Become a Better Investor Newsletter – 18 February 2023
Noteworthy this week
- The recent stock rally wasn’t supported by liquidity
- ECB’s Valentine’s trolling re-affirms 2% inflation
- Is the current inflation caused by supply shocks or by monetary debasement
- The US has pushed the Europe-Russia conflict for a long time
- Who cares about poison lakes in China?
The recent stock rally wasn’t supported by liquidity: The covid rally in stocks was driven by liquidity. However, the recent rebound wasn’t. If we assume that liquidity is the primary driver of stock prices, this rebound may not have legs.
The recent rally in stocks deviated from liquidity conditions, which have held steady but have not improved. This is just one reason to question whether there is an adequate foundation to support a new bull market. pic.twitter.com/4woQLnWrMB
— Jurrien Timmer (@TimmerFidelity) February 14, 2023
ECB’s Valentine’s trolling re-affirms 2% inflation: This is an actual post of the European Central Bank on Valentine’s day. The central bank clearly communicates its goal: 2% inflation. We’ll see more rate hikes then.
Roses are red
Violets are blue
We will stay the course
And return inflation to 2#ValentinesDay ❤️🥰 pic.twitter.com/seWC9tfDFg— European Central Bank (@ecb) February 14, 2023
Is the current inflation caused by supply shocks or by monetary debasement?: Great thread by Lyn, which doesn’t answer the question but shows the historical answers to the same question. Spoiler: Prices remain higher, hence, monetary debasement. Click below and read the thread.
After the dust settles from a major event, whether inflation was just caused by temporary supply shocks or by monetary debasement is answered by one key test:
Did aggregate prices go back to their previous level, or no?
🧵
— Lyn Alden (@LynAldenContact) February 11, 2023
The US has pushed the Europe-Russia conflict for a long time: A good description of what happened in April of 2008 when the US pushed France and Germany to allow NATO to state that they would bring in Georgia and Ukraine. France and Germany were hesitant to provoke Russia; the US was very intent on provoking Russia. Click below to watch the video.
If you have any doubts the U.S. intends to push Europe & Russian into a direct conflict, just watch this John Bolton interview.
He openly blames France & Germany for the current crisis & says the only solution is for NATO to retake all the territory.https://t.co/WDOJuu4q0J https://t.co/dmzssZu2Xr pic.twitter.com/OUNwbs11TG
— Financelot (@FinanceLancelot) February 10, 2023
Who cares about poison lakes in China?: Another interesting thread on the environmental costs of the green energy transition. Click on the image below to read the thread.
Something the #GreenEnergy advocates never want to talk about is the environmental damage so called “renewables” do to the planet. I mean who cares about a vast man-made lake of poison in northern China, as long as it’s not in my backyard. Right? 🧵 pic.twitter.com/soJ79Xki4t
— John Lee Pettimore (@JohnLeePettim13) February 14, 2023
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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 Rewind – Ditto | The Memo by Howard Marks
“Howard is joined by Bruce Flatt, CEO of Brookfield, for a discussion of Ditto, which was originally published on January 7, 2013. They examine the distinction between price and value and consider how investors might gain a competitive advantage today. This episode was recorded in November 2022.”
Readings this week
Investors: The one thing separating excellent from competent
“If you’re hard-working, intelligent and good at exams you can become a fund manager. But that won’t make you a great fund manager. That takes something else. What?”
Warren Buffett’s Worst Loss Came During the Dot-Com Bubble
“Buffett suffered a 49% loss from Jun 1998 to Mar 2000. At the same time, the NASDAQ rose 140% and SP500 rose 28%. Despite heavy losses and public ridicule, Buffett stuck to his guns and wouldn’t touch internet stocks. Buffett’s ability to stay disciplined might be more admirable than his analytical skill.”
Book recommendation
Once Upon a Time in Russia: The Rise of the Oligarchs and the Greatest Wealth in History by Ben Mezrich
To understand the state of Russia today, one must understand the oligarchs who have shaped it.”
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
Having the Inflation Special for breakfast 😋 pic.twitter.com/ywIQ38xoVQ
— John W. Rich (Fake Tech Exec) (@Cokedupoptions) February 16, 2023
One of the dumbest posts I’ve seen today pic.twitter.com/XOxcxFcE4t
— litquidity (@litcapital) February 10, 2023
New My Worst Investment Ever episodes
ISMS 5: How Rising Rates and Oil Prices Are Contributing to 6.4% Inflation in the US
What do you think: Are we headed for a recession or has the Fed engineered a soft landing?
Download the PDF with all charts and graphs
Access the episode’s show notes and resources
Ep648: Pia Singh – Mistakes Are Inevitable, So Be Prepared
BIO: Pia Singh is a Business Growth Strategist with 15+ years of experience in helping companies find ways to save on the bottom line and drive topline growth. She is a recognized Growth Strategist with excellent strategic planning capabilities.
STORY: Pia invested a substantial amount of her wedding money in a friend’s business. She lost everything she had invested and had to take a loan to pay for her wedding.
LEARNING: There are no shortcuts in investing; you must do your due diligence to succeed. Don’t make a rash investment decision without doing your research. Mistakes are inevitable, so be prepared.
Access the episode’s show notes and resources
Ep647: Raghav Kapoor – Be on High Alert When You’re Doing Well
BIO: Raghav Kapoor is the CEO and Co-Founder of Smartkarma, an Asia-focused Investment Research Network that serves global institutional investors, corporates, and private wealth.
STORY: Raghav invested 2% of his portfolio in a biotech company in the US simply because it was run by people he believed had a good reputation. He ended up losing 98% of his investment.
LEARNING: Invest within your area of competence or expertise. Capital preservation and compounding are essential. Great people get it wrong too.
Access the episode’s show notes and resources
Published on Become a Better Investor this week
In this episode, Andrew and David introduce the broad topic of “motivation.” David describes intrinsic vs extrinsic motivation and how motivation practices are usually manipulation tactics that don’t work over the long term. So what do we do instead?
Listen to The Best Way to Motivate: Cultivating Intrinsic Motivation Series with David P. Langford (Part 1)
Unlike EMs, DMs benefited from nearly free money. The market believes US ST rates rise has quelled inflation. What do you think: Has the Fed succeeded at quelling inflation or not?
Read ISMS 4: Bond Yields Are Showing the Fed Has Won Its Battle Against Inflation
PBF Energy Incorporated (PBF US): Profitable Growth rank of 2 was up compared to the prior period’s 8th rank. This is World Class performance compared to 350 large Energy companies worldwide.
Read PBF Energy – World Class Benchmarking
The One Enterprise Public Company Limited (ONEE TB): Profitable Growth rank of 4 was down compared to the prior period’s 2nd rank. This is above average performance compared to 260 medium Comm. Serv. companies worldwide.
Read The One Enterprise – World Class Benchmarking
MIXI Incorporated (2121 JP): Profitable Growth rank of 5 was same compared to the prior period’s 5th rank. This is average performance compared to 290 large Comm. Serv. companies worldwide.
Read MIXI – 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.