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Become a Better Investor Newsletter – 18 March 2023

Noteworthy this week

  • According to KPMG, everything was chill at SVB 2 weeks ago
  • SVB could have been avoided if regulators were actually doing their jobs
  • Saving SVB was a bailout of Silicon Valley
  • Then there’s Debit Suisse
  • The “king of chemicals” needed for the green switch and food

According to KPMG, everything was chill at SVB 2 weeks ago: Apparently, the big-four auditor KPMG signed off on Silicon Valley Bank’s (SVB) books just 2 weeks ago. Have we ever seen this before with auditors? (Psst, rhetorical question)

SVB could have been avoided if regulators were actually doing their jobs: On the other hand, when has that ever been more important than political agendas?

Saving SVB was a bailout of Silicon Valley: US Presidential candidate says the true impact of guaranteeing SVB’s depositors was a bailout of Silicon Valley rather than protecting the common person.

Then there’s Debit Suisse: Credit Suisse has been troubled for a while (obviously), but as the SVB contagion spread to Europe, there was a new crisis in the bank.

The “king of chemicals” needed for the green switch and food: Sulfuric acid is essential for electric vehicles, batteries, solar, wind turbines, and semiconductors, but 50%+ is used to make phosphate fertilizer. Surprise, surprise, we’re using dirty methods to produce some of this sulfuric acid.

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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

“Recent events in the US bank sector have led to a shift in expectations. The peak is now expected at 5% in May versus 5.5% in July. Fed is then expected to lower the rate rather than keep it at peak for some time.”

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Podcasts we listened to this week

MacroVoices #366 Louis-Vincent Gave: Staying Humble in Troubling Times

“What is the market signalling? Escalation of conflict between US/Russia and what it means for the markets. Where is the bond market headed? Fed rate hikes – is it over yet?”

Listen to the podcast

Readings this week

The Evidence Against Favoring Dividend-Paying Stocks

“There has been no historical alpha among dividend-paying stocks, including those with a history of increasing dividends. Investors are better served by “tilting” allocations to factors that have historically outperformed (e.g., value).”

Read the article

Momentum Investing: Ride Winners and Cut Losers. Period.

“The most basic momentum strategy buys stocks that have performed well in the past. This strategy is very different from a pure value strategy, which exclusively focuses on buying cheap stocks.”

Read the article

Book recommendation

Psych: The Story of the Human Mind by Paul Bloom

“A compelling and accessible new perspective on the modern science of psychology, based on one of Yale’s most popular courses of all time,”

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

ISMS 9: Saving Silicon Valley Bank Brings New Risks

The Silicon Valley Bank crisis started when the US government shut down its economy

The Silicon Valley Bank crisis started when the US government shut down the economy from 2020 to 2021.

Let’s take a step back to January 29th, 2020, when President Donald Trump announced a White House Coronavirus Response task force with the director of the National Institute of Allergy and Infectious Diseases, Anthony Fauci, and Deborah Brix as coordinator.

The decision to shut down the economy originated from this body but was ultimately implemented by President Trump, members of congress, and eventually President Joe Biden. This decision was truly the worst decision I have ever seen a government make in my lifetime.

Access the episode’s show notes and resources

Ep660: Dave Collum – What Should the US Be Doing in Ukraine?

BIO: Dave Collum is a professor of Organic Chemistry at Cornell University who developed an interest in markets, which, in turn, led to an interest in geopolitics.

STORY: Dave talks about his 2022 Year in Review: All Roads Lead to Ukraine.

LEARNING: Never trust politicians and bureaucrats.

Access the episode’s show notes and resources

Ep659: Bill Blain – Always Sell Fast in a Difficult Market

BIO: Bill Blain is a well-known financier and commentator on financial markets, contributor, and editor of the Morning Porridge.

STORY: Bill loves airships, and many of his investment mistakes involve airships.

LEARNING: Ignore the worst and the best estimates and focus on the middle consensus. In a difficult market, a bid is a bid, and you’ve got to sell fast.

Access the episode’s show notes and resources

Ep658: Jeroen Blokland – Know the Actual Business Outlook Before Investing

BIO: Jeroen Blokland is a long-term multi-asset investor with a long-term track record in financial markets. Jeroen worked at Robeco, the largest independent asset manager in The Netherlands, for almost 20 years before launching his independent investment research company, True Insights.

STORY: Jeroen’s first investment was in a Dutch company selling PCs. He barely did any research or due diligence. The company reported a loss of $27 million in the same year Jeroen invested. It later went bankrupt, leaving Jeroen with a massive loss.

LEARNING: Know the actual outlook of a company before investing. Diversify your portfolio.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

Cooperation is built into the human condition – we don’t survive without it. In this episode, Andrew and David talk about the connection in our brains between intrinsic motivation and cooperation – and how you can use that to help cultivate intrinsic motivation in an extrinsic world (and even make your organization more competitive!)

Listen to Applying the Neuroscience of Cooperation: Cultivating Intrinsic Motivation Series with David P. Langford (Part 5)

Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with an enthusiasm few can match.

Read ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?

China Communications Services Corporation Limited (552 HK): Profitable Growth rank of 7 was same compared to the prior period’s 7th rank. This is below average performance compared to 290 large Comm. Serv. companies worldwide.

Read China Communications Services Corporation – World Class Benchmarking

Ananda Development Public Company Limited (AWC TB): Profitable Growth rank of 10 was same compared to the prior period’s 10th rank. This is poor performance compared to 520 small Real Estate companies worldwide.

Read Ananda Development – World Class Benchmarking

International Holding Company PJSC (IHC UH): Profitable Growth rank of 2 was down compared to the prior period’s 1st rank. This is World Class performance compared to 640 large Cons. Staples companies worldwide.

Read International Holding Company – 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.