—-this article was originally published 11/12/2009.  Human economics and monkey economics are exactly the same–scarcity creates value.  The story is quite funny too.

We recently developed a series of scenarios  for our clients and prospective clients to consider as a way to establish how  they really feel about investment risk.

Scenario 1:

You’re on a plane preparing land at LaGuardia Airport in New  York City during a thunderstorm.  With  minutes to go before landing, the plane is suddenly rocked by violent down  drafts.  Do you:

• Buckle your seatbelt tighter, clutch your armrests and toss a  prayer to your personal deity.
• Rush down the aisle, kick open the cockpit door and seize  controls of the plane yourself.

Scenario 2:

You’re at the dentist having root canal.  Suddenly, you feel acrid dust on your tongue  and smell smoke.  Do you:

• Ask for a moment to rinse your mouth and clear your throat (this  will be over soon.)
• Grab the drill and finish the operation yourself.

Scenario 3:

You’re a defendant in a major product liability case.  If you lose, you could be out $500,000.  After two weeks of trial, the case could go  either way.  During the final summation  do you:

• Rely on your attorney to finish the trial – win or lose, he’s  the one who went to law school.
• Address the judge and jury yourself.

Scenario 4:

Your three year old car develops a case of “mushy” brakes and  won’t stop as quickly as you expect.  Do  you:

• Take the car into the dealer for a thorough inspection.
• Tinker with the master cylinder, calipers and brake pads  yourself.

Scenario 5:

Stock prices have fallen 20% over the last 6 months, and  leveraged investors everywhere are vomiting up securities.  On the television, investment analysts  soberly explain how you must hedge your portfolio by “loading up on the  UltraProShares Triple-Short ETF.”  Your  brother-in-law is buying gold and dividing his cash up among 6 different banks,  in case one of them fails.  Do you:

• Hang tight, knowing that you won’t draw on your assets in stocks  for at least five years, and think about maxing out your 401K contributions a  bit early this year.
• Fire your investment advisor (“that idiot!”) and convert all  your stocks to cash.

If you would select option “B” in any of these scenarios, please  write a few sentences as to why.

A good tongue-in-cheek reminder of why it sometimes makes sense to take professional advice and stick with a well thought out strategy!

They use it to illustrate purchasing power parity, the idea that the same item should cost about the same amount in every currency.  The graphic is below:

Source: The Economist

One of the stunning things, to me, was that despite an absolute pummeling of the Euro lately, the Big Mac is still more expensive in Euros!  Despite the weakness we’ve seen already, maybe there is more to go.  It’s cheapest to clog your arteries in China and Russia, which is a potential argument that the yuan is still too low.

Source: Fox News

I have to admit I’m actually a little hungry after writing this post!  Next time I suppose I should leave out the picture of the burger.

If it’s not one thing, it’s another thing.  There will never be a shortage of trends!

—-this was originally published 10/26/2009.  Although the US dollar has recently held up relatively well versus the Euro (until today!), there is still significant concern about its long-term status.

Congress determined that pizza should remain an option for school lunches because the tomato paste on the food counts as a serving of vegetables.  The United States Department of Agriculture had wanted to discount tomato paste as a vegetable, but food companies protested the change, according to The Associated Press.

The USDA required a half-cup of tomato paste be on each slice of pizza in order to count it as a vegetable, but after a $5.6 million food-company lobby, the department knocked that number down to two tablespoons of paste, according to Talking Points Memo, a political news organization.

Obviously tax reformers and debt-reducers need to hire someone in the tomato paste business because the debt fix doesn’t seem to be going so well.

Click to enlarge

—-this article was originally published 9/3/2009.  Calvin and Hobbes demonstrate a keen understanding of economics as currently practiced by some companies.

10. Occu-pie a la mode

9. Mud n’ Rocks

8. Kleptocracy Krunch

7. 99 Percent Vanilla

6. Class W-Oreo

5. Zuccotti Biscotti

4. Marching Powder

3. Protest Parfait

2. Drummer’s Delight

1. Unemploy-Mint

Source: Ben & Jerry’s