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Become a Better Investor Newsletter – 26 November 2022

Noteworthy this week

  • WACC for S&P 500 firms is up by 50%
  • US housing prices are falling
  • Mortgage appraisals in the US are positively skewed
  • Beyond meat, more like beyond profit
  • We’re not yet at the bottom of this bear

WACC for S&P 500 firms is up by 50%: The cost of capital for US firms in the S&P 500 has risen to 6% from 4%. This is going to hit investments. On the positive side, it could reduce malinvestment.

US housing prices are falling: It’s getting tougher for American households. In addition to inflation and high indebtedness, housing prices have started to come down.

Mortgage appraisals in the US are positively skewed: Given that the appraisals generally is above the contract price, we can assume that people have been able to take out too large mortgages. I’m confident that the situation is the same in Europe.

Beyond meat, more like beyond profit: Who would have thought heavily processed fake meat wouldn’t take over the world already? It seems like the company is beyond cleaning as well.

We’re not yet at the bottom of this bear: Looking at S&P 500, MacroAlf proposes that recessionary bear markets tend to bottom when: PMIs are well below 50, the unemployment rate has risen by 1.3 ppts, and forward EPS has been revised down by 10%+.

Poll of the week

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Results from last week’s poll


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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

“Yup agreed saving rate is coming down. But the cumulative savings from stimulus could be a buffer for the recession.”

Join the Become a Better Investor Community today! You can cancel any time, and as a newsletter reader you get a massive discount when you use this coupon code: READER

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Podcasts we listened to this week

The Macro Trading Floor – Jacob Shapiro: From Globalization To A Multipolar World

“In 2022, geopolitics has been one of the leading factors in markets, so we invited an expert in geopolitics to help us navigate this environment. Expecting a shift away from globalization and a more multipolar world over the next decade, this trend has many implications for economies around the world.”

Readings this week

History Lessons: How “Transitory” Is Inflation?

“Reverting to 3% inflation, which we view as the upper bound for benign sustained inflation, is easy from 4%, hard from 6%, and very hard from 8% or more. Above 8%, reverting to 3% usually takes 6 to 20 years, with a median of over 10 years.”

Read the full article.

What Really Matters? by Howard Marks

“I’ve gathered a few ideas from several of my memos this year – plus some recent musings and conversations – to form the subject of this memo: what really matters or should matter for investors. I’ll start by examining a number of things that I think don’t matter.”

Read the full memo.

Book recommendation

Woke: A Guide to Social Justice by Titania McGrath

Absolutely brilliant satire! I can recommend the audiobook, as the narrator does a terrific job.

“Being woke is actually much easier than people think. As Titania demonstrates, anyone can be an activist. By simply adding a rainbow flag to your Facebook profile, or calling out an elderly person who doesn’t understand what ‘non-binary’ means, you can change the world for the better.”

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

Ep623: Chris Do – Don’t Put Good Money After Bad

BIO: Chris Do is a self-described loud introvert, recovering graphic designer, middle child, serial entrepreneur, Emmy award-winning director, educator, and founder of TheFutur.

STORY: Chris’s business was based on the West Coast, and they wanted to expand to the East Coast for a bigger market share. So they opened a small office hemorrhaging money and didn’t generate substantial revenue.

LEARNING: You can’t export your core competency. Optimize your business before you scale.

Access the episode’s show notes and resources

Ep622: Cesar Hasselmann – Work Today on the Things You Want to See Happen

BIO: Cesar Hasselmann is an author, mentor, coach, and business consultant.

STORY: Cesar started a very successful gas and supermarket distribution network when he was only 16 years old. Unfortunately, about three years later, his country’s president stole public funds and caused most businesses, including Cesar’s, to suddenly collapse.

LEARNING: Challenges make you a better entrepreneur. Everything has a time. Understand the macro environment.

Access the episode’s show notes and resources

Ep621: Michael Bungay Stanier – Find a Trusted Financial Advisor to Manage Your Investments

BIO: Michael Bungay Stanier is the author of seven books that have sold over a million copies between them. He’s best known for The Coaching Habit, the best-selling coaching book of the century and already recognized as a classic.

STORY: Michael had $5,000 that he wanted to invest. He tasked his wife with finding the most suitable investment option. She found e-trading. They opened an online account and bought one share from about 20 companies. When it was time to sell, they lost almost half the remaining value of the portfolio to selling fees.

LEARNING: If you’re struggling with investing, find a trusted financial advisor to manage your investments—separate creating wealth from growing wealth. Understand the nature of the markets before you invest.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

David and Andrew’s discussion of how using Deming in the classroom not only inspires achievement it also creates collaboration among excited students.

Listen to By What Method: Deming in Education with David P. Langford (Part 4)

Catcher Technology Company Limited (2474 TT): Profitable Growth rank of 9 was same compared to the prior period’s 9th rank. This is poor performance compared to 700 large Info Tech companies worldwide.

Read Catcher Technology – World Class Benchmarking

Indorama Ventures Public Company Limited (IVL TB): Profitable Growth rank of 5 was down compared to the prior period’s 1st rank. This is average performance compared to 860 large Materials companies worldwide.

Read Indorama Ventures – World Class Benchmarking

Hindustan Unilever Limited (HUVR IN): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 630 large Cons. Staples companies worldwide.

Read Hindustan Unilever – World Class Benchmarking

Hefei Meyer Optoelectronic Technology Incorporated (002690 SZ): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 1,240 medium Industrials companies worldwide.

Read Hefei Meyer Optoelectronic Technology – 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.