Jason Zweig, “It takes years of deliberate effort for investors to become even partially effective at counteracting their own genetic biases.”  (Total Return)

Chart of the day

The ongoing divergence between the Dow Industrials and Transports.  (Bespoke also Tyler’s Trading)

Markets

Up to a point the stock market wants more inflation.  (Crossing Wall Street)

A look at the positive relative strength of the energy sector.  (All Star Charts)

Another look at pairwise asset correlations by market.  (All About Alpha)

The Dow is for most purposes just fine, thank you.  (Free exchange)

Media headlines will lead investors to ruin.  (StreetTalk Live)

Strategy

Why traders constantly subvert their own processes (and success).  (SMB Training)

On the benefits of portfolio rebalancing.  (Capital Spectator)

Research into an enhanced dollar cost averaging strategy.  (SSRN)

Why does the currency carry trade work?  (Buttonwood)

Religion and stock price crash risk.  (SSRN via Money Game)

Technology

Why Microsoft ($MSFT) should embrace the iPad.  (Fast Company, AppleInsider)

Why Apple ($AAPL) should buy Yahoo! ($YHOO).  (Eric Jackson)

How much does it cost to build an iPhone?  (Asymco)

Everything is a gadget now.  (SplatF)

Finance

How the Volcker Rule could recreate Glass-Steagall.  (Dealbook)

Three plus years into bankruptcy, Lehman Brothers still lives.  (research puzzle pix)

Wall Street is gearing up for credit ratings downgrades.  (Term Sheet)

Checking in on the most crowded hedge fund positions.  (Street of Walls)

ETFs

Why does the iShares S&P National AMT-Free Municipal Bond ETF ($MUB) trade at a premium to NAV?  (Morningstar)

What happens next with $TVIX?  (Kid Dynamite)

Now the SEC is sniffing around ETFs.  (Reuters)

Global

Why savings rates spiked during the Great Recession.  (voxEU)

The Aussie dollar is weakening, look out Euro stocks.  (The Source)

Hold your applause for the Greek debt deal. (Felix Salmon, ibid)

Other markets have big elections coming up in 2012.  (MarketBeat)

Economy

Just how much “pent up demand” is there in the US consumer economy?  (FT Alphaville)

What is going on with housing inventories?  (Big Picture)

Agriculture subsidies are scrutinized amidst a farm boom.  (FT)

Earlier on Abnormal Returns

Controversy is catnip for the financial media.  (Abnormal Returns)

What you missed in our Wednesday morning linkfest.  (Abnormal Returns)

Mixed media

Look out Facebook, “interest-based social networks” like StockTwits are the new, new thing.  (TechCrunch also Howard Lindzon)

In praise of Reid Hoffman and Ben Casnocha’s The Start-up of You.  (EconLog)

All the incessant talk ABOUT television ruining the viewing experience.  (Atlantic Wire)

Abnormal Returns is a founding member of the StockTwits Blog Network.

The same is true of the sell-side as well.  Wall Street analysts and strategists are not paid on the accuracy of their calls. They are paid by the business, i.e. commissions, they generate.  Would they like to be correct?  Sure, but being correct does not necessarily pay the bills.  That is why analysts can continue to miss on earnings estimates and why strategists can continually call for the S&P 500 to be up 10% every year.  Being right isn’t what matters, so long as the clients are happy.

These two points were driven home today in posts we noted earlier in the morning linkfest. The first item comes from the sell-side where Joe Weisenthal at Business Insider takes to task investment strategist Bob Janjuah for failing to face up to his mistakes.  Janjuah, a noted bear, in a recent piece tried to push off the blame for his incorrect calls onto the world’s central banks.  Weisenthal writes:

Bottom line: It’s Janjuah’s job to anticipate what central banks are going to do, the central banks haven’t done anything that bizarre, and there are fundamentals to back up the market turnaround. The idea that the market is now just such a tangled mess that it’s impossible to assess is nonsense.  And in general, this whole blaming authorities for your missing rallies is just not a good look for anyone.

Janjuah has made the classic mistake of confusing normative and positive economics.  In short, mistaking what should be, for what is.  Another example of this at work is Meredith Whitney.  Whitney is best known for her high profile call towards the end of 2010 for a surge in state and municipal bankruptcies that sent the municipal bond market into a tailspin.  Despite her hypothesis having been proven incorrect Whitney continues to be a media star.

So much so that Whitney recently signed a high-profile book deal to detail her thesis at length.  The book publishers are likely not as interested in her thesis as they are in the fact that Whitney is, according to Kevin Roose at Dealbook notes:

Still, as a Paris Hilton-imitating, professional wrestler-marrying market maven, Ms. Whitney is doubtless one of the most entertaining equity analysts out there.

It no doubt helps that the publisher knows that the Whitney book is likely to be “somewhat controversial” with a lot of “strong feelings on the issue.”  Controversy sells books.  One need not know much more than that to understand this announcement.

Controversy is interesting.  Railing against the world’s central banks is fun.  These viewpoints generate buzz and media coverage.  However in neither case do they necessarily help the investor make better more informed decisions.  The very best investors are politically agnostic in that they divorce their political views from their investing decisions.  Paying much attention to the media for whom controversy is catnip is at best a waste of time and at worst a waste of money.

When analysts fight the market, the market almost always wins.  (Money Game)

Look out muni bond market, Meredith Whitney scores a book deal.  (Dealbook)

What you need to know about the halt in creation of new $TVIX units.  (VIX and More)

Will a more unified experience the biggest benefit of the Apple’s ($AAPL) new Mac OS?  (GigaOM)

John Paulson sued over his Sino-Forest investment.  (Deal Journal, ibid)

Why aren’t mortgage rates lower?  (WSJ)

What should the Fed do, if anything, about higher oil prices?  (Modeled Behavior, FT)

The most recent read on Chinese manufacturing shows continued sluggishness.  (Reuters, Global Macro Monitor, FT Alphaville)

The US has decoupled from Europe.  (Pragmatic Capitalism)

Abnormal Returns is a founding member of the StockTwits Blog Network.

Carl Richards, “If you think that dollar-cost averaging will help you deal with the emotional risk of investing, go ahead and do it.”   (Bucks Blog)

Chart of the day

Stop dissing the Dow.  (Money Game)

Markets

Since 1962 the spread between the earnings yield on the S&P 500 and the 10-year Treasury has never been higher.  (Bloomberg)

The double top in long term Treasuries.  (The Reformed Broker)

One of these days cash-rich companies will up their dividends.  (FT)

Strategy

The value of highly levered firms is dependent on the state of the credit markets.  (Distressed Debt Investing)

Low volatility and commodity futures returns.  (Falkenblog)

Success requires attention to detail.  (Stock Sage)

Apparently our new economy is based on inexpensive tacos and expensive athletic wear.  (YCharts Blog)

Finance

The Fed is writing new financial regulations largely behind closed doors.  (WSJ)

How some brokers including E*Trade ($ETFC) stack up with consumers.  (Total Return)

The world of finance is filled with wasted talent. (The Reformed Broker)

ETFs

The ultimate greater fool trade involving natural gas ETPs.  (Kid Dynamite)

The four key drivers of $TVIX.  (VIX and More)

A field guide to $VIX ETPs.  (VIX and More)

Global

Greece has exposed the limitations of the Euro model.  (Dealbook, FT, The Atlantic)

Does the world really need a new currency basket?  (beyondbrics)

Economy

The Chicago Fed National Activity Index shows continued economic growth.  (Capital Spectator)

Conflicting signals for inflation.  (Carpe Diem, MarketBeat)

Why the US should apply the MLP/REIT model to infrastructure assets.  (FT)

Midwest farm land prices surged in 2011. Don’t expect a repeat in 2012.  (Big Picture Ag)

Earlier on Abnormal Returns

What you missed in our Tuesday morning linkfest.  (Abnormal Returns)

Mixed media

A rave review for Fred Stoller’s “My Seinfeld Year.”  (Big Picture)

The ultimate app for the “buy what you know” investor.  (USA Today)

Hepatitis C kills more Americans than HIV.  (Scientific American)

Abnormal Returns is a founding member of the StockTwits Blog Network.

Markets

Companies are becoming reluctant to give earnings guidance as Q1 estimates decline. (FT, Money Game)

Retail investors are putting money back into the stock market.  (Money Game)

Why investors flock to the big, brand name hedge funds:  the placebo effect.  (Pension Pulse)

Liquidity

How diminished market making could make markets more volatile.  (Sober Look)

More on the risk of higher gasoline prices to the consumer.  (TheArmoTrader, Capital Spectator)

Don’t look now but milk futures are becoming more liquid.  (WSJ)

Europe

Greece secures a second bailout. (FT, WSJ)

Reactions to the likely unsustainable Greek debt deal. (Felix Salmon, Zero Hedge, Global Macro Monitor, Money Game, naked capitalism)

A sign of the times:  the ECB has halted bond purchases.  (FT)

Abnormal Returns is a founding member of the StockTwits Blog Network.

Scott D. Anthony author of The Little Black Book of Innovation, “If you want to innovate, it is always good to start with a degree of humility. “  (Globe and Mail)

Chart of the day

Emerging Asia hearts gold.  (Gregor Macdonald)

Markets

The market is NOT closed for President’s Day.  (bclund)

You have been warned:  financial advisors love big cap, dividend payers.  (Money Game)

High dividend stocks should outperform as long as the Fed remains in easy money mode.  (Sober Look)

Why aren’t the industrial metals rallying?  (Bonddad Blog)

Strategy

What does ‘passive investing‘ really mean?  (Portfolio Probe)

The many ways in which overconfidence affect investors.  (SSRN via CXOAG)

Companies

Pfizer ($PFE) is contemplating a carve out of its animal health business.  (FT)

Can Yum Brands ($YUM) finally turn Taco Bell around?   (The Reformed Broker, Money Game)

All of General Mills ($GIS) outperformance comes during recessions.  (research puzzle pix)

Finance

ETFs

The VelocityShares Daily 2X VIX Short-Term ETN ($TVIX) is the new darling of $VIX traders.  (VIX and More)

Dear Eric Sprott, Reg FD is a real thing.  (Kid Dynamite)

Global

Trade Greek stocks at your own risk.  (FT Alphaville)

Emerging market bond investors cannot live on credit ratings alone.  (beyondbrics)

Iran may have a hard time finding buyers for its oil, post-sanctions.  (FT, NYTimes also TRB)

Japan has a trade deficit problem.  (Sober Look, FT)

Economy

Is it time to start worrying about inflation?  (Time)

$4 gasoline is going to pinch consumers.  (Horan Capital)

Closing the gap: alternative to the Keystone pipeline project.  (Econbrowser)

The real crisis of capi

Abnormal Returns is a founding member of the StockTwits Blog Network.

talism is unemployment, especially youth unemployment.  (Pension Pulse)

The week in review/preview

On falling risk and the prospects of a housing recovery.  (A Dash of Insight)

Where markets stand at week-end.  (Global Macro Monitor, ibid)

The economic week in review.  (Bonddad Blog)

The economic schedule for the coming week.  (Calculated Risk)

Mixed media

The world is shrinking.  (Howard Lindzon, Seth Godin)

Some tips on not pissing your fortune away.  (Business Insider)

Moneyball comes to ticket pricing.  (Crain’s Chicago)

Abnormal Returns is a founding member of the StockTwits Blog Network.

Howard Marks, “Thus timing – and in particular the selection of the beginning point and end point for studying a performance record – plays an incredibly important role in perceptions of success or failure.”  (World Beta)

Chart of the day

Higher unleaded gasoline prices threaten the recovery.  (Pragmatic Capitalism)

Markets

Energy stocks are beginning to show some relative strength.  (StockCharts Blog)

In what state will the market be when the next surprise hits?  (Dynamic Hedge)

On the absurdity of negative real yields on Treasuries.  (Sober Look also Calafia Beach Pundit)

The stock-bond anomaly keeps growing in 2012.  (Money Game)

Checking in on bullish investor sentiment.  (The Technical Take)

Strategy

Are you diversified?  Less than you think.  (Jason Zweig)

When the market moves against you, first admit you have a problem.  (The Reformed Broker)

Time to start thinking about a stock replacement strategy.  (Barron’s)

How to invest in spinoffs.  (Globe and Mail)

Why study bad companies?  (Old School Value)

Companies

What’s the plan to turn Hewlett-Packard ($HPQ) around?  (Barron’s)

Apple ($AAPL) is not as cheap as you think it is.  (Bloomberg)

Why alternate payment systems are having a hard time making inroads against the credit card companies.  (Pando Daily)

Finance

Complex mortgage securities are once again finding willing buyers.  (Dealbook)

The Facebook IPO will not unleash a follow-on wave of IPOs.  (WashingtonPost)

US Bancorp ($USB) joins the ETF game already in progress.  (Focus on Funds)

America’s schizophrenic banking system.  (FT)

Community banks are getting their own SecondMarket.  (Felix Salmon)

Hedge funds

What good are hedge funds?  (Marginal Revolution)

Smaller hedge funds have a better chance of outperforming in this sort of environment.  (Bloomberg)

Ray Dalio sold a chunk of Bridgewater Associates.  (Bloomberg, Deal Journal)

Global

China cuts reserve requirements for its banks.  (NYTimes)

Checking in on the German “economic miracle.”  (Bonddad Blog)

Canada’s housing market is at risk of “severe correction.”  (Financial Post via @frankvoisin)

Supranational corporations are the new multinationals.  (Finance Addict)

Economy

A look at the stock-driven leading economic indicators.  (EconomPic Data)

Five cents of every retail dollar is spent online.  (Real Time Economics)

The surge in temporary jobs reflects a new reality for the jobs market.  (WashingtonPost)

Measuring the output gap is tougher than it looks.  (Economist’s View, Sober Look)

President Obama, we need better economic data.  (Real Time Economics)

Regulation in America:  “Complexity costs money.”  (Economist, ibid)

Earlier on Abnormal Returns

Top clicks this week on Abnormal Returns.  (Abnormal Returns)

What you missed in our Saturday morning linkfest.  (Abnormal Returns)

Mixed media

Why do we form habits? So we can use our brains for unpredictable events.  (Jonah Lehrer)

John Fairfax lived an interesting life, to say the least.  (NYTimes)

Abnormal Returns is a founding member of the StockTwits Blog Network.

1. Would you buy this stock?  (Pragmatic Capitalism)
2. The hard truths of ugly bond math.  (EconomPic Data)
3. Who is Allan Mecham and how did he put up eye-popping returns?  (SmartMoney)
4. Are you people seriously trying to create a market top?  (The Reformed Broker)
5. Now is NOT a good time to be an individual investor.  (Aleph Blog)
6. A look at some previous occasions when the world’s largest market cap company went parabolic.  (Market Anthropology)
7. Some crazy a** charts comparing Apple ($AAPL) vs. Google ($GOOG) vs. Microsoft ($MSFT).  (Asymco)
8. How to apply game theory to investing.  (Minyanville)
9. It is going to more than a few too many bears to turn this market.  (Dynamic Hedge)
10. The return of two-way trading.  (Dynamic Hedge)

What else you missed on the site this week:

1. Identifying talent is only easy in retrospect.  (Abnormal Returns)
2. Quit your bellyaching, there has simply never been a better time to be an individual investor.  (Abnormal Returns)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

Finance

Andrew Haldane, “‘We have arrived at a situation in which the ownership and control of banks is typically vested in agents representing small slivers of the balance sheet, but operating with socially sub-optimal risk-taking incentives.”  (London Review of Books)

An exploration of low volatility investing.  (Advisor Perspectives)

Relative strength in portfolio management: a primer.  (Systematic Relative Strength)

Hedge fund manager Seth Klarman is in a battle over a Canadian mega quarry.  (Fortune)

Farming is the new banking.  (Reuters)

Companies

Is Apple ($AAPL) a software company or a hardware company?  (Daring Fireball)

How Nike ($NKE) has remade their marketing machine.  (Fortune via TRB)

On the huge opportunity standing before BillGuard.  (Pando Daily)

T. Rowe Price ($TROW) has found it tough going cracking the Indian market.  (WSJ)

How McKinsey & Co. “hijacked the NHS.”  (Daily Mail via The Browser)

Economics

Francis Fukuyama talks innovation and stagnation with Peter Thiel.  (The American Interest also Noahpinion)

Christina Romer with five books to help you understand the Great Depression.  (The Browser)

More money is not necessarily the best fix for US infrastructure.  (Bloomberg)

What does a post-campus America look like?  (Megan McArdle)

What would your plan for Greece be?  (Crooked Timber via TRB)

Psychology

Jonah Lehrer, “The fatal misconception behind brainstorming is that there is a particular script we should all follow in group interactions.”  (New Yorker)

Alexandra Samuel, “The new unplugging doesn’t require you to quit Facebook or throw out your iPhone. What it requires is careful attention to the sources of our discomfort; to the challenging qualities of online interaction, or of simply living in a networked world.”  (The Atlantic)

What Jeremy Lin tells us about the difficulty in identifying talent.  (The Frontal Cortex)

How laptops transformed one school district (for the better).   (NYTimes via Apple 2.0)

Book excerpts

How companies learn your secrets an excerpt from Charles Duhigg’s The Power of Habit: Why We Do What We Do in Life and Business.  (NYTimes)

Excerpts from Tracie McMillan’s The American Way of Eating: Undercover at Walmart, Applebee’s, Farm Fields and the Dinner Table.  (Slate, part 2, part 3)

To what degree are musicians made or born, a look at Gary Marcus’ Guitar Zero: The New Musician and the Science of Learning.  (Brain Pickings)

The Wall Street bombing that made J. Edgar Hoover and the FBI.  An excerpt from Tim Weiner’s Enemies: A History of the FBI. (Bloomberg)

Mixed media

Author Tess Gerritsen on what constitutes a great thriller.  (The Browser)

The geography of investment grade wines.  (New Geography)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

• The Reformed Broker – Hot Links
• Financial Adviser – The Good Leads
• Points and Figures – Breakfast Links
• FT Alphaville – Further reading
• Dealbreaker – Opening Bell
• peHUB – First Read
• beyondbrics – Further reading
• The Big Picture – 10 AM Reads
• Term Sheet – Pre-Marketing links
• Huffington Post – 7.5 Things You Need to Know Today
• MarketBeat – Morning Links
• naked capitalism – Links
• Economist’s View – Links

Some other resources we check on a daily basis include:

• Counterparties
• streetEYE
• TechMeme

Did we miss anyone?  If so, feel free to leave a comment.  As always thanks for reading.

Abnormal Returns is a founding member of the StockTwits Blog Network.