Edward J. Strafaci ~ Academic Blog

5 Things to Watch in the Third-Quarter GDP Report from the WSJ Eric Morath 10/28/16 U.S. economic growth appears to have accelerated in the third quarter after nine straight months of subpar gains, even for the lackluster expansion. Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.5% annualized pace this summer, according to economists surveyed by The Wall Street Journal. The economy grew at a 1.4% rate in the second quarter. Here’s what to watch in Friday’s GDP report from the Commerce Department. 1 Long-Awaited Breakout? The economy has grown at less than a 2% rate since the third quarter of 2015. That’s weaker than the average gain during the current expansion, which itself features the slowest annual advance of any growth period since at least 1949. Economists predict an acceleration, with some expecting the quarterly rate to touch 3% for the first time in two years. But keep in mind, economists projected a similar breakout in ...

We always think of intelligence as one entity. We think that scientists and academics are brainy and “intelligent” people. But if we put them in a bank, they may be at a loss for words when speaking to customers. And what about the misconceptions about people engaged in less intelligible jobs such as waiting tables or telemarketing who are deemed “unintelligent? Try giving these people an empty canvas and watch them create a masterpiece for you with just a pencil. The point is, our perception of intelligence is skewed. Everything that seems out of our reach is automatically deemed as intelligent however on the contrary, according to psychologist, Howard Gardner, everyone is blessed with multiple types intelligence. See the infographic below to have a better understanding. The Science Behind 9 Types Of Intelligence The 9 types of intelligence as theorized by Gardner in his book called  Frames of Mind: The Theory of Multiple Intelligences,  is a g...

Some Frank Talk About That ‘Index Fund’ of Yours Economic theory recommends: Buy everything. That means going far beyond an S&P 500 index fund http://www.wsj.com/articles/some-frank-talk-about-that-index-fund-of-yours-1476799693 Passive investment  is booming, but those who want to join the rush into index tracking can easily find themselves overwhelmed by the options. S&P Dow Jones Indices alone has more than one million indexes, and while the S&P 500 looks inherently more appealing than the Dow Jones Islamic Market Peru Small Cap Technology index (I kid you not), how can you choose? Step forward economic theory. Finance for the past half-century has been underpinned by the Capital Asset Pricing Model, or CAPM, and variants, which have a simple recommendation: Buy everything. The math involved shows the best balance of risk and reward in efficient markets comes from the so-called “market portfolio” of all assets, held in proportion to their value. The onl...

By   PAUL J. DAVIES Updated Oct. 10, 2016 8:05 a.m. ET Roll on 2017. The two big unknowns that have been threatening Europe’s big banks should be gone by the end of this year. An optimistic view says that removing these overhangs can trigger a revaluation of lenders who will finally know for sure how much capital they need. But investors should be cautious. Banks are still too big for an industry that will continue to shrink around them. Unlike U.S. peers, large European banks have yet to settle the last big postcrisis probes related to mortgage-backed bonds. Their second problem comes from global capital rule changes that will hurt banks that rely on sophisticated internal risk models to hold down capital requirements. U.S. banks have paid the fines and never relied so much on low risk weightings. Deutsche Bank  stock  has been roiled  recently by fears that its mortgage fine might be more than it can really afford. But the silver lin...