Quote of the day

Eric Falkenstein, “Think of your prejudices as your ultimate strategy that dictates your tactics.”  (Falkenblog)

Chart of the day

Relative (vs. S&P 500) sector performance year-to-date.  (StockCharts)


The S&P 500 is up 14 of 16 days.  What happens next.  (Bespoke, Global Macro Monitor)

Individual investors have gotten giddy going into year-end.  (Zero Hedge, Pragmatic Capitalism)

How the commodity complex performed in 2010.  (Fund My Mutual Fund)

Don’t worry about the low VIX until next year.  (VIX and More)

On the odds of a continued rally in January.  (Trading the Odds)

A quick overview of the fixed income markets going into 2011.  (Pragmatic Capitalism)

On the idealized state of the high yield market.  (Reuters Breakingviews)

You knew this was coming.  A hedge fund using Twitter-derived signals to trade.  (Felix SalmonNYTimes, Big Picture)

Strategy and Tactics

Want to make in the investment management industry these days?  Become a hacker.  (the research puzzle)

You need more than a signal to make money trading.  (Leigh Drogen also StockTwitsU)

On the beauty of having a system you can trade from a mobile phone.  (The Minimalist Trader)

The benefit of having learned to trade in a bear market.  (Trade to learn)

Why stock markets change their tune around year end.  (Derek Hernquist)

Only trade instruments you are comfortable with.  (Investing With Options)

How to come up with investment ideas.  (Gannon on Investing)

Interesting implications for trading.  How the mind interprets “trivial [physical] sensations.”  (Scientific American)


Why are companies focusing so much on share buybacks?  (Crossing Wall Street)

Remember the SEC case against Goldman Sachs (GS)?  Don’t worry, no one else does either.  (Lex)

Misdirected effort on the part of Bank of America (BAC) to defend its “reputation.”  (Kid Dynamite, Clusterstock, WSJ)

Is the tide ready to turn for the for-profit education stocks?  (Clusterstock)

Muni finance

A Chapter 9 (muni) bankruptcy is “quite different in form and substance from corporate bankruptcy.” (Bond Girl)

Bankruptcy is the last resort for states and municipalities.  (Fortune, Felix Salmon, WSJ)

Michael Cooper and Mary Williams Walsh, “No state or city wants to wind up like Prichard [Alabama].”  (NYTimes)


What explains recent growth in forex volume?  (voxEU)

There is little sign that finance has fallen out of love with its models.  (FT)

With the financial crisis in the rear mirror they are finally coming for the accountants.  (Felix Salmon)

Rick Bookstaber on why regulating Wall Street is harder than regulating other industries.  (Fortune)

What are the ratings agencies good for?  (Megan McArdle)

Yet another depressing story on how Merrill Lynch managed to blow itself up.  (ProPublica)


The morning in US economic reports.  (FT Alphaville, TRB)

No matter how you slice it inflation is difficult to find these days.  (macroblog)

The Swiss franc is serving as a haven from the Euro.  ( Street Sweep, WSJ)

Ten economic and investment themes for 2011.  (Mish)

The case for nominal GDP targeting.  (Macro Musings via Economist’s View)

To what degree is QE2 generating uncertainty about the economy?  (Calafia Beach Pundit)

Should the government be in the mortgage business?  (Planet Money)

Fun with words

Involuntary Transparency – A new paradigm of enforced openness – associated both with the WikiLeaks disclosures and the ability to make instant online price comparisons.”  (Schott’s Vocab also Tech Ticker)

More fun with this year’s made-up words and phrases. (FT Alphaville also Big Picture)

Just because

If you set the financial crisis to music, what would it sound like?  (FT via @TheBrowser)

The top 10 science stories of 2010.  (Scientific American)

Thanks for checking in with Abnormal Returns. For all the latest you can follow us on StockTwits and Twitter.