Cornell Capital Group’s Economics Blog. Brad Cornell teaches financial economics at the California Institute of Technology.
From Liberation Day Chaos to Cautious Recovery The second quarter of 2025 started with the April 2nd "Liberation Day" tariff announcement that sent shockwaves through global financial markets. What began as extreme volatility and panic selling evolved into a remarkable…
Stock Price Performance in Review We postponed publication of our quarterly memo awaiting the statement from President Trump on tariffs. That turned out to be wise. His statement hit the market, which was already down from year-end 2024, like a…
The P/E for automobile manufacturers is normally very low. Ford, GM and Toyota currently trade at 7 times earnings. Tesla’s P/E of 114 is unique in the auto industry. Elon Musk’s promises of future growth from humanoid robots and robotaxis…
By Rob Arnott, Bradford Cornell, Forrest Henslee, Thomas Verghese March 2025 Key Points Big market delusions (BMD) develop when investors anticipate that most early entrants in an exciting new market/technology will generate outsized returns. The recent electric vehicle (EV) craze demonstrates BMDs’ three-stage…
Today, we're going to talk about one of the most basic concepts of investing—risk. There's overwhelming evidence that when it comes to a large part of their net worth, like their retirement savings, investors are risk-averse. What that means is they…
Stock Price Performance in ReviewThe year 2023 ended on a high note. During the year, the S&P 500 Index rose 24.2% to close the year at 4,769.83. The total return on the index, including dividends, was 26.3%. However, as of…
The ultimate source of wealth from financial investments comes from the transfer of funds to entities that invest in the production of real goods and services.
The implied equity risk premium (IERP) and theories of stock market bubbles both offer explanations for the current elevated level of stock prices, but they are strange bedfellows. Here we explore the relation between the two, starting with the implied…
As Herb Stein “if something cannot go on forever, it will stop”. The current growth of government debt is unsustainable. How will it stop? And what does that mean for investors? Hello, and welcome back to *Reflections on Investing with…
