Noteworthy this week
- The most expected recession in history
- US stocks have seen inflows, and Europe has seen outflows
- It’s not only US stocks that perform over time
- Korea has a sober energy policy
- Eggs have become expensive, or have they?
The most expected recession in history: But will it happen? Some say the recession won’t happen just because it’s highly anticipated. Alf points out a flaw in this line of thinking.
The most expected recession in history?
I am hearing that’s exactly the reason why it’s not going to happen.
So let me ask you.
Everybody expects the sun to rise from East tomorrow.
Does that imply there is a higher chance it rises from West instead? pic.twitter.com/kH9FjtKdZe
— Alf (@MacroAlf) January 10, 2023
US stocks have seen inflows, and Europe has seen outflows: In the past year, US stocks have seen US$150bn inflows to equity, while Europe has seen SU$100bn+ outflows. This is impacting the performance of European stocks negatively.
“Are outflows from European equity funds over?”
The sort of think that naturally happens after a few months of local performance… pic.twitter.com/DxEqN0PVjj
— Chris Bailey (@Financial_Orbit) January 12, 2023
It’s not only US stocks that perform over time: Over the past decades, most people would agree that US stocks have been very strong. Some say you don’t need to hold anything else than US stocks. Though, a diversified non-US portfolio has shown the same return at lower volatility.
Everyone in the world would agree that over the past 50 years, these two portfolios are (near) identical.
B is actually slightly “superior”.
A is US stocks.
B is a diversified portfolio with no US stocks.
You don’t HAVE to own US stocks to win. Lots of ways to build wealth. pic.twitter.com/xIvHhM3zcS
— Meb Faber (@MebFaber) January 11, 2023
Korea has a sober energy policy: Unlike many European countries, Korea has decided to focus on nuclear power to phase out fossil fuels.
South Korea doubles down on nuclear power as part of new green policy shift 🇰🇷❤️☢️
📈 Nuclear to account for almost one-third of generation by 2030
👎 Plans for renewable energy downgraded
📉 LNG and coal demand set to drastically fall over next decadehttps://t.co/p1638d91Nb pic.twitter.com/upIiGpPNQC
— Stephen Stapczynski (@SStapczynski) January 12, 2023
Eggs have become expensive, or have they?: From a price perspective, eggs have reached an ATH in the US. On the other hand, eggs could still be considered cheap due to their high nutritional value.
Everyone keeps complaining about eggs being too expensive now but I’m gonna zag on this one
A dozen eggs for $3.60 is still ridiculously cheap
That’s basically 3-4 meals of high-quality protein for <$4
Eggs have been underpriced for years and remain relatively cheap pic.twitter.com/WWjyJZyGKz
— Ben Carlson (@awealthofcs) January 11, 2023
Results from last week’s poll
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Weekly market performance
Chart of the week
Discussed in the Become a Better Investor Community this week
“We will look at where we’re at in regions, sectors, and countries regarding various measures on Fundamental, Valuation, and Momentum.
To make guesses about the future, it’s crucial to know where we’re currently at.”
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Podcasts we listened to this week
“Jacob is a Danish-born astrophysicist living in the US and enjoying an early retirement. He is very thoughtful and deliberate about how he lives his life. He took the time to sit down and discuss his research and findings with me.”
Readings this week
Capital Allocation by Michael Mauboussin and Dan Callahan
“Capital allocation is a key job of management, but not all know how to allocate effectively. In this report, we establish the foundation by reviewing the sources and uses of capital and then show how US companies have allocated capital since 1985. Next, we review the alternatives in detail, including intangible investments, and offer a guide for thinking about the prospects for value creation. We finish with a framework for assessing a company’s capital allocation skills.”
The Rape of the Mind: The Psychology of Thought Control, Menticide, and Brainwashing by Joost Meerloo
“In 1933 Meerloo began to study the methods by which systematic mental pressure brings people to abject submission, and by which totalitarians imprint their subjective ‘truth’ on their victims’ minds. In ‘The Rape of the Mind’ he goes far beyond the direct military implications of mental torture to describing how our own culture unobtrusively shows symptoms of pressurizing people’s minds. He presents a systematic analysis of the methods of brainwashing and mental torture and coercion, and shows how totalitarian strategy, with its use of mass psychology, leads to systematized ‘rape of the mind.’”
Audible is great; have you tried it? If not, click here to get 2 books for free.
Memes of the week
I am never going to financially recover from this pic.twitter.com/gKQ8iSMZTj
— Ramp Capital (@RampCapitalLLC) January 11, 2023
— Alongside (@alongsidefi) January 11, 2023
New My Worst Investment Ever episodes
ISMS 1: The United States Won WW2.5, but Who Lost?
WW2.5 is what I like to call “The US against who?” You may say China or Russia. In my opinion, those are both wrong. It’s the US against Europe. And the US just won. The Russia-Ukraine conflict has encouraged US dominance over Europe. Let’s take a deeper look at this dominance.
Ep640: Peter Johnson – Pick the Right People to Work With
BIO: Peter W. Johnson, Jr. is the founder and principal of PWJohnson Wealth & Legacy, LLC, a fee-only Registered Investment Advisory firm based in Silicon Valley, California.
STORY: Peter invested in two business ideas that came too early for their time. Both businesses had minimal uptake because people didn’t understand what Peter was trying to do.
LEARNING: Never invest all of your money in risky things; always stay diversified. Pick the right people to work with. A great idea is not the only thing you need to succeed.
Published on Become a Better Investor this week
Dr. Deming listed 7 Deadly Diseases of Management in Out of the Crisis, and one of the more surprising is #3: Evaluation of performance, merit rating, or annual review. In this episode, David and Andrew discuss the harmful practice of awarding “teacher of the year,” “student of the month,” or other traditional recognition practices. David also offers practical suggestions for alternatives.
Tonghua Dongbao Pharmaceutical Company Limited (600867 SH): Profitable Growth rank of 1 was up compared to the prior period’s 2nd rank. This is World Class performance compared to 440 medium Health Care companies worldwide.
Central bankers appear to be raising rates into a recession to stifle inflation; stagflation would be the worst outcome. Demand for necessities (food and energy), inflation, and supply-chain disruptions can drive commodities higher. We see opportunities to allocate to specific sectors and markets within equity. Bonds and gold to protect capital.
Lepu Medical Technology (Beijing) Company Limited (300003 SZ): Profitable Growth rank of 4 was up compared to the prior period’s 5th rank. This is above average performance compared to 420 large Health Care companies worldwide.
Carlsberg Brewery Malaysia Berhad (CAB MK): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 480 medium Cons. Staples companies worldwide.
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.