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Become a Better Investor Newsletter – 25 November 2023

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Noteworthy this week

  • US Gov’t spending at WW2 levels
  • Bank credit is contracting
  • Stock market scars impact asset allocation
  • Argentina’s new president doesn’t like the left
  • Investors welcome Milei’s presidency

US Gov’t spending at WW2 levels: A couple of points are interesting about this chart, the first being that the US Gov’t spending is at the wartime level. The other point is that the Gov’t spending has been on a rising trend following the normalization after WW2.

Bank credit is contracting: This has only happened once in the past 50 years, following the Global Financial Crisis. Noteworthy is that slowing credit typically has a slowing impact on the economy.

Stock market scars impact asset allocation: Data from Vanguard shows that investors who started investing after bubbles have a lower overall equity allocation.

Argentina’s new president doesn’t like the left: Javier Milei is said to be libertarian and definitely doesn’t hold back towards the left’s failures and shortcomings. Let’s hope he can deliver some improvement for the Argentinian people!

Investors welcome Milei’s presidency: The Argentinian ETF initially jumped 13% on the news of Javier Milei becoming president.

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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

“@channel please find the above performance chart of the 5 stock strategies and 1 asset allocation strategy you have access to in the community.”

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Podcasts we listened to this week

RWH036: THE POWER OF SIMPLICITY W/ ANTHONY KINGSLEY

“In this episode, William Green chats with Anthony Kingsley, who oversees more than $10 billion at an investment firm named Findlay Park. Anthony is the portfolio manager of the Findlay Park American Fund, which has crushed its benchmark index by 1,200 percentage points over 25 years. Here, he discusses his firm’s surprisingly simple path to exceptional returns.”

Listen to the episode.

Readings this week

The Downsides of Diversification

“The benefits of diversification have been known for over half a century. In the early 1950s, Harry Markowitz demonstrated that there exists an “optimal” portfolio which has the highest investment return for a given level of risk. However, despite the theoretical ease with which someone could apply this mantra to their investment portfolio, I’ve recently realized the practical difficulties in doing so.”

Read the post.

Book recommendation

Con/Artist: The Life and Crimes of the World’s Greatest Art Forger by Tony Tetro and Giampiero Ambrosi

“The world’s most renowned art forger reveals the secrets behind his decades of painting like the masters—exposing an art world that is far more corrupt than we ever knew while providing an art history lesson wrapped in sex, drugs, and Caravaggio.”

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 36: Larry Swedroe – Two Heads Are Not Better Than One When Investing

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 two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this thirteenth series, they discuss mistake number 24: Do You Believe More Heads Are Better Than One? And mistake 25: Do You Believe Active Managers Will Protect You from Bear Markets?

LEARNING: Invest conservatively instead of following the crowd. The best way to minimize the risks of a bear market is to hyper-diversify.

Access the episode’s show notes and resources

Ep751: Luke Gromen – Start Small, Then Grow as You Learn

BIO: Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst.

STORY: Luke put a large position in a private equity investment because it had a great founder who had previously created and sold some tech companies. Additionally, one of Luke’s dearest friends went to work there. However, he didn’t realize that the company was overvalued, so when the founder couldn’t raise funding, the company collapsed, and Luke lost all his money.

LEARNING: Position sizing is crucial. Don’t get too excited and emotionally invested in an investment. Be careful when investing in illiquid assets because you can easily get trapped.

Access the episode’s show notes and resources

Ep750: Jason Brown – You Never Go Broke Taking a Profit

BIO: Jason Brown is the founder of Power Trades University and the Brown Report. He has over a decade of stock & options trading experience, is a podcast host, and is a YouTuber. Jason believes anyone can profit from the stock market, even if they’ve lost money before.

STORY: At 24, Jason had about $250,000 in a trading account. Jason wanted to buy a condo and pay cash for it. Condos were like $500,000. He figured that he could use the $250,000 to trade and make enough to pay cash for the condo. So he risked a quarter million trying to make half a million and lost it all.

LEARNING: You never go broke taking a profit. There’s no one trade that’ll make you rich, but there is one trade that will blow up your entire account. Don’t set unrealistic or obsessive goals.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

“Trust me!’ We’ve all heard it, and probably said it. But how do you build a culture of trust at work, or in a classroom? David Langford and host Andrew Stotz talk about how inclusive decision-making inspires trust, and leads to better outcomes.

Listen to How to Build Trust: Role of a Manager in Education (part 10)

Vallourec SA (VK FP): Profitable Growth rank of 2 was up compared to the prior period’s 5th rank. This is World Class performance compared to 320 large Energy companies worldwide.

Read Vallourec SA – World Class Benchmarking

Tianrun Industry Technology Company Limited (002283 SZ): Profitable Growth rank of 6 was up compared to the prior period’s 7th rank. This is below average performance compared to 1,220 medium Industrials companies worldwide.

Read Tianrun Industry Technology – World Class Benchmarking

IHH Healthcare Berhad (IHH MK): Profitable Growth rank of 7 was same compared to the prior period’s 7th rank. This is below average performance compared to 380 large Health Care companies worldwide.

Read IHH Healthcare – World Class Benchmarking

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 two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this eleventh series, they discuss mistake number 20: Do You Only Consider the Operating Expense Ratio When Selecting a Mutual Fund? And mistake number 21: Do You Fail to Consider the Costs of an Investment Strategy?

Read ISMS 34: Larry Swedroe – Consider All Hidden Costs Before You Invest

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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