8 Fascinating Reads
Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
Rick Ferri looks at the subsequent performance of top-performing mutual funds:
Only 10% to 20% of top-quartile funds in each category remained in the top quartile over the subsequent five-year period. In contrast, Ptak found that on average, 20% to 30% of top quartile funds from the previous five years fell to the bottom quartile in performance in the next five years.
Stephanie Coontz reminds us that the good-old days really weren't:
You can't just stroll through the past, picking the things you like and skipping the ones you don't, as if historical eras were menus, and you could pick one from column A and one from column B. They are, rather, interconnected social, economic and political systems. Whether someone would really want to return to a particular time depends on socioeconomic class, age, sex, race and health.
In 1950, a young man, with or without a high school degree, would have found it much easier than it is today to get and keep a job in the auto industry ... Other members of the autoworker's family, however, might be less inclined to trade the present for the past. His retired parents would certainly have had less economic security back then. Throughout much of the 1960s, more than a quarter of men and women age 65 and older lived below the poverty level, compared to less than 10 percent in 2010.
In most states, his wife could not have taken out a loan or a credit card in her own name. If she wanted a job, she had to turn to the "Help Wanted -- Female" section of the classifieds, where she might learn, as one 1963 ad in this newspaper put it, that "you must be really beautiful" to be hired. In 42 states, a homemaker had no legal claim on the earnings of her husband. And nowhere did a wife have legal recourse against marital rape.
On second thought
Dan Gross says some famous bears are turning bullish:
Charles Morris, the author of the best-selling crisis book The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash; in June he released a sequel volume -- albeit a slim one -- called Comeback: America's New Economic Boom ... And while in his 2011 jeremiad, The Great Stagnation, George Mason University economist Tyler Cowen said all the low-hanging fruit of productivity and technology had been picked, times have changed. Having tracked continuing technological advances and the slowdown of health-care costs, Cowen is recanting a bit in his new book, Average Is Over: Powering America Beyond the Age of the Great Stagnation, due out in September.
CNNMoneynotes the decline of credit cards:
About 16% of consumers ages 18 to 29 didn't have a single credit card by the end of 2012 -- up from 8% in 2007, according to data that credit score provider FICO collected from the credit files of millions of consumers.
As a result, credit card debt has declined by about a third among this age group -- from an average $3,073 to $2,087 per person.
Investor Bill Nygren argues that it's easier to be a value investor today, writes Barron's:
"One of the things that has changed is the time horizon of investors," Nygren said. "Investors might be smarter than 20 or 30 years ago, but they are focused on such a different time period than what we are looking for. I've seen sell-side reports [where they argue,] 'It might take more than two quarters for the good news to start coming out.'" He chuckles.
"[Ours is] 5 to 7 years. [So] there's actually less competition for cheap stocks today than when I started in the business," he said. "Indexing, the percentage of momentum investors, very short term events -- I think is higher than ever. [It] makes it easier for a long-term value investor to do well."
Woe to the European economy:
European car sales tumbled again in May, reaching their lowest level in 20 years, manufacturers' data showed Tuesday, but analysts and industry officials said the market might have finally begun to bottom out.
Sales fell 5.9 percent in May from a year earlier, to 1,042,742 units, the European Automobile Manufacturers' Association reported from Brussels. The association said it was the smallest number of vehicles sold in the month since May 1993, when the number stood below 1 million.
Good news from Bloomberg:
An increase in the number of babies being born provides the latest sign that the U.S. economy is mending from the worst recession of the post-World War II era.
Births rose less than 1 percent to 3.96 million in 2012, the first annual increase since the number tumbled from the historic high reached just as the economic recession began in December 2007, according to provisional data released today by the U.S. Centers for Disease Control and Prevention in Atlanta.
Former Treasury secretary Larry Summers discusses America's energy revolution. Watch it here:
Enjoy your weekend.
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