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Fellow economist here… I would have thought this rule would be irrelevant to us! I don’t think most of us think we can beat the market. I hold index funds o

Fellow economist here… I would have thought this rule would be irrelevant to us! I don’t think most of us think we can beat the market. I hold index funds only. (To be clear: I think this rule is a good idea and should apply to anyone with any serious role there. I’m just a little surprised it’s binding on anyone.) Edit: clicked on your profile. Thanks for writing reghdfe. I use it with some coauthors on a project on healthcare now.

landemva 5y ago
It is hilarious that well-studied economists understand that it is difficult and unlikely to consistently beat market returns when using any decent size, yet a primary purpose of the Fed is explicitly to manipulate interest rates. We would get more value, and much cheaper, by simply using a formula for money expansion and the resulting interest rate.
zzleeper 5y ago
TBH 99% or more of what I hold is index funds. I started playing with Robinhood when trying to understand what was going on in the retail market (May 2021). On the other hand, I do think that from time to time you can get an insight that the rest of the market hasn't picked up. About reghdfe, you are welcome! I wrote it because the server for my PhD thesis was a piece of crap, but it kinda found a life on its own!
mlac 5y ago
The point of the regulation is that it would stop an economist (or anyone) from trading with non-public information. And it would be perfectly rational for an economist (or someone else) to trade a single stock if they had non-public information and there was no downside. Right now the downsides (it’s unethical / a gray area but depending on one’s position not always illegal) are not fully baking in the costs to society (e.g. a trader with non-public knowledge can get ahead of the broader market, impacting the ability to have a “fair” market and increasing costs for other investors). I strongly believe that policy makers need to be indexed with broad exposure across, at a minimum, industry sectors but more preferably the US economy (or a state’s economy if they are a state representative). There is too much room for misaligned incentives (buy our depressed stock, pass this bill, make a couple million) that should be removed.

landemva 5y ago

It is hilarious that well-studied economists understand that it is difficult and unlikely to consistently beat market returns when using any decent size, yet a primary purpose of the Fed is explicitly to manipulate interest rates. We would get more value, and much cheaper, by simply using a formula for money expansion and the resulting interest rate.

zzleeper 5y ago

TBH 99% or more of what I hold is index funds. I started playing with Robinhood when trying to understand what was going on in the retail market (May 2021). On the other hand, I do think that from time to time you can get an insight that the rest of the market hasn't picked up. About reghdfe, you are welcome! I wrote it because the server for my PhD thesis was a piece of crap, but it kinda found a life on its own!

mlac 5y ago

The point of the regulation is that it would stop an economist (or anyone) from trading with non-public information. And it would be perfectly rational for an economist (or someone else) to trade a single stock if they had non-public information and there was no downside. Right now the downsides (it’s unethical / a gray area but depending on one’s position not always illegal) are not fully baking in the costs to society (e.g. a trader with non-public knowledge can get ahead of the broader market, impacting the ability to have a “fair” market and increasing costs for other investors). I strongly believe that policy makers need to be indexed with broad exposure across, at a minimum, industry sectors but more preferably the US economy (or a state’s economy if they are a state representative). There is too much room for misaligned incentives (buy our depressed stock, pass this bill, make a couple million) that should be removed.