Pension funds don’t have enough junk

Junk Bonds are debt instruments issued by corporates that have relatively low credit ratings.  They pay interest at high rates as a result. Typically viewed as risky investments, the junk bonds boom of the 80s showed that there is more to junk than just a risky investment. Locally, our pension funds and other retirement savings […]

Losing a Million (or R18,000 at least) (updated)

In How Not to Lose Money in Make a Million I showed that the game was massively more likely to lose you money than make you money.  It may be a great way for the promoters to gain some new client and some media coverage, but it’s a really poor way to introduce the masses […]

How not to lose money in Make a Million

I have a clear strategy for how not to lose money playing the Make a Million competition. As I explain it, you may come up with some smart tactics to win the competition and enhance your returns, but you’re on you’re own there. So, how does one not lose money with the Make a Million […]

Implied Pension Return Assumptions and the Equity Risk Premium

When companies value pension obligations and required contribution rates, they make assumptions about the expected future investment returns. (Accounting standards require market-based rates reflecting fixed interest returns, but that’s a separate point). So what assumptions are pension funds making? The WSJ has an interesting article showing that the average US pension fund is assuming future […]

Interactive house price data (including South Africa)

The Economist has a brilliant interactive chart showing nominal house price growth across a range of countries, including South Africa. It’s clear, as we already know, that South African house price increases have been dramatic. Somehow though, seeing it on a graph with a range of other countries brings it into sharper focus. Our property […]

Why you’re mis-estimating the Equity Risk Premium #1

You base your estimates of the ERP on US history alone Your ERP estimate is too high because your calculation suffers from survivorship bias and errs by including the largest economy for which the most data is currently available rather than a random sample. The US has been a spectacularly successful economy over the last […]