduates

I have been investigating how to get more talent in the tech industry for a while. There is not a lot of data on precisely how people select into tech and what might cause more people to train for in-demand jobs. Gordon Macrae, in his substack The View, has a recent relevant post Issue #9: Tracking 100 bootcamp graduates from 2015.

Gordon ran his own survey of 100 graduates of coding bootcamps. Coding bootcamps are a fascinating element that help fill in the skills gap. They are not well-understood, and we don’t have much publicly available data of the sort that helps researchers measure the outcomes of a traditional college education.

Here are some of his results from this preliminary survey:

Of this total, 68% of the graduates surveyed in 2022 were doing roles where the bootcamp was necessary for them to work in that role. What I found fascinating, though, was that this figure varied wildly depending on the bootcamp they attended. 

On the lowest end, just 50% of graduates from Bootcamp A were doing jobs in 2022 that required having gone to a bootcamp. Conversely, 90% of Bootcamp D graduates were working in technical roles seven years after graduating.

What is more, the percentage of bootcamp graduates in technical roles at 7 years after graduation has gone done by 15%. The average immediately after graduation was 82% working in a technical role. 

Other resources:

There is more work to be done in this area.

Postmodernism to Poastmodernism

Authors of the kinds of books I read present themselves as a voice of reason against our declining society that no longer can evaluate arguments or define moral principles. (I’m fun at parties.) “Postmodernism” has been attacked all my life.

For a while, I have been looking for a successor of postmodernism. To simply define our age as the one that came after modernism seems unsatisfactory. How many more decades can we coast along on this antithesis idea?

One reason I don’t like the term postmodernism is that it gives a sense of progress where we might be losing ground. If you aren’t modern, then you are pre-modern. If you aren’t a verbal culture, then you have regressed to pictographs. If you aren’t engaging arguments, then you have degenerated to tribalism. So, postmodern might be dressing up a decline with a word that is too respectable sounding.

Calling people who use smartphones premodern does not seem right. But, what information are they consuming on those screens? Is it mostly low-quality videos and quick poasts? That doesn’t seem like what someone in 1900 would expect of a modern person.

Here’s an idea for the new century. We are in an age of poastmodernism, beginning with the founding of Twitter. This is different from the kind of skepticism or moral relativism that defined postmodernism. The poasters and their followers can be earnest. They retweet like evangelists. (A “poast” is a message posted in an internet forum.)

Poasts are short. This does not allow for nuance or traditional rational forms of argumentation. A poast could be referencing a rich history or body of literature, but if this generation has not evaluated those original sources then they are really just getting the meme. The poast does not provide its own context. Tyler Cowen says that people who think “modern art” is absurd have no context. Context for modern art would be the classical art and realistic landscape paintings that came before. Most Americans including myself are pretty ignorant about classical art. Similarly, how much value would teenagers get from Lord of the Rings internet memes if they have never seen the movies or read the books?

I’m on Twitter. The pace of discourse is more fun than reading a 50-page econ journal article. I get the appeal of poasting. It’s easy. Our first pediatrician told us not to let our baby use touchscreen games. She told us that it is good for a child to struggle to touch a ball that is two feet away across the floor. Better that they cry over the ball then get the dopamine too easily on a tablet game. Tapping on a screen trains kids for instant rewards. Something that concerns me about a generation that was not raised on books is that they will actually enjoy poasting less than I do, because they will be used to the rapid pace of reward. Twitter as a company benefits from the current generation of people who did not grow up with Twitter.

Poasting affects politics. This week two US Senate candidates had a debate. What would someone who gets most of their news from social media learn about the debate? Some top poasts about the debate have almost zero positive policy substance. Campaigners use the internet medium to dunk on their opponents instead of offer solutions to problems. What attracts engagement is the fire emoji.

This is not meant as a comment on either men as candidates. I share these jabs because lots of Americans are consuming their “news” in this form (see Pew Research chart). In postmodernism a successful political candidate has to appeal to feelings as much as reason. In poastmodernism, they only have 280 characters to work with. (Donald Trump was a skilled poaster.)

Getting elected today might require great poasting, but that has little to do with being good at governing. Most people think the details of government are dull. Ten minutes into a city council meeting, I’m bored and ready to check the notifications on my phone. And yet, we cannot just poast about poasting. It’s the physical political world and the classic books that make the best subjects of conversation. So, I’m not sure if the era of poastmodernism will last for a long time, or simply to the end of my lifetime. Millennials are not going to give up the dog fire meme.

You’ll have to pry it from our hands after our large generation has passed on. But will it inspire people in the future? I have already been informed that teenagers are calling our gifs “cringe”. They seem to prefer 90 second videos of their peers dancing to pop music. Don’t ask me what comes next after that.

I’ll end on a positive note by saying that sometimes shorter is better. Get to the point quickly, if you can. Some of the novels produced in the modern era were too long. Adam Smith’s books would be more widely read if they were shorter. Long-winded speeches are not necessarily good and I’m glad I am not forced to listen to them. (I get the tl;dr the next day.)

A lot of bad ideas were dressed up in pages of smart-sounding language and then passed off for wisdom in the modern era. It might be harder to pull that off today. Authoritarian regimes in the past relied on being able to lie about conditions on the ground. Today, we know what is happening because of Twitter. American elites believed lies about what was going on inside the Soviet Union for years. That would be impossible today.