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Become a Better Investor Newsletter – 1 April 2023

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Noteworthy this week

  • Commercial real estate could be hit next
  • The first yuan-settled LNG trade happened
  • Still, US$ remains the reserve currency
  • Turns out DB is better than CS (at getting fines)
  • Passive investing is not necessarily that diversified

Commercial real estate could be hit next: Commercial real estate (CRE) is a US$20.7trn market in the US. About 80%, or US$2.3trn, of CRE loans are concentrated in small banks, which is a vulnerability.

The first yuan-settled LNG trade happened: China and UAE settled an LNG trade in Chinese yuan this week. While this was just a trade, it’s likely to affect the US$ dominance in global trade.

Still, US$ remains the reserve currency: While China definitely wants to challenge the US$ reserve currency status, the yuan is unlikely to replace the US$ anytime soon. We’re more likely to see continued trade in US$ and increased trade in yuan.

Turns out DB is better than CS (at getting fines): Deutsche Bank has been fined a total of US$18.5bn since 2000, which is 60% more than Debit Suisse. Wow, DB must be proud!

Passive investing is not necessarily that diversified: Looking at the NASDAQ, 7 Tech companies account for more than 50% of the weight. The same stocks account for almost a quarter of the S&P500.

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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

“Join our Valuation Master Class guest speaker session with Mr. Amit Bhartia and learn his top 10 investing themes in 2023. He will also share his experience in the world of finance.

Amit is a former partner of the renowned asset management firm Grantham Mayo Van Otterloo (GMO), which manages over US$70bn in assets.

He was the CEO of their Asia operations and successfully ran their emerging market domestic demand fund for over ten years.”

Try 1 month of the Become a Better Investor Community for FREE today!
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Podcasts we listened to this week

MacroVoices #369 Dr. Pippa Malmgren: Perspective on the Further Geopolitical Escalation

“Erik and Pippa discuss:

  • Causes of recent increased nuclear escalation risks
  • Possibility of China to annex the Russia/Ukraine conflict
  • Where is China/US relations headed?
  • The Pentagon’s involvement in SVB bailout
  • The ‘little giant’ strategy.”

Listen to the podcast

Readings this week

Do Stocks Outperform Treasury Bills?

“Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills.”

Download the paper here

Book recommendation

Wanting: The Power of Mimetic Desire, and How to Want What You Need by Luke Burgis

“Humans don’t desire anything independently. Human desire is mimetic – we imitate what other people want. This affects the way we choose partners, friends, careers, clothes and travel destinations. Mimetic desire is responsible for the formation of our very identities.”

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

Ep666: Jeremy Kokemor – Tread Carefully When Investing in Metals and Mining

BIO: Jeremy Kokemor founded Right Tail Capital: a concentrated, fundamental equity investment firm based in Richmond, Virginia.

STORY: Jeremy was an intern in an investment management firm where he got to cover small-cap metal miners. He was new to this industry and made several mistakes.

LEARNING: Figure out your investment style. Be careful of overconfidence and overestimation bias when looking at stocks to invest in. Be willing to change your mind when the circumstances call for it.

Access the episode’s show notes and resources

Ep665: Paul Hodges – There’s No Substitute for Judgment

BIO: Paul Hodges is a trusted adviser to major companies and the investment community and has a proven track record of accurately identifying key trends in global marketplaces. He is chairman of New Normal Consulting and a Global Expert with the World Economic Forum.

STORY: Paul invested in a company in the cinema industry, which according to his research, was a well-performing business. After investing, his bank’s asset manager advised him to sell this stock. The stock grew 10-fold after that. Paul missed out on that windfall.

LEARNING: There’s no substitute for judgment. Distinguish between opinion and knowledge. Opinions are not knowledge.

Access the episode’s show notes and resources

Ep664: Amy Minkley – What Is Your Enough?

BIO: The founder of FI Freedom Retreats, Amy Minkley’s, life changed when she discovered the Financial Independence movement in 2019.

STORY: Amy was working in Bangkok, living an unhappy life of overworking and over-saving. This way of life gave her zero balance, and she was burning out. Ultimately, this led her to a new path that saw her quit her job in search of a more balanced life.

LEARNING: Be clear about your values and spend on that and not what others value. Separate creating wealth from growing wealth.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

How many people need to be “on board” in order to start implementing Deming ideas in an organization? Andrew and David P. Langford discuss Dr. Deming’s answer and what that means for folks trying to make changes.

Listen to What is the Critical Mass for Transformation?

RS Public Company Limited (RS TB): Profitable Growth rank of 5 was up compared to the prior period’s 8th rank. This is average performance compared to 290 small Comm. Serv. companies worldwide.

Read RS – World Class Benchmarking

Is global CPI going to follow the US CPI slowdown?

Download the PDF with all charts and graphs

Read ISMS 12: CPI Racing Across the Globe

Did the Fed finally break something with its aggressive rate rises? I’ve been repeating in my investment strategy that the Fed will eventually break something, and yes, they did. They did.

Read ISMS 11: US Banking Crisis and Fed Rate Cut

Is US CPI going up or down by yearend 2023?

Download the PDF with all charts and graphs

Read ISMS 10: US CPI Could Decline to 4% By YE23; Unless QE Revs Up

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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