Blogs y opiniones de economia en ingles

Articles Zillow is actually losing money on their iBuyer segment. To date, they’ve lost 667 million dollars. (By Coby Lefkowitz) We already know when we’re out of breath. We don’t always need a device or an app to tell us. (By Phil Pearlman) We have a relatively sanguine view on the likelihood of inflation becoming ingrained in the system (much as it pains us to agree with the Fed) (By James Montier) It’s a clou...

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 These were the most read posts on the site this week, in case you missed it: ...

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Male Investors More Likely To ‘Freak Out,’ MIT Study Finds The worst culprits when it comes to panicky selloffs? “Investors who are male or above the age of 45 or married, or have more dependents, or who self-identify as having excellent investment experience or knowledge tend to freak out with greater frequency,” the authors said. The Facebook Whistleblower, Frances Haugen, Says She Wants to Fix the Compa...

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A selection of correspondence

Updated on October 8th, 2021 by Bob Ciura While there are many dividend paying stocks in the market, there are only 32 stocks that have offered a rising dividend for at least 50 consecutive years. This exclusive group of stocks are referred to as the Dividend Kings. You can see the full downloadable spreadsheet of […]

The post Dividend Kings In Focus: Universal Corporation appeared first on Sure Dividend.

The Best Investment Writing Volume 5: Peter Chiappinelli, GMO – The Passive Aggressive Agg, Revisited             Author:  Peter Chiappinelli is a member of GMO’s Asset Allocation team. Prior to joining GMO in 2010, he was an institutional portfolio manager on the asset allocation team at Pyramis Global Advisors, a subsidiary […]

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Making water:

Bowman said his company’s machines — made for use at homes, offices, ranches and elsewhere — dehumidify the air and in doing so create water that’s filtered to make it drinkable.

The technology works especially well in foggy areas and depending on the size can produce between 200 and 1,900 gallons (900 and 8,600 liters) of water a day. The machines also operate efficiently in any area with high humidity, including California’s coastline, he said.

Malaria:

The world has gained a new weapon in the war on malaria, among the oldest known and deadliest of infectious diseases: the first vaccine shown to help prevent the disease. By one estimate, it will save tens of thousands of children each year.

Collections:

I like to collect the cashflows of the best businesses in the world. I pile them up high in my accounts, adding to them when values fall, automatically buying more when dividends and distributions are paid out. My collection gets larger every year. I can’t touch it. I can’t hold it. It’s virtual, it’s digital, it lives in the online environment created by the brokerage firms and exchanges. There are many collections like it, but this one is mine. I count up the cashflows coming my way when I’m in a bad mood and that makes me happy again. I think everyone should collect the things that make them happy.

Back to the office:

Griffin said many employees in Corporate America haven’t returned because their bosses are afraid to tell them to do so.

“If you talk to other CEOs, they live in fear of how we’ll be publicly persecuted from delivering the straightforward message: It’s time to go back to work,” he said.

Risk:

In 1987, the Safer was redesigned as a floating storage-and-off-loading facility, or F.S.O., becoming the terminus of a pipeline that began at the Marib oil fields and proceeded westward, across mountains and five miles of seafloor. The ship has been moored there ever since, and recently it has degraded to the verge of collapse. More than a million barrels of oil are currently stored in its tanks. The Exxon Valdez spilled about a quarter of that volume when it ran aground in Alaska, in 1989.

Have a good weekend.

Welcome to the latest episode of The Compound & Friends, a new podcast from your favorite financial and investing commentators. This week, Michael Batnick, Tyrone Ross, JC Parets and Downtown Josh Brown discuss: ►Entrepreneurship + career change ►Fintech CEO + crypto-friendly technician = crypto rabbit hole ►JC Chartfest ►And a whole lot more! You can listen to the whole thing below, or find it wherever you l...

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It’s fun seeing your friends. This week we had JC Parets and Tyrone Ross come by to talk about starting their businesses, bitcoin, and charts. So many charts. I love arguing with JC but one thing I will never do is question his love for the game. He’s passionate about what he does and it’s obvious. You hear it in his voice. But listening to the show, you can’t see his charts. So if you wanted to fo...

The post The Compound and Friends Episode 18 with JC and Tyrone appeared first on The Irrelevant Investor.

Every so often you read about yet another experiment where monkeys were used to pick stocks for a portfolio and that portfolio outperformed the ones selected by professional investors. I have written about such an experiment in jest a couple of months ago. But as is now widely known, simple equal-weighted portfolios with random assets tend to outperform more sophisticated ‘optimised portfolios’. The reason behind this phenomenon is that in practice, it is very, very hard to forecast which stock is going to outperform other stocks in the same industry, region or the market overall. There are some indications we can get from analysing a stock that allow us to shift the odds in our favour, but truth be told, the uncertainty around any kind of stock market prediction is so large that in practice the odds shift very little if at all. 

But let’s assume that through your analysis you, dear investor, are able to avoid the absolute duds in the stock market. Most likely, if you are able to do that, you are still stuck with hundreds or even thousands of stocks globally that all have some decent prospects for growth and high returns. But hardly any of us can invest in thousands of stocks (unless they simply buy a market ETF), and we want to narrow it down to a handful of the most promising stocks in our portfolio. Once you have eliminated all the obvious outliers wouldn’t it be a good idea to just select your stocks at random from the remaining stocks? The data on stock selection would support such a process but then again, the problem for many investors would be to justify such a seemingly careless course of action.

But now think about a company trying to hire a new top-level executive. Or you trying to hire a new member of your team. Obviously, we are going to select candidates with the best qualifications, some of which like academic qualifications or a track record as a portfolio manager may be measurable. But most of the qualifications needed for the jobs in today’s knowledge economy will be softer. Things like emotional intelligence, the ability to work in teams and think outside the box are hard, if not impossible to measure in an interview process. This is why the overwhelming majority of people are incapable of identifying the best candidate and why job interviews lead to terrible outcomes.

Enter Chengwei Liu who has made a radical suggestion: In some circumstances, it might be best if a company selects people based on a lottery. He argues that when companies hire senior executives the hiring managers tend to hire people that are like them. This is a well-known tendency of all of us. When we can’t decide which one of several individuals is going to perform best at a task, we tend to look for similarities to our own strengths and weaknesses. And because we are obviously successful at our jobs, the person with the most similarities to us is most likely to succeed at the task. The result is that we all have an innate tendency to hire people like us. 

But when it comes to successfully completing complex tasks (whether it is running a business or other tasks) there is a proven benefit to selecting more diverse teams. And I am not talking about ethnic or gender diversity here, but about cognitive diversity. Teams of people with a wide range of thinking and problem-solving modes perform better at complex tasks than teams of people who all think more or less alike. 

To benefit from this diversity bonus and break through our innate tendency to hire people like us, Liu suggests a simple process like the one shown below. Basically, it boils down to first eliminating the inferior candidates by looking at their skills and qualifications. Once the obviously unqualified candidates have been eliminated, one has to ask if there is a risk of making the selection worse by focussing on smaller and smaller details of the candidates’ profiles or using selection criteria that are not predictive of job performance. If that is the case, then it is best to select the candidate via a lottery.

That is, of course, if one can justify to one’s stakeholders (i.e. the boss) the selection process if the randomly chosen candidate is a dud and underperforms. And this is unfortunately the crux of the matter. Because selecting candidates via lottery (just like selecting stocks via a lottery) is so unconventional and so radical, there better be no mistakes. Because every mistake will immediately be interpreted as you not having done your job – even though technically, you have done a better job than most people. 

When is it best to use a lottery to select a job candidate

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Source: Lu (2021)

We observe this phenomenon so often in real life. Statistically, it may be better to do nothing or select via a lottery, but most people are not being judged by the long-term average success rate of their choices but by each individual outcome. And if only one of these outcomes is negative (which will happen almost certainly) you will no longer be able to continue your career. This is why goalkeepers in football (soccer) jump into the corner of the goals at a penalty, even though statistically it is better to just stand still and wait until you see where the ball is going. This is why fund managers continue to select stocks based on extremely minor differences in the fundamentals of a company even though a random equal-weighted portfolio would perform better in the long run. And this is why we continue to select people based on interviews rather than lotteries even though the organisation overall would benefit more from a lottery.

Two little stories from nature that teach us a few things about investing:

1. Extremes lead to extremes.

California has been devastated by wildfires for a decade. Back to back, year after year. Long-term droughts turned forests into dry tinder.

So everyone was elated when 2017 brought one of the wettest winters California had seen in recent memory. It was epic. Parts of Lake Tahoe received – I’m not making this up – more than 65 feet of snow in a few months. The six-year drought was declared over.

But the fires just got worse. The wettest year in memory was followed by “the deadliest and most destructive wildfire season on record.” And those two things were actually related.

Record rain in 2017 meant a surge of vegetation growth. It was called a super bloom, and it caused even desert towns to be covered in green.

That seemed great, but it had a hidden risk: A dry 2018 summer turned that record vegetation into a record amount of dry kindling to fuel new fires.

So record rain led to record fire.

That’s not intuitive, but there’s a long history of this verified by looking at tree rings, which inscribe both heavy rainfall and subsequent fire scars. The two go hand in hand. “A wet year reduces fires while increasing vegetation growth, but then the increased vegetation dries out in subsequent dry years, thereby increasing the fire fuel,” the NOAA writes.

The point is that extreme events in one direction increase the odds of extreme events in the other.

And isn’t it the same in the stock market? And in business?

The Japanese stock market is the most-cited example of when long-term investing doesn’t work. The Nikkei index traded lower today than it was in 1990. In 2012 it traded 70% lower than it was at 22 years before. Just a disaster.

There can be a lot of explanations for what happened, not least of which is Japan’s demographics. But the biggest cause is simple: Returns were so extreme from 1950 to 1990 that there was nothing left over for subsequent decades.

The Nikkei increased 400-fold from 1950 to 1990, an average annual return of more than 16%. I don’t think any other country, in any era, has a stock market that performed so well.

What’s happened over the last 30 years is the flip side of an extreme event in one direction leading to an extreme event in the other. Today we marvel at how terrible the Japanese stock market has performed, but the real shocker is how well it performed prior. Half a century of extraordinary performance in one direction might lead to half a century of flat in the other.

Record good leads to record bad – just like California’s fires.

Same in business, where extreme success increases the odds of becoming fat, happy, and in over your head. WeWork raising $12 billion from investors seemed like extraordinary success – every company gushes in a press release when it raises a huge round. But the more extreme the fundraising, the more distorted the business became. Raising record money led it to nearly run out of money. A similar thing happens all the time: Energy went from negative prices last year to global shortages today. NYC rents went from plunging to surging. Shortages lead to gluts, busts seed the next boom.

That’s nature’s first lesson: Extremes lead to extremes.

2. Small changes compounded for long periods of time are indistinguishable from magic.

The most astounding force in the universe is obvious. It’s evolution. The thing that guided single-cell organisms into a human who can read this article on a phone. The thing that’s responsible for 20/20 vision and flying birds and immune systems. Nothing else in science can blow your mind more than what evolution has accomplished.

Biologist Leslie Orgel used to say, “evolution is cleverer than you are” because whenever a critic says, “evolution could never do that” they usually just lacked imagination.

It’s also easy to underestimate because of basic math.

Evolution’s superpower is not just selecting favorable traits. That part is so tedious, and if it’s all you focus on you’ll be skeptical and confused. Most species’ change in any millennia is so trivial it’s unnoticeable.

The real magic of evolution is that it’s been selecting traits for 3.8 billion years.

The time, not the little changes, is what moves the needle. Take minuscule changes and compound them by 3.8 billion years and you get results that are indistinguishable from magic.

That’s the real lesson from evolution: If you have a big number in the exponent slot you do not need extraordinary change to deliver extraordinary results. It’s not intuitive, but it’s so powerful. “The greatest shortcoming of the human race is our inability to understand the exponential function,” physicist Albert Bartlett used to say.

And isn’t it the same in investing?

Howard Marks once talked about an investor whose annual results were never ranked in the top quartile, but over a 14-year period he was in the top 4% of all investors. If he keeps those mediocre returns up for another 10 years he may be in the top 1% of his peers – one of the greatest of his generation despite being unmentionable in any given year.

So much focus in investing is on what people can do right now, this year, maybe next year. “What are the best returns I can earn?” seems like such an intuitive question to ask.

But like evolution, that’s not where the magic happens.

If you understand the math behind compounding you realize the most important question is not “How can I earn the highest returns?” It’s, “What are the best returns I can sustain for the longest period of time?”

That’s not to say good returns don’t matter. Of course they do. Just that they matter less than how long your returns can be earned for. “Excellent for a few years” is not nearly as powerful as “pretty good for a long time.” And few things can beat, “average for a very long time.” Average returns for an above-average period of time leads to extreme returns.

“The only thing that matters is where you are in the long run,” Marks said.

That’s the second lesson: Less focus on change, more focus on the exponent.

Final Trades: Apple, Navient, GM, & More from CNBC. ...

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Here in the UK, we have seen a massive M&A wave in 2021. Thanks to private equity firms flush with cash, low valuations for UK companies and a relatively cheap Sterling vs the US Dollar, UK small and mid-cap companies have been targeted left, right, and centre. Apart from the usual concerns about foreign takeovers of strategically important businesses, this has also rejuvenated the age-old business of predicting, which company is going to be the next takeover target.

Targeting takeover targets is a siren song that is hard to resist because the returns that can be pocketed on the announcement date of a new takeover are extremely high and can easily surpass 50%. If only there was a way to predict which companies are going to be the next target.

Well, there isn’t. Researchers have tried to identify the driving forces behind a company takeover for more than 50 years now and according to a new review by Abongeh Tunyi from the University of Sheffield we are not only unable to formulate any reliable model that predicts future takeover targets better than chance, we don’t even understand what the driving forces are behind a company becoming a takeover target. Anything from valuation to financial leverage and bankruptcy risk has been examined and researchers have come up empty-handed. In essence, it seems that selecting takeover targets is a more or less random process that has more to do with the psychology of the investor rather than fundamentals.

Yet, both retail and professional investors keep on playing the game. Newspapers write about potential takeover targets and retail investors pile into these stocks in the hope of a quick profit. Professional fund managers may not follow the advice of newspaper journalists and instead use more sophisticated analysis, but they also try to play that game. Though, admittedly, I know of no fund manager who targets takeover targets explicitly. Instead, it is one element of the analysis that may shift the odds in favour of a company. If two companies look equally attractive based on fundamental analysis, the fund manager may invest in the potential takeover target. But even so, targeting takeover targets is a losing game for fund managers. A study of c.2,500 US fund managers and their portfolios showed that the average excess return on takeover targets for fund managers was -0.04% before fees and -1.44% after fees. 

Hence, targeting takeover targets is a bit like playing roulette and putting your money on a single number. If you are lucky that number shows up and you strike it rich, but most of the time you will be a loser.

The goal of every dividend investor is to generate a sufficient stream of passive dividend income, that would adequately cover their expenses. In order to achieve this goal however, investors need to select a strategy and fine-tune it over time to reflect current market conditions. In most of my articles I tend to focus on investing that would generate dividends for several decades to come. But...

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‘I don’t know that we’re out of the woods yet,’ says Tastytrade’s Victor Jones from CNBC. ...

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There are so many factors that can hold a person back in this life.

Many are circumstantial – a lack of connections, money, education, a stable home environment. These conditions are outside of our control, especially when we’re growing up.

But one of the biggest setbacks a person can face is one that can be practiced: your own perception of what you’re capable of.

In my years of experience, I’ve found that the defining characteristic that sets the massively successful apart is simply the belief that they are capable of achieving what they want.

That’s it.

If I could give a piece of advice to anyone starting out, in any field really, it would be to allow your imagination to expand to the belief that you are capable of achieving great things. And beyond capability, that you’re worthy.

It’s a hard line to toe, because there’s nothing more unattractive than overconfidence, especially when it’s unearned. But that’s not what I’m talking about here.

It’s not hubris – it’s chutzpah.

It’s that scrappy mentality. That way of thinking that says, “well, if someone’s gonna do it, why shouldn’t it be me?”

It’s that sense of purpose, of knowing that you can do more than what you’re already doing.

When I was getting started I used to scale back before I’d even begun. I’d make a plan, then look it over, afraid that I’d overdone it.

Now, I challenge myself to do the opposite. I make a plan and then I ask myself:

“Are you thinking big enough?”

The China Lehman event came and went but this society was too stoned on monetary heroin to notice. History will say that as the world fell apart, this generation did nothing to stop it. Convinced it was just disintegration as usual...







The universal ideology is denial. It's the one thing both political parties have in common - central to their party platform. Both sides are now playing the victim card. One side blames the past for the problems of today, the other side blames the problems of today for erasing the past. Neither side has a path to the future beyond pointing fingers and accepting zero responsibility. 
Denial of course extends beyond politics. It affects the environment, the economy, mental health, physical health, mass shootings, and of course Ponzi markets. Denialists inform us that the problems of today are no different than the problems of the past. Which is true. The only difference is that now these problems can no longer be ignored. They are all backing up like a sewer at the same time. But these hoarders revel in squalor so they don't really notice.
Taking the easy way out is now the universal way of life. 
Case in point, there has never been so many shit jobs in U.S. history. The number of shitty jobs now outnumbers the people who want a shitty job by 10:1. Yet no pundit can figure out why so there are so few takers. The Bureau of Labor Statistics (BLS) doesn't include gig jobs in their payroll tally, and yet roughly 60 million Americans now have gig jobs. Which means they are contractors and hence not picked up in BLS surveys. In addition, the younger generation aka. "Generation Gamble" has figured out that it's more lucrative to gamble in Bitcoins and Reddit pump and dump schemes than to work a dead end job on a fast food assembly line. Add in the millions of women who left the workforce during the pandemic, and the millions more older men who took early retirement, and how about all those job stealing Mexicans who headed home during the lockdown. I bet those GOP governors wouldn't mind getting a few of those people back now. There's your "labor shortage".
Zerohedge posited that the labor shortage was all due to pandemic unemployment benefits, but that turned out to be just another massive lie. In my next life I am going to monetize useful idiots and then I will never have to be right in markets ever again. Which gets me to the point of this post, denial is an extremely lucrative business. There is no demand for truth and reality. Which is why we are now surrounded by industry sociopaths inventing whatever delusional theory will make them the largest profit.
As it was in 2008, these sociopaths have successfully convinced the masses that we are in a highly inflationary environment. Which per Econ 101 SHOULD be a warning that it's the end of the cycle. Commodities are leading which is another end of cycle indicator. Oil peaked in September 2008 right as the wheels came off the Lehman bus. This highly successful disinformation campaign and its attendant misallocation of capital, will ensure that the impending dislocation is far worse than it otherwise would have been. These people have created buying panics in everything from Bitcoins, to McMansions, cars, commodities, and of course stonks.
Unfortunately, with capacity utilization at an all time low and monetary policy solely welfare for the rich, it's impossible to create sustained inflation in this economy. The speed limit for the economy has been falling for decades and now the bond market controls monetary policy not the economy. The downside of this multi-decade supply side economic catastrophe is that we now have a lost generation attempting to gamble their way to prosperity. 







Given this society's addiction to denial, it can come as no surprise that this meltdown in progress will come as a complete surprise.
There have been three China-led global implosions over the past six years - one every three years. And each time, U.S. gamblers have increased their allocation to risk:
The IMX index indicates how a large sample of Ameritrade investors are actually positioned in risk assets. We see in the lower pane that while there is a general understanding that risk has increased over time, it's currently deemed to be low. 






This chart shows via real copper prices that reflation peaked in 2011. Wave 'a' was the 2018 tax cut, and wave 'c' is now. China led the world out of depression in 2008 and now they are leading the world back into depression by taking a laissez-faire attitude towards the Evergrande collapse.
China is now more capitalist than the U.S. where continuous monetary bailouts for the ultra-wealthy are expected. Now Chinese authorities chide the U.S. and Europe on creating extreme moral hazard. 
As we see above, it's way too late. 






As far as Tech stocks go, Cramer is exhorting his followers to BTFD. He says the market is finding a bottom right now.
Here we see deja vu of 2018 that Nasdaq new highs peaked this past February, and October was not a good time to buy Tech. Or anything else for that matter.







In summary, ALL of the risks from the past decade are now concentrated in this month. Add in a super Tech bubble and a super housing bubble, and there has never been as much denial as we are seeing right now. Nothing even comes close.
What once was deemed an asset - ignoring risk - will soon turn into a life long liability.