The post Become a Better Investor Newsletter – 18 May 2024 appeared first on Become a Better Investor.
Noteworthy this week
- China replaces UST with gold
- Meme stonks redux
- Electricity inflation is the highest in 40 years
- US small cap debt coming due
- Magical PE vol
China replaces UST with gold: In 1Q24, China sold a record amount of US Treasuries (UST) and US agency bonds to buy gold.
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China sold a record amount of Treasury and US agency bonds to buy gold in the first quarter https://t.co/wtNeLpmpv9
— Jan Nieuwenhuijs (@JanGold_) May 16, 2024
Meme stonks redux: A tweeted image by the “Roaring Kitty” set off a new crazy pump in meme stocks like GameStop and AMC.
Imagine spending 4 years of your life studying efficient market hypothesis only to see a $GME rip 100% and add hundreds of millions of dollars of market cap because some guy who calls himself “roaring kitty” tweeted a meme
— Dr. Parik Patel, BA, CFA, ACCA Esq. (@ParikPatelCFA) May 13, 2024
Electricity inflation is the highest in 40 years: Energy prices surge as demand is growing from, for example, data centers and AI.
BofA: Electricity inflation is the highest in 40 years, just as data center & AI demand surge pic.twitter.com/EABjanrdRc
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) May 14, 2024
US small cap debt coming due: Small caps have a bigger share of debt coming due in the next 5 years. At the same time, 41% of Russell 2000 companies are not profitable.
41% of Russell 2000 companies are not profitable. Imagine what would happen when small caps would need to refinance their debt at current much higher interest rates. pic.twitter.com/23LvEDDTPz
— Michael A. Arouet (@MichaelAArouet) May 13, 2024
Magical PE vol: Institutional investors like private equity (PE) for its low volatility (vol) and high risk-adjusted return. However, the vol is low because the shares aren’t priced regularly, like listed equities.
MAGIC!!!
I mean this borders on ethics violation, no?
Selling people PE and private real estate as being single digit vol? Private credit is like a 4 vol here.
(red lines are mine) pic.twitter.com/qJP6Lr0UvB
— Meb Faber (@MebFaber) May 14, 2024
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Weekly market performance
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Chart of the week
Discussed in the Become a Better Investor Community this week
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Podcasts we listened to this week
The Morgan Housel Podcast – The Long Run Is Just A Collection of Short Runs
“Take the notion that investors should ignore the short run. It’s important to recognize that the long run is just a collection of short runs, and capturing long-term growth means managing the short run effectively enough to ensure you can stick around for a long time.”
Listen on Apple or Spotify.
Readings this week
Secrets of Family Empires
“Family businesses are at the heart of the world’s economic system – they employ the majority of the workforce and contribute over half of GDP, and even more in many Latin American and some Asian economies.”
Read the article
Book recommendation
Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger
“Poor Charlie’s Almanack draws on Munger’s encyclopedic knowledge of business, finance, history, philosophy, physics, and ethics—and more besides—to introduce the latticework of mental models that underpin his rational and rigorous approach to life, learning, and decision-making. Delivered with Munger’s characteristic sharp wit and rhetorical flair, it is an essential volume for any listener seeking to go to bed a little wiser than when they woke up.”
Get the book on Audible or Kindle.
Audible is great; have you tried it? If not, click here to get 2 books for free.
Memes of the week
Accurate? pic.twitter.com/a0QOROFlMv
— Michael A. Arouet (@MichaelAArouet) May 11, 2024
pic.twitter.com/M0NRCXgHdR
— Not Jerome Powell (@alifarhat79) May 16, 2024
New My Worst Investment Ever episodes
Ep784: August Biniaz – Be a Specialist Not a Jack of All Trades
BIO: August Biniaz is the Co-founder and Chief Investment Officer of CPI Capital. CPI Capital is a real estate private equity firm with the mandate to acquire multifamily assets while partnering with passive investors as limited partners.
STORY: Upon looking back and reflecting on the worst investment decision August has ever made, he says it’s his time, shiny object syndrome, getting excited about new investment ideas, and then putting a lot of time into learning about those ideas and losing that time.
LEARNING: Don’t be a jack of all trades and a master of none. Focus on your primary business. Stay in your lane.
Access the episode’s show notes and resources
Published on Become a Better Investor this week
Dr. Deming developed his philosophy over time and in conversations with others, not in isolation. As learners, we tend to forget that context, but it’s important to remember because no one implements Deming in isolation, either. In this conversation, Bill Bellows and host Andrew Stotz discuss how there’s no such thing as a purely Deming organization and why that’s good.
Listen to System of Profound Wisdom: Awaken Your Inner Deming (Part 20)
Guangdong TCL Smart Home Appliances Company Limited (002668 SZ): Profitable Growth rank of 3 was same compared to the prior period’s 3rd rank. This is above average performance compared to 920 large Cons. Disc. companies worldwide.
Read Guangdong TCL Smart Home Appliances – World Class Benchmarking
Sri Trang Agro-Industry Public Company Limited (STA TB): Profitable Growth rank of 10 was down compared to the prior period’s 7th rank. This is poor performance compared to 920 large Cons. Disc. companies worldwide.
Read Sri Trang Agro-Industry – World Class Benchmarking
United Parcel Service Incorporated (UPS US): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 1,420 large Industrials companies worldwide.
Read United Parcel Service – World Class Benchmarking
Zalando SE (ZAL GR): Profitable Growth rank of 2 was up compared to the prior period’s 9th rank. This is World Class performance compared to 950 large Cons. Disc. companies worldwide.
Read Zalando SE – World Class Benchmarking
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.
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