Donald Luskin

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Donald Luskin (born April 1954) is Chief Investment Officer for Trend Macrolytics LLC, a consulting firm providing investment strategy and macroeconomics forecasting and research for institutional investors.

Luskin is a contributing editor and columnist both for National Review Online (NRO)[1] and SmartMoney.com.[2] His columns touch on investing, economic and political matters. Luskin is a frequent guest on Larry Kudlow's CNBC television show, Kudlow & Company. He has published two books, Index Options and Futures: The Complete Guide[1] and Portfolio Insurance: A Guide to Dynamic Hedging.[2] He also writes a blog, "The Conspiracy to Keep You Poor and Stupid", based on the title of his as-yet unpublished book. The blog's tagline is: "How big government, big business, big media and big academia block your road to financial freedom—and tell you it's for your own good." Luskin is a self-avowed libertarian, and his blog links to other financial and political blogs espousing similar beliefs. He formerly was a columnist for TheStreet.com and Business 2.0 magazine. His writings have appeared in the Wall Street Journal, the Journal of Portofolio Management, the Harvard Business Review and other publications.

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[edit] Biography and Achievements

On his blog, Luskin states he "attended Yale in 1973-1974; dropped out to rejoin the real world as soon as possible."[3]

After college, Luskin worked for several years as a creative consultant to Los Angeles companies such as Mattel and Teledyne, and motion picture studios Warner Brothers and LucasFilm. He and two colleagues developed a series of all-night treasure-hunts, one of which was adapted into the Walt Disney motion Picture Midnight Madness.

Luskin's investment career began in 1979, when he started a hedge fund while an options market maker on the Pacific Stock Exchange. As his fund grew and evolved, he became a market maker on the Chicago Board Options Exchange and the New York Stock Exchange.

In 1984 Luskin joined Jefferies & Co., a brokerage firm. There as senior vice president, he invented POSIT, a crossing network enabling institutional investors to exchange entire portfolios with each other. POSIT was later spun out of Jefferies as a separate publicly traded company, Investment Technology Group.

In 1987 Luskin joined Wells Fargo Investment Advisors, a division of Wells Fargo Bank, as senior vice president in charge of investment management and trading. He became vice chairman when the firm merged with Japan's Nikko Securities in 1989, becoming Wells Fargo Nikko Investment Advisors. When the firm was acquired by Barclays Bank in 1995 and became Barclays Global Investors, Luskin became chief executive officer of the firm's global business in mutual funds. Over Luskin's eleven years with the firm, assets under management grew from $69 billion to over $500 billion. Luskin was responsible for numerous innovations in index funds and quantitative investing, including the development of the LifePath family of mutual funds, for which Luskin is the named inventor on a US patent.[4]

In August 1999, during the tech bubble, Luskin and partner Dave Nadig (himself subject of a book by James Morton: Investing with the Young Guns) started the MetaMarkets Open Fund, the first mutual fund to publish trades and list its holdings in real-time via its website. This "transparency" and "openness," Luskin and Nadig said, was a step forward in the financial world, equivalent to the political revolutions and international democratic transformations of the 1990s, because it leveled the playing field for the average investor and overthrew "financial elites."[5] MetaMarkets.com, the venture-backed company that Luskin and Nadig founded to operate OpenFund, was hailed by Fortune magazine as one of the "coolest companies" in America in 2000. Their model was dismissed by some analysts as being a "gimmick," having nothing to do with investing per se: "They brought chat boards to life in a mutual fund."[6] At its peak, OpenFund received $45 million in investments, and the fund's biggest positions included companies like JDS Uniphase and Extreme Networks. After the market top in March 2000, the valuations of technology companies collapsed and many OpenFund investors redeemed their shares, as the 2000 market crash reduced the fund's value by 75%.[7] The fund was shut down in the summer of 2001.[8]

[edit] Conflicts with Paul Krugman

As a public intellectual, Luskin has been controversial. Much of his blog and many of his NRO columns are spent detailing and explaining how economic facts, figures, and trends are distorted by politicians, pundits and the media. He has a particular animosity towards the New York Times, especially columnist Paul Krugman, whose economic pronouncements he has endeavored to debunk. Luskin is de facto leader of what he calls the "Krugman Truth Squad," an ad hoc group of bloggers who are dedicated to detailing and rebutting what they consider Krugman's lies and distortions.

Luskin and his Truth Squad pressured Times ombudsman Daniel Okrent to require Krugman to correct errors in his column -- errors to which Krugman ultimately admitted -- and Krugman's editor Gail Collins to promulgate a more stringent columnist corrections policy.[9] In his farewell column, Okrent said, "…Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults".[10] Luskin similarly worked with Okrent's successor as ombudsman Byron Calame, which resulted in further Krugman corrections, and a new and even more stringent columnist corrections policy.[11]

Krugman has occasionally responded directly to Luskin's criticisms. In one instance Luskin accused Krugman of making an arithmetical error in his appraisal of the costs and effects of the 2003 tax cuts.[12] Krugman responded with a series of postings on his own website, claiming to refute Luskin's accusations.[13] In one such posting, apparently referring to the persistence of Luskin's criticisms, Krugman humorously referred to Luskin as his "stalker-in-chief".[14] Later, after Luskin appeared at a Krugman book signing, Krugman said of Luskin on the FOX News television program Hannity and Colmes, "That's a guy, that's a guy who actually stalks me on the web, and once stalked me personally".[15] The animosity between Luskin and Krugman became so intense it became the subject of a story in The New Yorker with extensive remarks from both men.[16]

[edit] Quotes

  • "Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation—and show you how to fight back!"—Description of his weblog.
  • "Fig-leaf Dan—available in one handy stretch-to-fit size."—An insult to Daniel Okrent, public editor of the New York Times. Luskin believes Okrent did a poor job of hiding liberal bias in the New York Times.
  • "The emperor has no clothes, and I intend to keep calling him naked."—On the merits of attacking Paul Krugman.


[edit] References

  1. ^ Index Options and Futures: The Complete Guide. ISBN 0-471-85464-6. 
  2. ^ Portfolio Insurance: A Guide to Dynamic Hedging. ISBN 0-471-85849-8. 

[edit] External links