The Independent Market Observer

Rising Interest Rates, Part 1: Return to the Natural Level?

December 15, 2015

This post originally appeared last spring. With a Federal Reserve rate increase largely expected to happen this week, I want to take a look at what happens when rates start to rise.

Continue reading → Leave a comment

What Keynes and Hayek Can Teach Us About Economics

December 11, 2015

I shared this post in 2014, but it’s always worth another go.

As we close out the year and look ahead to a new beginning in 2016, I thought it would be fun to repost a couple of entertaining videos from EconStories that offer some surprisingly accurate lessons in economics. Let the rap battles begin! 

Continue reading → Leave a comment

Back to the Basics on Stocks

October 13, 2015

There are two components to stock markets: earnings and how much investors are willing to pay for them. Recently, much of the commentary has been on valuations, with the implicit assumption that earnings would more or less take care of themselves. Although this has been the case for the past several years, at least on a per-share basis, one of my colleagues and an investment research associate, Sam Millette, recently pulled some figures that gave me pause.

Continue reading → Leave a comment

Being a Good Investor: How to Worry in a Productive Way

September 30, 2015

I gave a talk last night to a group of clients, part of which included a discussion of the possible reasons behind recent market turbulence. Afterwards, a client asked me what else, beyond what I had discussed, could have caused the downturn? I thought that was an interesting way to look at how we as investors should watch markets.

Continue reading → Leave a comment

What Would You Ask Ben Bernanke?

September 16, 2015

I was discussing the Federal Reserve with one of my colleagues the other day, who expressed the opinion that everyone shows the Fed too much deference. “People think they know exactly what they are doing!” he exclaimed.

On the contrary.

Continue reading → Leave a comment

Do Rising Rates Mean Falling Stocks? Part 2

June 15, 2015

My post last week on this topic generated a fair amount of attention and quite a bit of comment, both positive and negative. I stand behind my argument, but one excellent question came up that’s worth addressing: what does the data show during a period of rising rates, such as the 30 years before 1985 (the starting point for the data in my previous post)?

Continue reading → Leave a comment

What Population Changes Mean for Economic Growth

June 8, 2015

In a recent post, I noted that demographics are a potential reason for the slower economic growth we’re now experiencing, compared with earlier growth cycles. Today, let's take a closer look at the data to see how changes in population have become a more important factor in the level of economic growth over time.

Continue reading → Leave a comment

Where Does Economic Growth Come From?

June 2, 2015

When we discuss economic growth, there’s a tendency to look at the top level of data—the growth figure itself—and try to figure things out from there. Recently, I’ve compared current growth levels with those of past decades (here and here) but haven’t discussed why things might have been different.

Today, as a way to understand those differences, let’s think about where growth comes from, on a fundamental level.

Continue reading → Leave a comment

What Happens When Interest Rates Rise? Part 3

May 20, 2015

In this last post on rising interest rates, let's talk about what everyone really wants to know: What do rising rates mean for our investments? As we discussed yesterday, a rate hike probably isn’t imminent, but it’s certainly worth thinking about to get ahead of the risk.

Continue reading → Leave a comment

What Happens When Interest Rates Rise? Part 2

May 19, 2015

Yesterday, we discussed what the natural interest rate should be, arriving at about 5 percent on a nominal basis, assuming 2-percent inflation. That seems like a reasonable number over time, given that the Federal Reserve has committed to an inflation target of 2 percent. But with interest rates currently far below 3 percent, there’s clearly a gap between what the rate should be and where it is now.

Continue reading → Leave a comment

Subscribe via E-mail

New call-to-action
Crash-Test Investing
Commonwealth Independent Advisor

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly into an index.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.  

Third party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®