Catching Up: Research Reading, Indexing, etc.

Catching up and emptying my overflowing links:

  • Fundamentally flawed indexing: The myth of how cap-weighted indexing is broken (FAJ)
  • Highest price ever: The great NYSE seat sale of 1928-29 (FAJ)
  • The collapse of the banking system 1930-33 (FAJ)
  • Tariff incidence in America’s gilded age (FAJ)


  1. Anyone know where one could get a free copy of “Fundamentally flawed indexing”? Or else related articles that discuss why Arnott might be wrong? His thesis made sense and it would be good to know the other side of the issue.

  2. I like the link regarding how correspondent check clearing may have played a role in the collapse of the banking system during the depression. It reminded me of an interesting article I read on The Fed’s Entry into Check Clearing Reconsidered, which discusses a time when the check clearing system and associated costs were market driven, and in fact, checks were regularly settled via correspondents and often not at “par” value. The article resonates with your link when they mention that:
    “A key perceived defect of the previous system was the “pyramiding” of reserves in financial centers, which left the latter vulnerable to sudden widespread withdrawals. Through rediscounting the Reserve Banks would provide an elastic supply of balances in response to rapid demand shifts, preventing financial panics.”
    While the conventional wisdom is that the Fed’s entry into check clearing was to eliminate non market based inefficiencies in the clearing system, this link provides perhaps a better rationale for a system that, for a time at least, had tax payers subsidize the clearing of checks.