TheStreet: The 1.9 Million Reasons To Eat Out

By SIMON CONSTABLE

NEW YORK (TheStreet) -- Saving a few extra bucks a month might make sense individually, but when everyone penny-pinches together, the consequences can be catastrophic.

How bad?  As many as one in three of the jobs lost in the Great Recession and its aftermath could have been caused by such collective consumer frugality. That's up to 1.85 million more job losses than there would have been otherwise. 

The statistics are examined in a new working paper titled Trading Down and the Business Cycle, published this month by the National Bureau of Economic Research. The paper states that between 22% and 36% of the jobs lost were because of consumers "trading down," or buying lower quality products and services.

Read more here.

OZY: A Worst-Case Scenario for Stocks — It's Ugly

By SIMON CONSTABLE

Oh, how it hurts to see, U.S. stocks slowly (and sometimes not so slowly) sinking in recent weeks like so many Titanics. And yet, it could be worse. A lot worse. The 2008 financial crisis is the kind of thing you want to just shut out from your mind, a time when the only option seemed to be gallows humor. (The best joke: How your 401(k) retirement, now worth half its value, was only a “201(k)” plan.) Nobody, at least nobody who really understood money, wanted to look at their monthly financial statements. Doing so left a sinking feeling in the pit of the stomach.

Thank goodness we’re not living through that again! Or could we be? Fair warning, what some smart observers think may not exactly make your day.

Read more here.

TheStreet: Dumping Energy Stocks Might Cost Harvard $100 Million a Year

By SIMON CONSTABLE

NEW YORK (TheStreet) -- Harvard's $32.7 billion endowment would generate significantly lower returns if climate-change activists convince the university to abandon fossil fuel investments, according to a new study.

Such a strategy might cost more than $100 million a year, according to the report, which was commissioned and financed by the Independent Petroleum Association of America. It examines the effects of divestment on five universities with large endowments and indicates cutting out those stocks would have "material impacts" on the ability of the portfolios to meet schools' funding goals. Read more here.

Photo by Clay Banks on Unsplash

WSJ: What Is Tail Risk?

By SIMON CONSTABLE

Bank research reports frequently refer to “tail risk” for investors, but it isn’t always clear what it means and what to do about it.

Broadly speaking, a tail risk is an event with a small probability of happening, says Bob Conroy, professor of finance at the University of Virginia Darden School of Business. “In every event there are tails; there are really, really good things that can happen and really, really bad things.”

The term comes from looking at the bell curve, or so-called normal distribution of results. The tails of the bell curve extend out to plus or minus infinity with ever-decreasing probabilities. Read more here.

WSJ: In Chaos, Small Hedge Funds Do Better

By SIMON CONSTABLE

The moment a crisis breaks out, hedge-fund investors should pray they’re in a large fund, which has the capital and market influence to survive, right? 

Just the opposite, it appears.  Read more here.

Forbes: An Antidote To The Tiger Mom? -- Book

By SIMON CONSTABLE

There is something about the sting of asphalt on the palm of your hand when you fall off your bicycle that makes you never want to let it happen again. Of course it will happen again, but you learn, you get better and so on. That is the way millions of people learned to ride. At least they did. But not so much lately.

A couple of years ago I met a woman who had never fallen from a bicycle or seemingly had any major failure in her life. Unfortunately, she wanted me to write her life story. It was unfortunate because narrative’s with no struggle don’t work so well. Obstacles overcome, after all, make a better tale. The bigger the obstacle the better the story. A story without such tension is just lacking. And now we are learning that it doesn’t really work so well in life either.

That brings me to Jessica Lahey’s recently published book, “The Gift of Failure: How the Best Parents Learn to Let Go So Their Children Can Succeed,” which addresses the issue of over protective parenting and how sometimes it’s just a better gift to let kids learn through trial and error. Lot’s of emphasis on the error, please! Read more here.

TheStreet: You Need Nerves of Steel to Make Money in the Metal Market

By SIMON CONSTABLE

NEW YORK (TheStreet)-- Steel stocks may shine soon, after losing their luster during a brutal summer, but only investors with an appetite for turbulence should consider buying them.

What makes them attractive is the relatively low prices. The Market Vectors Steel  exchange-traded fund, which holds a basket of steel stocks and iron-ore producers, is down 25% over the three months through Thursday, more than three times as much as the Standard & Poor's 500 index. U.S. Steel fared even worse, falling more than 35% over the same period. Read more here.