“A Battle as Old as Markets”
Top 5 of the Week of August 6
In our Top 5 this week, A Wealth of Common Sense’s Ben Carlson discusses the recent market inversion yield curve. From the Enterprising Investor, Christopher Merker uncovers the four challenges of the environmental, social, and governance (ESG) investing market. And from Pension Partners, Charlie Bilello examines the gold versus stocks battle.
Jack Forehand, from Validea, reveals how knowledge can be a dangerous thing. And writing for PitchBook, Anthony Mirhaydari explains how venture capital is affecting the economy…
Predictive Power
- The recent yield curve is a dominant point of contention among investors at the moment
- Studies have shown that what follows a yield curve inversion isn’t always particularly good for the economy or for stocks—and everyone knows that investors love attempting to predict a recession
- Whether the predictive power of a yield curve proves true or not, it’s always good to have a recession game plan in the back of your head
ESG Issues
Despite its growth and increased application, ESG investing remains challenging:
- One of the most severe problems remains in gaining consistency when defining standards and terminology around the approach
- Quality of information and use comes next, investors’ perceptions and understanding of ESG need to change before adoption can improve
- And while ESG fits well in public markets, it’s failing to move into private markets which have dominated over public ones in the last six years consecutively
“A Battle as Old as Markets”
- From 1972-1980, Gold Bugs fervently believed that gold is the best investment approach—owning stocks is unmentionable
- This narrative spins a complete 180 from 1981-1999 when the age of the internet changes everything and investors should own stocks only, not gold
- 2000-2011 sees another about turn thanks to two 50% bear markets while gold has quintupled—investors are staying away from stocks again
- In the 2010s, indexing was in but it still paled next to active management, a view which is now beginning to change completely…
Which side of the battle are you on? Share your comments in the section below
It’s Not About What You Know, But What You Don’t Know
- It’s an inherent human trait that we have the belief that the harder we work and read the more we will know
- This knowledge—what we ‘think’ we know—is the most dangerous aspect of investing, the more you think you know, the more convicted you are that you’re right about your decisions
- Making decisions with this confidence can be detrimental to our investments, so seek advice and perspectives that move contrary to your own
Back to Reality
- 2018 has seen $57.5 billion invested in US VC-backed companies, a figure that is set to break $100bn for the first time since the dot-com bubble
- Unicorns are everywhere, and the Silicon Valley startup model looks like it works well on the surface—but what if this is merely another bubble storing up pain for investors in the near future?
- Thankfully, the industry is pushing policymakers to fix the situation as it recognizes the unhealthiness of overvaluations, to bring the situation back down to earth
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!
Do you like Top 5 of the Week? Feel free to share it with your friends.
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. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.