Become a Better Investor Newsletter – 27 May 2023
Noteworthy this week
- Fake AI image led to a stock market drop
- It looks like dot com 2.0
- Japan headed for three-decade high
- Chinese cars to flood the world
- Your instant cup of Joe is getting pricy
Fake AI image led to a stock market drop: As if markets weren’t noisy already, now investors need to consider fake news created by AI. Fake news is nothing new but could become easier with AI. Independent thinking is more crucial than ever.
This morning, an AI generated image of an explosion at the US Pentagon surfaced.
With multiple news sources reporting it as real, the S&P 500 fell 30 points in minutes.
This resulted in a $500 billion market cap swing on a fake image.
It then rebounded once the image was… pic.twitter.com/DpHgflkMXP
— The Kobeissi Letter (@KobeissiLetter) May 22, 2023
It looks like dot com 2.0: Few companies in the S&P500 are driving outperformance. The last time the share was this low was before the dot-com bubble burst.
Party like it’s 1999 👇 ( Jefferies) pic.twitter.com/YqIg7llQpo
— Michael A. Arouet (@MichaelAArouet) May 23, 2023
Japan headed for three-decade high: We’ve been overweight Japan in our asset allocation for about 2 months. The stock market is now getting close to where it was 30+ years ago. Not only one lost decade for Japanese stocks.
Japanese stocks in Yen very close to breaking out of a 33+ year consolidation. No need to rush, but you see this kind of setup maybe a handful of times in a career. DXJ get you exposure. NOT ADVICE pic.twitter.com/hFVvOe7nEB
— Adam Butler (@GestaltU) May 23, 2023
Chinese cars to flood the world: Chinese automakers have become more competitive, and their cars are rolling on the roads of all continents. The labor-intensive auto industry could put China at an advantage and boost its exports.
Chinese auto export boom is coming. Autos require more labor input than vast majority of products and lower complexity of EVs is mainly components (e.g. engines), not in assembly where China has huge competitive advantage. It was Japan auto export boom that made it globally… https://t.co/dOLG7hWh1O
— Michael Green (@profplum99) May 18, 2023
Your instant cup of Joe is getting pricy: Robusta coffee beans, used for instant coffee, have reached a 15-year high. Big producers warn about falling supply. As the premium between Robusta and the more premium Arabica beans tightens, maybe it’s time to drink better coffee.
Global coffee bean shortage sends prices to 15-year high ☕📈
⚠️ Production is expected to fall in Indonesia, Brazil and Vietnam
💰 The price of robusta beans (normally used for instant coffee) is surging amid strong demand over higher-end arabicahttps://t.co/roWAU5lXoH pic.twitter.com/hdDPtGuJjI— Stephen Stapczynski (@SStapczynski) May 24, 2023
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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
“Please find the above performance chart of the 5 stock strategies and 1 asset allocation strategy you have access to in the community.
We’ll update these each week. For since inception performance, you get them in the monthly reports of the asset allocation strategy, and at the portfolio revisions (4x per year) for the stock strategies.”
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Podcasts we listened to this week
RWH026: WEALTH & HEALTH W/ JASON KARP
“In this episode, William Green talks with Jason Karp, a prodigiously talented investor & entrepreneur whom he also profiled in his book, “Richer, Wiser, Happier.” Jason founded Tourbillon Capital Partners, where he managed $4.5 billion. He then quit the hedge fund business & created HumanCo, a holding company that invests in the health & wellness sector.”
Little Ways The World Works – The Morgan Housel Podcast
“This episode has little to do with money. But in some ways it has everything to do with money. That’s the riddle I want to unpack.”
Readings this week
Return on Kindness
“I got up and stood on a platform — a microphone in front of me, a beam of bright light in my face. Warren Buffett just called me to ask a question in front of tens of thousands of people around me and millions watching worldwide. I was in the middle of Berkshire Hathaway’s Annual Meeting – the Woodstock for Capitalists held in Omaha, Nebraska, each year. It was my turn to speak; I said: ,Thank you for making our lives better.’”
Book recommendation
Crime And Punishment by Fyodor Dostoevsky
“Raskolnikov, an impoverished student tormented by his own nihilism, and the struggle between good and evil, believes he is above the law. Convinced that humanitarian ends justify vile means, he brutally murders an old woman—a pawnbroker whom he regards as “stupid, ailing, greedy…good for nothing.” Overwhelmed afterward by feelings of guilt and terror, Raskolnikov confesses to the crime and goes to prison. There he realizes that happiness and redemption can only be achieved through suffering.”
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
Monday: Learned what AI is
Tuesday: Read 50 threads about the future of AI
Wednesday: Bought Nvidia and made 25% in an hour
Investing is too easy
— John W. Rich (Wealthy) (@Cokedupoptions) May 24, 2023
— Inverse Cramer (Not Jim Cramer) (@CramerTracker) May 11, 2023
New My Worst Investment Ever episodes
Ep690: Chris Mamula – Take Responsibility for Your Financial Situation
BIO: After poor experiences with the financial industry early in his professional life, Chris Mamula educated himself in investing and tax planning.
STORY: Because Chris trusted his parents, he also blindly trusted their financial advisor. It was only after he stumbled upon better financial advice that Chris realized he’d wasted well over $100,000 in fees and another $100,000 in taxes.
LEARNING: Gain financial literacy and take responsibility for your financial situation. Don’t trust financial advisors blindly.
Access the episode’s show notes and resources
Ep689: Michael Howell – Liquidity Is the Main Driver of Asset Markets
BIO: Michael Howell is CEO of CrossBorder Capital, a London-based FCA-registered, independent research and investment company he founded in 1996.
STORY: Michael was once in a meeting with the governor of the Bank of Thailand, who told him they would cut interest rates the following week. Even though all possible data showed this would be a wrong move, Micahel believed him. The bank didn’t lower the rates; instead, it increased them.
LEARNING: Don’t listen to what people say, particularly central bankers; watch what they do. When participating in macro investing, understand where you are on the liquidity cycle and where investors are positioned.
Access the episode’s show notes and resources
Ep688: Brady Slack – What to Look For in a Coach or Mentor
BIO: Brady Slack is the owner of High Country Finance, LLC, a full-service tax and accounting firm based in Utah in the US. His purpose is to be a resource that helps everyone experience wealth while paying the fewest taxes possible.
STORY: Brady came across a coaching group on Facebook that was good at marketing its coaching package. He was fascinated by the package and bought it for $50,000. While it was a good package, it wasn’t a good fit for him as it didn’t align with his business goals.
LEARNING: Vet the mentor, coach, or advisor before you engage with them. Pick a mentor or a coach who embodies what you want to be. Don’t decide out of desperation or pressure.
Access the episode’s show notes and resources
Published on Become a Better Investor this week
What is quality? Does it mean always meeting specifications? What if the calculus for specifications means little and tells managers almost nothing about the process or its potential for improvement? Dr. Bill Bellows discusses the negative consequences of this kind of black-and-white thinking and what to do about it.
Listen to Meeting Requirements Is Not Enough: Awaken Your Inner Deming (Part 2)
PT Bumi Serpong Damai Tbk (BSDE IJ): Profitable Growth rank of 4 was up compared to the prior period’s 7th rank. This is above average performance compared to 340 medium Real Estate companies worldwide.
Read Bumi Serpong Damai – World Class Benchmarking
Samsung Engineering Company Limited (028050 KS): Profitable Growth rank of 3 was same compared to the prior period’s 3rd rank. This is above average performance compared to 1,440 large Industrials companies worldwide.
Read Samsung Engineering – World Class Benchmarking
Singapore Airlines Limited (SIA SP): Profitable Growth rank of 8 was up compared to the prior period’s 10th rank. This is below average performance compared to 1,440 large Industrials companies worldwide.
Read Singapore Airlines – World Class Benchmarking
SISB Public Company Limited (SISB TB): Profitable Growth rank of 2 was same compared to the prior period’s 2nd rank. This is World Class performance compared to 660 small Cons. Disc. companies worldwide.
Read SISB – 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.