Move Over Black Swans, the Gray Rhino Is Trampling Through
Top 5 of the Week of November 13
Nathan Jaye, writing for CFA Institute, heads up our Top 5 this week by helping us recognize the gray rhinos of finance in an interview with Michele Wucker who coined the phrase. And Dr. Daniel Crosby of Nocturne Capital reveals his actionable tips for overcoming overconfidence bias.
The Macro Tourist Kevin Muir observes the rising scorn of Value Investing and asks us to place our bets, please. Jeff Desjardins, the founder of the Visualist Capitalist, shares a striking graphic visualization of the world’s debt. And The Reformed Broker Joshua Brown warns us of the dangers of plastic bears…
Move Over Black Swans, the Gray Rhino Is Trampling Through
- The phrase gray rhino was invented to aptly—and metaphorically—describe the dangerous horned beast problems that we all encounter—the ones that head straight for you (like rhinos)
- You have to deal with the fight or flight choice of the problem you are facing—you have to make a decision
- Doing a regular “gray rhino reality check” to be on top of any financial issues is key to taking charge of your problems—instead of avoiding them
Eating Humble Pie
- If you have come to the realization that more humility is required in your investing approach, build a “steel man” against which to sharpen your tools of rationale and decision-making
- Learn to love the questions you are asking; this will improve your process and inevitably help you find the answers you’re looking for too
- Furthermore, to overcome your confidence bias always attempt to change your perspective to an “outside view” and rely on external data and alternative experiences to combat ego
What tips would you share for overcoming overconfidence bias? Share your comments in the section below
The Scorn of Value Investing
- The stock market needs a “Value Investor’s Deadpool,” for those who still hold the firm belief that trading in cheap companies is the way forward
- Because the current decline of value stocks against growth stocks is similar to the value investing erosion of the DotCom bubble of 2000—meaning value funds, and value investors, are having a tough time at the moment
- This vastly increases the chances of a big name fund tapping out “at the bottom” soon—we just need to lay our bets down on which…
Crazy Numbers
- The collective amount of world debt, that all national governments are indebted by, adds up to a whopping $63 trillion
- Ideally, governments would only borrow for short-term projects or deficits, but it has become the norm for many countries to run constant deficits—which is pretty unhealthy for the global economy
- The U.S. debt alone has crept up to around $20 trillion from $6.9 trillion in federal debt in 2001, and it accounts for 32% of the global debt all by itself
Beware Plastic Bears
- There are more “plastic bears” in the financial world than ever before; these are noted investors/fund houses who speak of bubble concerns while holding “large amounts of the asset class they claim to hate”
- No-one thinks anything of it if their dire predictions do not play out, but they’ll invariably be touted as heroes if their forecasts prove true
- While innocent investors listen to these plastic bears and make trading moves based on their ‘expert’ predictions, seriously damaging their own interests
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.
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