The year is winding down and, with it, my final column for 2017 (though please stayed tuned next week for my morning reads).
Looking through all of the random effluvia from the proceeding 51 weeks, I notice lots of ideas and subjects that I wanted to address but simply never got around to writing about. Here is my collection of random flotsam and jetsam that I wanted to share with you before heading off for the holiday break:
Political Volatility ≠ Market Volatility: Has there ever been a year like 2017? If you are anything like me, you were probably hoping that the end of the 2016 presidential campaign would bring about some quiet to the nation’s capital. No such luck. It has been a relentlessly noisy firehose of tweets, alternative realities, indictments and scandals.
But here’s the thing: Market volatility has never been lower. That’s a very, very important point. Why? Think back to night of Election Day. Futures plummeted on forecasts that Donald Trump’s policies would kill the bull market (we heard similar noise about President Barack Obama in 2009).
The most important thing you should have learned in 2017: mixing politics and investing is a foolish, money-losing exercise.
Twitter’s Improvements: Everyone’s favorite social-media punching bag is starting to get its act together. It has figured out that the quality of experience for new users is the key to future growth. Protecting the Twitter community from bullies, trolls, Nazis and other undesirables isn’t censorship; it’s protecting valuable private intellectual property. If you don’t like it, well, go find a social network for hate -- they’re out there.
Aspirational Real Estate Pricing: My friend Jonathan Miller came up with this phrase three years ago and it continues to entertain. Listings for $25 million going for less than $10 million, or a $135 million listing selling for $100 million below the asking price!
Before you mock the practice as egotistical stupidity -- and surely there is some of that involved -- behavioral economics teaches us this pricing strategy probably anchors buyers at a higher, perhaps much higher, selling price. That is the entire point.
Interactive News Media: This year, the quality of interactive/data vizualization online has gone from merely great to spectacular. Content producers have become obvious data junkies, cranking out compelling stories via pictures, charts, video and infographics. Consider these three monsters of interactive media: the New York Times’ “How Ed Sheeran Made ‘Shape of You’ the Year’s Biggest Track”; Bloomberg New’s “How a Melting Arctic Changes Everything”; and the Wall Street Journal’s “How Tax Cuts Affect Revenue.”
That’s just a sampling and the breadth and quality of what was produced is just breathtaking.
National Federation of Independent Business Goes Full Hack: As a small business owner, I have been going back and forth with senior people of this group for more than a decade about some of their less-informed commentary. The group was way too bullish heading into the financial crisis, and way too skeptical coming out of it. In 2015, I noted NFIB news releases has been “consistently, persistently, dour — absolutely negative.”
Now I know why: This organization isn’t an objective collector of data, but a partisan lobbying group. It has engaged in astro-turfing, placing virtually identical op-eds about taxes -- from different authors -- in newspapers.
I don’t care about your politics, but this isn’t what legitimate economic analysts do. They now join the National Association of Realtors and the National Retail Federation as clueless hacks, off of my personal list of credible data providers.
Defending What’s Right on Wall Street: As the guy who literally wrote the book about the stupid, short-sighted and destructive things Wall Street has done, I find it ironic that I am now defending the financial industry from misguided attacks. There are too many to list, but this was the most recent one I saw. The bad guys get the media coverage and all of the positive things that occur seem to get overlooked. I want to rectify this.
Live Music Concerts: We are now in the golden age of, well everything. Television, print journalism, podcasts -- but especially live music. This past year I have seen numerous jazz, classical, blues and rock ‘n’ roll shows that were just astonishing. Not just giant stadium shows, but some in venues so small you could put your feet up on the stage. If you haven’t been going out to regular live events, you don’t know what you are missing.
Bigger Isn’t Better in Asset Management: I am decades late to the party on this one, but I keep finding evidence that this is true.
This is unfortunate: There are people, funds and firms that should really cap assets under management because the approach used doesn’t scale well. But fees rise with the assets, and so there’s a counterproductive incentive to keep raising capital past the point of optimal efficient management.
We can’t all be Vanguard or Blackrock. If what you do doesn’t lend itself to managing hundreds of billions of dollars in assets, then perhaps it’s wiser to spend your time finding the right clients rather than merely looking for more of them.
That’s my random roundup for 2017. Have a happy, safe and healthy new year!
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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