The Weekend Bulletin (Vol. 1 | Iss. 8)
A weekly digest of some interesting stuff from around the world-wide-web for the discerning investor.
Volume 1 | Issue 8 | January 11, 2020
Section 1: Investing Wisdom
Year ends and new years are generally characterized by look backs and goal settings. In keeping with that tradition, here is an article on each activity:
If you were to read a market performance report, may I suggest that this be the only one that you read, for not only is it short and to the point, but is equally simple. The biggest takeaway for me was that investors got rewarded with very little premium for taking risks in the last decade - in India, equities marginally outperformed gold and debt, large caps delivered better returns than mid and small caps, while globally, the US outperformed emerging markets. A simple, old fashioned, 60/40 asset allocation would have seen investors in the US triple their money even as hedge funds in the US struggled to beat the return of the 10-year bond. No wonder passives got as big as they are!!
Planning your investments can be an arduous exercise. How does one choose from the plethora of options available: should one go direct or via mutual funds, active or passive, large cap or mid cap, what is the best fund to invest in, and so on...Finding answers to these questions can sometimes be so daunting that investors tend to procrastinate their investment decisions. If you find yourself in a similar situation, then this article has some wise advice for you.
This article talks about the impermanence of economic dominance and moats. It makes a very interesting point: sometimes moats don't get eroded, but simply by-passed. New castles with better moats come up elsewhere.
On a related note, Apple continues to demonstrate it's ability to build new castles (although mostly adjacent to existing ones):
Lastly, if you are an analyst or their manager, this succinct communication framework may be very handy in garnering votes from your clients/bosses:
Section 2: Mental Models & Behavioral Biases
At a dinner, Charlie Munger asks the following to a group of investors: a famous investment house set up a 'best ideas' fund multiple times - a multi-fund-manager fund where each fund manager bought his best ideas. However, the fund never managed to do well. Why? Famed investor Mohnish Pabrai narrates this story and talks about why intensive stock research can be injurious to your financial health.
Section 3: Personal Development
Beginning of a new year is a good time for some motivational reading. This one is straight from the 1920’s. And like a good wine, this wisdom gets better as it ages: 'Bill Jones' was a motivation guru of the 1920’s. However 'Bill Jones' didn't exist. He was made up by a British Parker-Holliday printing company in 1926, as a way to sell a new product - corporate motivational posters. The character may be made up, but the wisdom is real (click on the tweet below to read the entire thread)
Section 4: Trivia
Consider the following facts:
More than 50,000 pieces of artwork are stolen every year globally.
Art robberies, unlike those shown in the movies, are mostly due to laxed security standards at museums.
Stolen art is harder to sell in the black market, the more famous or valuable it is.
Art owners may engage in black market negotiations with thieves after a successful heist to get their artwork back.
Given the above, if you were tasked to come up with a strategy to reduce art theft, what would you do? Read here to find out if your strategy would work (a nice exercise in game theory and unintended consequences).
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Have a wonderful weekend!!
- Tejas Gutka.