Skip to content
Learning that drives better investment decisions

Become a Better Investor Newsletter – 13 May 2023

| |

Noteworthy this week

  • US inflation slowed in April
  • The likelihood of US default increases
  • We must clean up our act
  • Buffett is making bucks in Japan
  • ChatGPT, your new portfolio manager?

US inflation slowed in April: Numbers came in slightly below expectations. Falling inflation could lead to the Fed pausing rate hikes.

The likelihood of US default increases: Looking at credit default swaps (CDS), market participants are pricing a higher probability of a US default.

We must clean up our act: Central bankers and politicians try to smoothen economic cycles. But we need to let weak businesses either adapt or die. Will the Fed let it happen?

Buffett is making bucks in Japan: Berkshire Hathaway had its AGM last weekend. Something to celebrate was the investment in five Japanese trading companies.

ChatGPT, your new portfolio manager?: A researcher at the University of Florida used ChatGPT to parse news headlines for whether they’re good or bad for a stock and found that ChatGPT’s ability to predict the direction of the next day’s returns was much better than random.

Join the world’s toughest valuation training

Become a Valuation Expert. Valuation Master Class Boot Camp graduates can confidently value any company in the world and possess in-demand industry skills.

Click here to learn more.

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

“Tomorrow, we will have our bi-weekly live session at 6 PM GMT+7.

We will talk about the performance of our global asset allocation strategy, the second book in the “Manage People” series, “Good to Great,” and a bit of talk about interest rates.”

Try 1 month of the Become a Better Investor Community for FREE today!
You can cancel at any time. Click here to learn more.

Podcasts we listened to this week

RWH024: WEALTH, WISDOM, & HAPPINESS W/ TOM GAYNER

“Tom is the CEO of the Markel Corporation, a global financial holding company, where he oversees about 20,000 employees. Here, he shares his time-tested advice on how to achieve enduring success in business & investing while also building a happy & fulfilling personal life.”

Listen to the episode.

Readings this week

Long-term shareholder returns: Evidence from 64,000 global stocks

“Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.”

Read the paper

Book recommendation

The Zurich Axioms by Max Gunther

“The 12 major and 16 minor Zurich Axioms contained in this book are a set of principles providing a practical philosophy for the realistic management of risk, which can be followed successfully by anyone, not merely the ‘experts’. Several of the Axioms fly right in the face of the traditional wisdom of the investment advice business – yet the enterprising Swiss speculators who devised them became rich, while many investors who follow the conventional path do not.”

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

New My Worst Investment Ever episodes

Ep684: Julian Klymochko – Arbitrage Trades Don’t Always Turn Out to Be Risk-free

BIO: Julian Klymochko is the CEO and Chief Investment Officer of Accelerate, a leading provider of alternative investment solutions.

STORY: Julian got into an M&A trade where the acquirer had to stage a shareholders’ vote. This led to a hostile acquisition where the target company was bought by another acquirer that was not part of the deal. Julian made a significant loss in this trade.

LEARNING: Never put on an M&A trade that has the buy side vote. Arbitrage doesn’t always mean a riskless trade.

Access the episode’s show notes and resources

Ep683: David Hay – The Importance of Range Expansion

BIO: David Hay has been employed in the securities industry since 1979 when he joined Dean Witter Reynolds, now Morgan Stanley.

STORY: A colleague told David about a business that was going to sell books online. David wasn’t convinced that the business had a competitive edge. So while his colleague invested $50,000 into this company, David chose not to invest. The company was Amazon. Had David invested then, he’d now be a multimillionaire.

LEARNING: Invest only what you can afford to lose. Keep challenging your thesis. Have a systematic quantitative framework to help you keep an open and agile mind when investing.

Access the episode’s show notes and resources

Ep682: Rex Salisbury – Quitting Can Be a Very Important Skill to Exercise

BIO: Rex Salisbury is the Founder & General Partner at Cambrian Ventures, a pre-seed & seed focused fintech fund.

STORY: Rex’s biggest mistake ever was sticking with his initial career too long, even though he knew he shouldn’t have been working that job.

LEARNING: Invest in the skill that you want to move into as much as you. Build networks early in your career.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

Andrew talks to Justin Marcharia, Round Table Training Africa’s Managing Director, about his collaboration with The Deming Institute. His goal is to help new and small businesses in East Africa use the Deming philosophy to grow in sustainable ways.

Listen to Growing Businesses in Kenya: Interview with Justin Macharia

What’s interesting about Toyota is that if you buy today, you get its future growth for free.

Download the PDF with all charts and graphs

Read ISMS 22: Toyota vs. EV Extremists – Who Is Right?

Central banks’ aggressive rate hikes and QT crash the stock markets. Collapsing energy prices would be damaging to our tilts to World energy. If inflation reaccelerates, we could miss out on rising commodities prices. Our high gold allocation could get hit by higher rates or improved market sentiment.

Read A. Stotz All Weather Strategies – April 2023

Advanced Info Service Public Company Limited (ADVANC TB): Profitable Growth rank of 3 was same compared to the prior period’s 3rd rank. This is above average performance compared to 260 large Comm. Serv. companies worldwide.

Read Advanced Info Service – World Class Benchmarking

Central Retail Corporation Public Company Limited (CRC TB): Profitable Growth rank of 1 was up compared to the prior period’s 9th rank. This is World Class performance compared to 930 large Cons. Disc. companies worldwide.

Read Central Retail Corporation – 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.

Posted in Newsletter