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Don’t Invest in Fear, Invest in Water

Top 5 of the Week of February 22

Global equities entered a bear market last week according to Bloomberg data. Fearmongers building a “Tower of Babel” continue to predict the worse, so Babinow have collected some alternative perspectives for you.

This week Russ Koesterich, Global Chief Investment Strategist of BlackRock gives us reasons to be positive, and Bloomberg View’s own Barry Ritholtz urges us to be looking forward, but not to fear the worst. Todd Sullivan, of ValueWalk, recommends riding out the storm and staying invested in your equities.

From AARP, Allan Roth helps us face the reality of what ‘normal’ is for the stock market, in short, the last six weeks. And speaking of ‘short’; we found another great article influenced by The Big Short movie, this time teaching us how to invest in water successfully…

Enter…Pursued By a Bear Market

  • Past year’s selling fueled by recession fears has lead to lower prices
  • High-yield market spreads are returning to 2009 levels and investors describing themselves as “bullish” are now below 20%; a good opportunity to take advantage and buy now
  • 2016 markets will be decided by valuations and the trend of the economy as the “latest round of central bank intervention is proving ineffective”

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Don’t Invest in Fear of What has Just Happened

  • One in three investors fears a repeat of 2008-2009 financial crisis within the next three years, with some countries experiencing higher level of fear than others; France (46%) and India (59%)
  • Recent events will afterward become ‘normal’ to investors, “but a market crash, a financial crisis, deep bear market or hyperinflation” will leave a mental mark
  • Typical fearmongers are not predicting anything new just stirring up irrational fearlook forward but don’t fear the worst

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Ignore the Forecasts; Ride Out the Storm

  • Media’s “Tower of Babel” is constructed by momentum investors doom and gloom predictions
  • See the big picture. Stay centered on “economic fundamentals”don’t bail out or rush in due to the media noiselook at long-term economic trends, not short-term “broken markets”
  • Value investors are buying now, as “fundamentals remain quite positive, and the equity markets provide ample investment opportunities”

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Normal Behavior in the Stock Market

  • US stock market returns from 2009-2015 were “abnormal,” not the last six weeks; this is a return to “normal”
  • We base and overweight our predictions for the future on recent memorable events, what behavioral economists call “recency bias”
  • The media also tend to reinforce this bias—be aware of the hype and stop it from overly influencing your investments

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Michael Burry Focused on One Commodity: Water

  • Despite 70% of the Earth’s surface covered in water, a mere 2.5% of that is freshwater andy only 0.007% is easily accessible to support the global population of 7 billion people
  • By 2020, “there will be an $84.4 billion gap…between what we’re spending on water infrastructure and what is needed”
  • Get exposure by purchasing water rights, investing in water-rich farmland, or in companies focused on: water utilities, infrastructure, and equipment

What do you think about water as an investment? Do you have any ethical concerns? Share your thoughts and comments in the section below.

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form – and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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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. The Babinow Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.