Mark D. Wolfinger: The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options
Michael Lewis: The Big Short: Inside the Doomsday MachineA captivating story of the crisis, told from the perspective of the winners, but with lessons for all.
Barry Ritholtz: Bailout Nation, with New Post-Crisis Update: How Greed and Easy Money Corrupted Wall Street and Shook the World EconomyAn informative and entertaining account of the financial crisis. Almost anyone will find this stimulating and useful.
Leonard Mlodinow: The Drunkard's Walk: How Randomness Rules Our Lives (Vintage)Great insight for investors seeking to distinguish real indicators from random noise.
Kate Kelly: Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall StreetGood read, good info -- a building block for anyone trying to figure it out. What the heck happened!??
Michael Shermer: Why People Believe Weird Things: Pseudoscience, Superstition, and Other Confusions of Our Time
Graham T. Allison: Essence of Decision: Explaining the Cuban Missile Crisis (2nd Edition)A seminal work on decision-making.
Mancur Olson: The Logic of Collective Action: Public Goods and the Theory of Groups, Second printing with new preface and appendix (Harvard Economic Studies)
Andy Kessler: Wall Street Meat: My Narrow Escape from the Stock Market Grinder
Roger Lowenstein: When Genius Failed: The Rise and Fall of Long-Term Capital Management
Robert A. Caro: Master of the Senate: The Years of Lyndon Johnson, (Vintage)
Ken Uston: Million Dollar Blackjack
Edwin Lefèvre: Reminiscences of a Stock Operator (A Marketplace Book)
Neil Browne: Asking the Right Questions: A Guide to Critical Thinking (8th Edition)
Ralph Vince: Portfolio Management Formulas : Mathematical Trading Methods for the Futures, Options, and Stock Markets
Malcolm Gladwell: Blink: The Power of Thinking Without Thinking
Brett N. Steenbarger: Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading)
Robert J. Shiller: Irrational Exuberance
Gene Epstein: Econospinning: How to Read Between the Lines When the Media Manipulate the Numbers
Edward R. Tufte: The Visual Display of Quantitative InformationThe authoritative work on the subject.
Murray Edelman: The Symbolic Uses of Politics
Gary Belsky: Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics
Laurence H. Meyer: A Term at the Fed : An Insider's View
James Altucher: Trade Like a Hedge Fund : 20 Successful Uncorrelated Strategies & Techniques to Winning Profits
Janet Lowe: Warren Buffett Speaks : Wit and Wisdom from the World's Greatest Investor
Nassim Nicholas Taleb: Fooled by Randomness : The Hidden Role of Chance in Life and in the Markets
William Poundstone: Fortune's Formula : The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street
Steven D. Levitt: Freakonomics : A Rogue Economist Explores the Hidden Side of Everything
« Ten Things that Will be "More Normal" in 2011 | Main
Are you thinking about the markets, or do you have a fixation on politics?
The politics versus investing theme is familiar to readers of "A Dash." Why do I keep beating this drum? Because it is so important.
A Small Digression
I enjoyed Josh Brown's wonderful advice on blogging:
If your visitor clicks a link, hits your page and is greeted with a wall of text, that visitor is gone. No one wants to read something that looks like homework, no matter well written it is. Your first paragraph should never be more than one or two sentences. Each paragraph thereafter should be 3 to 4 sentences maximum. If you're over 500 words for the whole post, you better be writing something important or brilliant, otherwise just stop. The markets are moving and people won't even give your post a chance if it looks unconquerable.
Josh has a finger on the pulse of the market, and I am also enjoying his TV stints. We accord him our highest office honor by taking the TV off of mute and backing up TIVO when he is on!
With respect to my blog, it is pretty obvious that I regularly fail to take his advice. The Old Prof cannot seem to do anything in 500 words! I also do not follow his other advice, although I agree that it is very wise.
I plan to think about this more -- perhaps by doing a few more brief pieces. Many of my topics require more extensive analysis -- -Meanwhile
If you cannot spend two minutes reading an article, you may not be a good candidate for my material! Put another way, if you have at least two minutes to spend, you might gain an edge over investors with ADD!
End of Digression
Illinois raised its income tax from 3% to 5% on a temprorary basis, with an eventual 3.5% rate. There are few deductions, so this is bigger than it seems. What does the Illinois story really mean?
The Illinois decision reflects what I expect to happen around the country, and at a national level. I have watched the Illinois debate very closely for years. I have many roles -- as a taxpayer, a voter, a member of the Citizens Financial Advisory Committee for a major school district, and as a former Public Finance Professor at a major university. I have had a front-row seat. I voted for Governors of both parties, including those who are now in prison.
The last Governor of Illinois who was loved by everyone, and who could have won the election had he run, made it clear that the deficit problems could not be solved without a tax increase. In the context of last year's election, a tax increase was off of the table. This was typical of national politics.
The tax increase was enacted by the lame-duck legislature. While the Democrats will have a majority next year, it will be less powerful. Some question the legitimacy of this decision.
Separating Investing from Politics
There is one conclusion that should be crystal clear for investors: The Illinois decision is bullish. Increasing taxes helps the credit rating for the state, Illinois cities, school districts, and other taxing districts. It makes Illinois debt in all forms more attractive than it was yesterday, and it also should reduce the national concern about municipal defaults.
I expect other states to follow this approach.
I note that some observers who predicted widespread state and local defaults have now shifted gears. They complain that Illinois should have cut spending.
This is what I mean about confusing politics and investing -- something that seems commonplace in 2011. [I note that I am, once again, over 500 words.]
We are all familiar with the taxing versus spending debate. No matter what the formula, a state that makes good on its obligations is doing the right thing.
Investment Implications: Bullish for Muni Bonds, suitable for some of my clients, and a general market positive.
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