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Become a Better Investor Newsletter – 14 January 2023

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Noteworthy this week

  • The most expected recession in history
  • US stocks have seen inflows, and Europe has seen outflows
  • It’s not only US stocks that perform over time
  • Korea has a sober energy policy
  • Eggs have become expensive, or have they?

The most expected recession in history: But will it happen? Some say the recession won’t happen just because it’s highly anticipated. Alf points out a flaw in this line of thinking.

US stocks have seen inflows, and Europe has seen outflows: In the past year, US stocks have seen US$150bn inflows to equity, while Europe has seen SU$100bn+ outflows. This is impacting the performance of European stocks negatively.

It’s not only US stocks that perform over time: Over the past decades, most people would agree that US stocks have been very strong. Some say you don’t need to hold anything else than US stocks. Though, a diversified non-US portfolio has shown the same return at lower volatility.

Korea has a sober energy policy: Unlike many European countries, Korea has decided to focus on nuclear power to phase out fossil fuels.

Eggs have become expensive, or have they?: From a price perspective, eggs have reached an ATH in the US. On the other hand, eggs could still be considered cheap due to their high nutritional value.

Results from last week’s poll

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Weekly market performance

Click here to see more markets and periods.

Chart of the week

Discussed in the Become a Better Investor Community this week

“We will look at where we’re at in regions, sectors, and countries regarding various measures on Fundamental, Valuation, and Momentum.

To make guesses about the future, it’s crucial to know where we’re currently at.”

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Podcasts we listened to this week

Talking Billions – Ep.8: Jacob Lund Fisker | Frugal, Responsible, and Environmentally Friendly Living

“Jacob is a Danish-born astrophysicist living in the US and enjoying an early retirement. He is very thoughtful and deliberate about how he lives his life. He took the time to sit down and discuss his research and findings with me.”

Readings this week

Capital Allocation by Michael Mauboussin and Dan Callahan

“Capital allocation is a key job of management, but not all know how to allocate effectively. In this report, we establish the foundation by reviewing the sources and uses of capital and then show how US companies have allocated capital since 1985. Next, we review the alternatives in detail, including intangible investments, and offer a guide for thinking about the prospects for value creation. We finish with a framework for assessing a company’s capital allocation skills.”

Download a PDF of the research here.

Book recommendation

The Rape of the Mind: The Psychology of Thought Control, Menticide, and Brainwashing by Joost Meerloo

“In 1933 Meerloo began to study the methods by which systematic mental pressure brings people to abject submission, and by which totalitarians imprint their subjective ‘truth’ on their victims’ minds. In ‘The Rape of the Mind’ he goes far beyond the direct military implications of mental torture to describing how our own culture unobtrusively shows symptoms of pressurizing people’s minds. He presents a systematic analysis of the methods of brainwashing and mental torture and coercion, and shows how totalitarian strategy, with its use of mass psychology, leads to systematized ‘rape of the mind.’”

Audible or Kindle.

Audible is great; have you tried it? If not, click here to get 2 books for free.

Memes of the week

New My Worst Investment Ever episodes

ISMS 1: The United States Won WW2.5, but Who Lost?

WW2.5 is what I like to call “The US against who?” You may say China or Russia. In my opinion, those are both wrong. It’s the US against Europe. And the US just won. The Russia-Ukraine conflict has encouraged US dominance over Europe. Let’s take a deeper look at this dominance.

Access the episode’s show notes and resources

Ep640: Peter Johnson – Pick the Right People to Work With

BIO: Peter W. Johnson, Jr. is the founder and principal of PWJohnson Wealth & Legacy, LLC, a fee-only Registered Investment Advisory firm based in Silicon Valley, California.

STORY: Peter invested in two business ideas that came too early for their time. Both businesses had minimal uptake because people didn’t understand what Peter was trying to do.

LEARNING:  Never invest all of your money in risky things; always stay diversified. Pick the right people to work with. A great idea is not the only thing you need to succeed.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

Dr. Deming listed 7 Deadly Diseases of Management in Out of the Crisis, and one of the more surprising is #3: Evaluation of performance, merit rating, or annual review. In this episode, David and Andrew discuss the harmful practice of awarding “teacher of the year,” “student of the month,” or other traditional recognition practices. David also offers practical suggestions for alternatives.

Listen to Deadly Disease of Employee of the Month: Deming in Education with David P. Langford (Part 11)

Tonghua Dongbao Pharmaceutical Company Limited (600867 SH): Profitable Growth rank of 1 was up compared to the prior period’s 2nd rank. This is World Class performance compared to 440 medium Health Care companies worldwide.

Read Tonghua Dongbao Pharmaceutical – World Class Benchmarking

Central bankers appear to be raising rates into a recession to stifle inflation; stagflation would be the worst outcome. Demand for necessities (food and energy), inflation, and supply-chain disruptions can drive commodities higher. We see opportunities to allocate to specific sectors and markets within equity. Bonds and gold to protect capital.

Read A. Stotz All Weather Strategies – December 2022

Lepu Medical Technology (Beijing) Company Limited (300003 SZ): Profitable Growth rank of 4 was up compared to the prior period’s 5th rank. This is above average performance compared to 420 large Health Care companies worldwide.

Read Lepu Medical Technology (Beijing) – World Class Benchmarking

Carlsberg Brewery Malaysia Berhad (CAB MK): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 480 medium Cons. Staples companies worldwide.

Read Carlsberg Brewery Malaysia – 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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