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  • Ritholtz Calls for More Reliable Holiday Retail Projections

    Barry Ritholtz would like to rein in the hype about holiday spending. And not just this year. But every year. At least until we focus on some measurements that are reliable. Ritholtz points out that much of the reporting on holiday sales at this time of year is based upon consumer surveys. And those surveys have shown to be way, way off. From Ritholtz's most recent Washington Post column: When you conduct a survey, you are asking people to say what they plan to do. Hence, what you learn is what they believe about their future behavior. We are an unreliable bunch. If you want to learn how much people actually spent, you need to measure that at the cash register. History has shown again and again that there is little correlation between our expectations and our actions. Yes, we want to save more for retirement, lose weight, get into shape. We say so each January. And by February, you will discover the yawning chasm between intentions and action. So when those breathless retail sales surveys were released, we had no idea as to whether, and by exactly how much, sales might climb. The most that could be accurately said was that more people appeared to be in stores on Black Friday 2011 than in 2010. Indeed, that can be explained in part by the unseasonably warm weather around the country; as well as the extended store hours (including midnight Thanksgiving Day). How far off have these surveys been in the past? Enormously. In 2005, based on a survey on Black Friday and Saturday, the NRF forecast a 22 percent increase in holiday shopping gains for the Thanksgiving weekend. The results? Up just 1 percent. The National Retail Federation has been especially off in their projections. On his The Big Picture blog, Ritholtz shows just how far the NRF projections have been: Read Ritholtz's Washington Post Column, Did Black Friday save the season? Beware the retail hype , here . Read Humans Are Awful at Predicting Their Own Behavior at The Big Picture , here .

  • Ritholtz on the 'Many Hats' of a Great Investor

    Barry Ritholtz 's blog The Big Picture is one of the most popular--and frankly one of the best--in the econo-business blogosphere. But he's not above making an appearance in old media every now and then. He has a column in today's Washington Post that is worth a read. In it, Ritholtz muses on what it takes to be a great investor. He argues that an investor wears many hats. At times, an investor is an Historian : Knowing what has happened in the past (and how often) is an enormous advantage when it comes to investing. It informs you of the range of possibilities, allows you to conceptualize possible outcomes to various scenarios and provides a framework for thinking about market cycles. Heading into the market bottom in 2003, some market historians warned about a secular bear market. These are the decade-plus long periods of huge rallies and great collapses. Some warned that investors should not be surprised if after a decade, the markets were essentially unchanged, which is exactly what happened. Think back to the market lows in March 2009. After about a 20 percent bounce off the bottom, quite a few commentators expressed fears that the markets had gone “too far, too fast.” Market historians knew that the median bounce after a drop of 50 percent or more was 75 percent. With that information, you might not have been scared away from equities just before they gained 80 percent in value over 18 months. At other times he/she may be a Psychiatrist , a Trial Lawyer , a Mathematician , or an Accountant . Read the full column here .

  • A Time Person of the Year Curse?

    With Time naming Facebook's Mark Zuckerberg the 2010 Person of the Year , Barry Ritholtz reminds us that back in 1999 Time selected another pioneer of the digital business world: Amazon's Jeff Bezos . And what did it bring Amazon? Well, the company seemed to top out--at least for a decade. At The Big Picture , Ritholtz provides this picture of Amazon's market fate following the Time proclamation: Will the same happen to Facebook? Read Uh-Oh: Facebook’s Zuckerberg is Time Man of the Year here .

  • The Economic Crisis Backstory, Animated

    Here's a short animated video out of Europe from filmmaker Denis van Waerebeke . It is another simple explanation of one of the story-lines of the global economic crisis. Ecoland - Bubble story from Denis van Waerebeke on Vimeo . (Hat tip Barry Ritholtz )

  • Economic Indicator?: Hemlines

    With New York having just survived another Fashion Week , Barry Ritholtz says it is time to revisit the Hemline Index, the notion (urban legend?) that the average length of women's skirts gets shorter during good economic time and longer during bad times. Ritholtz, shares this graphic from Smith Barney to help make the point: It seems there is something to this idea, but according to Ritholtz's sources, the effect is a delayed one. Read The Hemline Index at The Big Picture , here .

  • The Best of The Best of Business Books, 2009

    Of all the lists of "Best Business Books of 2009," our favorite is that of Marketplace host Kai Ryssdal . And we have a few reasons. First, it includes some of the top books that addressed the changing nature of the markets and the financial system--namely Andrew Ross Sork in 's Too Big to Fail , and Ken Rogoff 's This Time is Different . Second, it includes books from some of the top online econ and finance writers, like Barry Ritholtz of The Big Picture , and Justin Fox , who blogs at The Curious Capitalist . Third, it has some refreshing surprises, like Chemical Cowboys --a look at the fall of the ecstasy empire by Lisa Sweetingham . But the main reason this is the Best of the Best of Business Books for 2009? It is a list of books AND a collection of interviews with the authors of those books. Take a look and a listen by clicking here .

  • The Destructive Power of Yes: Seattle Times on the Failure of WaMu

    A little over a year ago, the FDIC seized the assets of Washington Mutual on the bank's 119th birthday . it was the largest US bank failure ( Reuters ), and the roots of the failure had a bit to do, ironically, with the message of a WaMu ad campaign--The Power of Yes: The Seattle Times breaks down the WaMu failure in today's paper, and, in a story now all too familiar, it appears that the thrift was all to happy to say yes just about anybody: WaMu lured borrowers with a very low interest rate of about 1 percent. But this "teaser" rate was good only for one month. After that, the option ARM could have far higher interest rates than conventional 30-year fixed-rate loans. With each minimum payment, unpaid interest piled up. Once the debt grew too large, WaMu canceled the minimum-payment option. You could suddenly get a new bill for two or three times what you had been paying. Another aspect of the option ARM made it even riskier. Washington Mutual broke the most basic rule of lending, a rule as fundamental as "all lifeguards must be able to swim": It would give you an option ARM even if you couldn't afford to repay it. You only needed enough income to cover the minimum payments. Read parts 1 and 2 of the Seattle Times coverage here and here . And read the indispensable Barry Ritholtz's take here .

  • Temp Help Numbers

    On Friday we looked at some of the internal data form the Bureau of Labor Statistics employment numbers. Barry Ritholtz looked deeper and found some positive signs in the Temp Help employment numbers. Not overwhelmingly positive signs, but positive nonetheless. And Ritholtz argues that temp help numbers can be a strong indicator "as to the demand for Labor and Employer confidence." Read Temporary Help is Less Bad here .

  • The Good and the Bad in Housing Data

    Yesterday's release of the Case-Shiller Price Index was cause for some small celebration for some market watchers. The index showed housing prices stabilizing across the board, and even rising in some key cities, including San Francisco--which has seen the third biggest drop in housing prices during the recession (behind Phoenix and Las Vegas). The Times quotes Mark Fleming, chief economist for First American CoreLogic, as saying “We’ve found the bottom, and Wells Fargo chief economist John E. Silvia writing in a letter to investors, “Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus. Here's the year over year Case-Shiller trend (source: Standard and Poor' s , via The Big Picture ): Before anyone gets carried away with the recent spate of apparently positive housing news, Barry Ritholtz reminds us all that new home sales are at their lowest level for the last 27 years, and it is taking a long time for seller and builders to find buyers. Read Worst June New Home Sales Since 1982 here .

  • Trucking and Rail Data Reveal Slowed Domestic Shipping

    Barry Ritholtz of The Big Picture has been busy these last few weeks. His new book, Bailout Nation is out, and last week he ran a one day conference on the state of the economy and economic recovery . But he isn't too busy to sniff out some interesting economic indicators. Namely: some numbers on transport from the American Trucking Association (ATA) and the Association of American Railroads (AAR) . As Ritholtz point out, the ATA's Truck Tonnage Index went down another 2.2 percent in April, and the trend looks like this: Worse, rail carload traffic fell 24.7 percent, according to the AAR. Surely, these are not numbers that spell the end of the recession...at least not yet. Read Ritholtz's full post here .

  • New Home Sales Up From Last Month But Still Lag

    The seasonally adjusted rate of new home sales for February was 337,000, according to a report released by the US Census Bureau this morning. This represents a 4.7 percent increase over January. But it is a 41.1 percent decline from February 2008. Over at The Big Picture , Barry Ritholtz explains why the new numbers are anything but cause for celebration--no matter what the headlines may say. And for exhibit A, he points to this chart from the Census Bureau: Read Ritholtz's post here . The full Census report is available here .