Episode Details

In this session, I talk about two long-running stories in markets, the first relating to a SEC proposal to replace quarterly with semi-annual reporting for US firms and other to Kevin Warsh's (the new Fed chair) view that the Fed should speak less and provide less guidance. The common themes in both stories is that they remove "news" that the market has become to receiving and using to set prices, and the advocacy and opposition to both proposals share commonalities. Advocates for the changes argue that removing quarterly reporting will make makes less "short term" and that reducing Fed guidance will also reduce the gaming around Fed actions. Opponents to the changes point to the loss of information that markets can use to set prices, and increased volatility in markets.
I see shades of grey. I do like access to quarterly reports in my investing, since they allow me to update my valuations more frequently, but I also believe that earnings reports have become bulky and filled with distractions. Rather than reducing the frequency of reporting, I would prefer slimmer reports that have less management guidance and prognostications.
As for the Fed, I do think it is healthy for investors to step back from the post-2008 view of the Fed as an all-powerful institution that can set interest rates and alter the trajectory of the economy. Neither perception is based in reality, and a world where we see less and hear less from the Fed will be a healthier one.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/quarterly.pdf
Blog post:

Learn more about your ad choices. Visit megaphone.fm/adchoices