Become a Better Investor Newsletter – 1 June 2024
Noteworthy this week
- Tough times for small US businesses
- Asset managers don’t expect a recession
- China drives copper demand
- Oil and gas are here to stay
- Nvidia dominates the data center compute market
Tough times for small US businesses: The share of loss making companies in the Rusel 2000 has been in an upward trend for the past 30 years. Outside recessions, the rise has been the strongest in the past 10 years. Currently, 40% (!) of companies report losses.
Eye-opening trend in number of zombie companies. It has been possible only due to continuously lower interest rates and ample liquidity chasing yield. Let’s see what happens when these companies need to roll their debt at current rates. pic.twitter.com/vu4gAnmXHL
— Michael A. Arouet (@MichaelAArouet) May 28, 2024
Asset managers don’t expect a recession: 78% of global asset managers currently say that a recession within the next 12 months is unlikely. In November 2022, roughly 90% of portfolio managers anticipated a recession.
Global asset managers still do not foresee a recession within the next 12 months.
78% of asset managers current say that a recession within a year is unlikely.
This is up from 65% recorded in March and the highest share of respondents since February 2022.
Meanwhile, in… pic.twitter.com/0FKYD6W7xP
— The Kobeissi Letter (@KobeissiLetter) May 24, 2024
China drives copper demand: China has largely driven copper demand in the past 25 years. Pretty much everything related to the “green transition” requires a lot of copper. Copper is also among the best-performing assets in the past six months.
🇨🇳Did you know that the entire increase in copper demand over the past 25 years has been driven by China alone? pic.twitter.com/Q6utTe7WWk
— Vlad Bastion Research (@VladBastion) May 28, 2024
Oil and gas are here to stay: The main fossil energy source expected to be massively reduced by 2050 is coal. Oil is forecasted to remain flat. Nuclear is expected to grow by 60%. Though these forecasts are probably biased in favor of “green energy.”
Most important chart for energy investors. Oil and gas are here to stay. Coal will be replaced by renewables and nuclear. That’s it. pic.twitter.com/P9RbfgFHNE
— Michael A. Arouet (@MichaelAArouet) May 25, 2024
Nvidia dominates the data center compute market: As Nvidia’s market cap surpasses whole markets like Germany, Korea, and Australia one can also note their dominance. Nvidia’s market share in the data center compute market has expanded to 80% from 15%. Does that motivate the current valuation?
Nvidia’s share of the data center compute market has grown from about 15% five years ago to circa 80% today, via Goldman Sachs: pic.twitter.com/jZFIkh6HGw
— Tracy Alloway (@tracyalloway) May 28, 2024
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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
RWH045: REAL SUCCESS W/ CHRISTOPHER TSAI
“Christopher, who’s beaten the S&P 500 over the last 24 years, explains why Tesla is his biggest position; why investors routinely underestimate the impact of disruptive technologies; why it was so challenging to be the son of America’s first celebrity fund manager; what 3 habits help him most; & what he learned from his famed mentors, Peter Kaufman & Charlie Munger.”
Readings this week
The Missing “T” in ESG
“ESG rating agencies, however, are not solely accountable for the tax-related blind spot. As we show, their most prominent clients—ESG funds and their corresponding fund families—also share the blame. We observed a tendency for ESG funds to favor companies implementing aggressive tax strategies.”
Book recommendation
Scaling People: Tactics for Management and Company Building by Claire Hughes Johnson
“Scaling People is a practical and empathetic guide to being an effective leader and manager in a high-growth environment. The tactical information it puts forward—including guidance on crafting foundational documents, strategic and financial planning, hiring and team development, and feedback and performance mechanisms—can be applied to companies of any size, in any industry.”
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
— Declaration of Memes (@LibertyCappy) May 28, 2024
— Declaration of Memes (@LibertyCappy) May 26, 2024
New My Worst Investment Ever episodes
Ep786: Mark Kohler – Take Ownership of What You’re Doing Wrong
BIO: Mark Kohler, M.PR.A., C.P.A., J.D., is a highly respected Founding and Senior Partner at KKOS Lawyers, specializing in tax, legal, wealth, estate, and asset protection planning.
STORY: Mark and his partner bought two properties to put up on Airbnb. The first property needed just a bit of modification, but the second one required far more. It took them more time and money than expected to get it ready for renting.
LEARNING: Take ownership of your mistakes. If a problem occurs, admit it, step up, and try to solve it—don’t run away or stick your head in the sand. The majority of trouble we face in our lives will be caused by ourselves.
Access the episode’s show notes and resources
Published on Become a Better Investor this week
How can you make lasting change at your organization? Recruit your friends! In this discussion, Bill Bellows lays out his experience recruiting and working with a small group to make big changes in a large company.
Listen to Transparency Among Friends: Awaken Your Inner Deming (Part 21)
SK Telecom Company Limited (017670 KS): Profitable Growth rank of 6 was up compared to the prior period’s 7th rank. This is below average performance compared to 240 large Comm. Serv. companies worldwide.
Read SK Telecom – World Class Benchmarking
Tongcheng Travel Holdings Limited (780 HK): Profitable Growth rank of 1 was up compared to the prior period’s 9th rank. This is World Class performance compared to 920 large Cons. Disc. companies worldwide.
Read Tongcheng Travel Holdings – World Class Benchmarking
Glory Limited (6457 JP): Profitable Growth rank of 2 was up compared to the prior period’s 10th rank. This is World Class performance compared to 1,390 large Industrials companies worldwide.
Read Glory Ltd – World Class Benchmarking
Henan Shuanghui Investment & Development Company Limited (000895 SZ): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 540 large Cons. Staples companies worldwide.
Read Henan Shuanghui Investment & Development – 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.