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Become a Better Investor Newsletter – 11 May 2024

Noteworthy this week

  • 0% return over the next 10 years
  • Berkshire Hathaway got US$189bn in cash
  • US is no.1 in oil
  • Risk of an RMB devaluation is real
  • Gang crime threatens the Swedish economy

0% return over the next 10 years: The chart shows that when the S&P 500’s PE ratio was at its current level, the return for the following decade was zero.

Berkshire Hathaway got US$189bn in cash: Buffett’s Berkshire Hathaway now holds a record US$189bn in cash. I guess he is waiting for times to accumulate at better prices.

US is no.1 in oil: I’m not sure about the tweet author’s take on the chart, but seeing the US become the world’s no.1 oil producer while also pushing green energy is interesting.

Risk of an RMB devaluation is real: We can expect China to stimulate the economy. Loose financial conditions, further falls in asset prices like property, and weak investment returns likely will exacerbate unrecorded capital outflows. In the face of both, the renminbi is likely to get weaker.

Gang crime threatens the Swedish economy: According to an FT article, the governor of the Swedish central bank warned that long-term economic growth is at risk if gang crime continues.

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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

“We just uploaded the performance review and weight update of our Global Asset Allocation Strategy.”

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Podcasts we listened to this week

The Memo by Howard Marks – The Impact of Debt

“In his latest memo, Howard Marks examines the relationship between leverage and survivability, taking inspiration from a recent Collaborative Fund post by Morgan Housel. Howard explains why determining the appropriate amount of leverage should be about optimization, not maximization.”

Listen to the episode.

Readings this week

How I Think About Debt

“Japan has 140 businesses that are at least 500 years old. A few claim to have been operating continuously for more than 1,000 years. These ultra-durable businesses are called “shinise,” and studies of them show they tend to share a common characteristic: they hold tons of cash, and no debt.”

Read the article

Book recommendation

The Anxious Generation: How the Great Rewiring of Childhood Is Causing an Epidemic of Mental Illness by Jonathan Haidt

“After more than a decade of stability or improvement, the mental health of adolescents plunged in the early 2010s. Rates of depression, anxiety, self-harm, and suicide rose sharply, more than doubling on many measures. Why?”

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

Ep783: William Browder – Don’t Go to Russia

BIO: William Browder is the CEO of Hermitage Capital Management, Head of the Global Magnitsky Justice Campaign, and author of Red Notice and Freezing Order.

STORY: Bill moved to Moscow at the age of 31 and was the only Westerner there with any Wall Street skills. That led him to become the largest foreign investor in the country. His decision to go to Russia was the worst investment of his life. Although Bill made a fortune for his clients and a smaller portion for himself, he wishes he never moved to Russia because a lot of people have died, and a lot of lives have been ruined.

LEARNING: Don’t go to Russia.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

What happens if you transform HOW you think? In this episode, Bill Bellows and host Andrew Stotz discuss the problem of thinking in one dimension at a time (as we were taught in school) and its impact on our ability to solve problems. BONUS: Book recommendations to broaden your understanding of Deming and more.

Listen to Transforming How We Think: Awaken Your Inner Deming (Part 19)

In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe: Ignorance is Bliss. Today, they discuss three chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this series, they discuss mistake number 32: Are You Subject to the Money Illusion? Mistake 33: Do You Believe Demographics Are Destiny? And mistake 34: Do You Follow a Prudent Process When Choosing a Financial Advisory Firm?

Read ISMS 41: Larry Swedroe – Focus on Managing Risk Not Returns

Gold and commodities did well as stocks and bonds fell. Performance review of our strategies in April 2024 – All Weather Inflation Guard fell 1.5%, All Weather Strategy fell 1.5%, All Weather Alpha Focus fell 0.9%.

Read A. Stotz All Weather Strategies – April 2024

Asics Corporation (7936 JP): Profitable Growth rank of 2 was up compared to the prior period’s 4th rank. This is World Class performance compared to 950 large Cons. Disc. companies worldwide.

Read Asics Corp – World Class Benchmarking

Puma SE (PUM GR): Profitable Growth rank of 6 was down compared to the prior period’s 4th rank. This is below average performance compared to 950 large Cons. Disc. companies worldwide.

Read Puma SE – 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.