CPI day is here. The consensus is for 0.3% MOM and 3.8% YOY increase in core and slightly lower prints in the headline numbers at 0.2% and 3.2% respectively. I have no idea what the impact of Zuckerberg feeding his Hawaiian raised cows macadamia nuts and artisanal beers will have on current or future inflation.
Yesterday, the spot BTC ETF's actually got approved (for real this time), the 10Y retook 4%, stocks rose and Matt Levine weighed in on some of his current favorite topics, Securities Fraud & Insider Trading, both while discussing Bitcoin ETF approvals and the Reddit thread: "Is it insider trading if I bought Boeing puts while I am inside the wrecked airplane? …"...classic stuff.
Yesterday, Japanese stocks hit a 34 year highs. In his commentary to the 2003 edition of Ben Graham's The Intelligent Investor, journalist Jason Zweig used Japan as an example of why owning foreign stocks is advisable. Zweig states: "It's the end of 1989, and you're Japanese. Here are the facts:
- Over the past 10 years, your stock market has gained an annual average of 21.2%, well above the 17.5% annual gains in the United States
- Japanese companies are buying up everything in the United states from Pebble Beach golf course to Rockefeller Center; meanwhile American firms like Drexel Burnham Lambert, Financial Corp. of America, and Texaco are going bankrupt.
- The U.S. high-tech industry is dying. Japan's is booming.
In 1989, in the land of the rising sun, you can only conclude that investing outside of Japan is the dumbest idea since sushi vending machines. Naturally you put all your money in Japanese stocks.
The result? Over the next decade, you lose roughly two-thirds of your money.
The lesson? It's not that you should never invest in foreign markets like Japan; it's that the Japanese should never have kept all their money at home. And neither should you. If you live in the United states, work in the United States, and get paid in U.S. Dollars, you are already making a multilayered bet on the U.S. economy. To be prudent you should put some of your investment portfolio elsewhere - simply because no one, anywhere, can ever know what the future will bring at home or abroad."
One difference that I see between the 2003 story and today is that there are many more multinational companies listed in both the U.S. and foreign markets that generate at least a decently high proportion of their earnings from non-U.S. markets, which should provide some international diversification inherently. Nonetheless it's a good reminder that we're always facing the unknowable future.
With the spot BTC ETF approved and the continued inundation of investment outlooks, perhaps it's a good time to revisit the distinction between investing and speculating. Doing so makes you realize how difficult it is to separate investing from speculation. Everyone thinks that the distinction between those two terms is so easy (go ahead take out a piece of paper and try to clearly define each term), partly, I believe, because most people don't want to believe that they're speculating. The classic definition of investing comes from Benjamin Graham where he describes investing as "an operation, which upon thorough analysis, promises safety of principal and adequate return." Graham makes clear that investing involves a true analysis of the company whose securities are being purchased and that in making such analysis you ensure you are confident that serious losses and would be willing to hold the stock even if you had no way of knowing its daily share price.
Another definition of investing that I believe deserves serious consideration comes from Martin Fridson whereby he states: "Having rejected the customary bases for distinguishing between investment and speculation, I realized that the distinction that actually mattered was between holding the market portfolio and holding any other mix of securities and weightings. I dubbed the latter behavior “subdiversification.” "One might subdiversify for a specialized purpose, such as matching assets to a particular set of liabilities. That strategy aims at eliminating uncertainty and cannot reasonably be regarded as speculation. If, however, an individual overweights certain securities and underweights others with an eye toward outperforming the market portfolio, that individual is speculating."
Back in 2013, CFA's Future of Finance Forum had a panel on the topic of investing vs. speculating. Robert Hagstrom, CFA offered up his assessment as “An investor thinks foremost of the asset first then the price of the asset afterwards...“A speculator thinks foremost of price first and then the asset later or not at all.” And perhaps he summed up the topic best, lamenting: "“How is it an accountant can tell me the difference between debits and credits; a lawyer can define the differences between a felony and a misdemeanor; and a doctor can tell me what is the difference between a bacterial infection and a viral infection but we in the financial industry cannot answer . . . what is the difference between investing and speculation[?]”
XTOD: *FED'S WILLIAMS: RATES RESTRICTIVE ENOUGH TO REACH 2% PRICE GOAL
*WILLIAMS:MUST BE CONFIDENT INFLATION HEADED TO 2% BEFORE EASING
*WILLIAMS: DON'T SEEM CLOSE TO POINT OF SLOWING ASSET RUNOFF
XTOD: Todd Combs on reading what others don't: I think most people would probably be surprised how few people actually read annual reports and 10ks and so forth...let alone trade magazines and so forth. Like, I still read trade magazines and they're a phenomenal source of information...get information just as a journalist would.
XTOD: What we have learned from all the recent regional (NY, Philly, Dallas, etc…) Fed Surveys (as the name indicates, these come from the beast’s mouth) is that wage indicators have been showing an inflection higher for a few months now.
That means AHE are likely to reflect this in q1 and inflect higher.
Which makes you really wonder, how in the face of this adverse odds did the Fed and JPOW chose to perform their dovish pivot, knowing damn well that they ran a high risk of yet another policy mistake.
You could argue, one more, one less, what’s the big deal. And no one can blame you for it.
XTOD: Did you know America is now producing more oil and gas than any other nation on Earth?
XTOD (epic Airbnb thread - something like 30 million + views): For a fun game, let's do a tour of the unit @Airbnb refuses to give me a refund for! I'm sure they'd hate if you liked it shared this, which seems to be the only way to get their attention. Let's start with the entryway. Not off to a great start re: cleanliness. https://x.com/SureAsMel/status/1744876406020915672?s=20
https://x.com/cfromhertz/status/1745177485183004709?s=20
https://x.com/kevg1412/status/1744791063175540840?s=20
https://x.com/INArteCarloDoss/status/1745129833804304854?s=20
https://x.com/opinion/status/1745136306286444557?s=20
No comments:
Post a Comment