In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourth episode, they talk about mistake number five: do you let your ego dominate the decision-making process? And mistake number six: do you allow yourself to be influenced by herd mentality?LEARNING: Don’t let your ego influence your decision-making. Stay disciplined and avoid becoming irrationally exuberant. “The market is a predator preying on the mistakes of investors, their egos, and their herd behavior.”Larry Swedroe In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this fourth series, they talk about mistake number five: do you let your ego dominate the decision-making process? And mistake number six: do you allow yourself to be influenced by herd mentality?Missed out on previous mistakes? Check them out:ISMS 8: Investment Mistake No.1: Are You Overconfident in Your Skills?ISMS 17: Investment Mistake No.2: Do You Project Recent Trends Indefinitely Into the Future?ISMS 20: Larry Swedroe – Investment Mistakes No.3 and 4Mistake number 5: Do you let your ego dominate the decision-making process?According to Larry, logically, we make mistakes because we are human beings. One common mistake investors make is letting their egos influence their decision-making. No matter what you ask people, they all tend to think they’re better than average. Ego wants us to feel good, so we believe we’re better than average. But, the problem with ego is that it would much prefer to play a game where it only wins and never loses instead of a game where it can win or lose.Assume you’re a passive investor and put your ego aside because you know you’re unlikely to beat the market. So you choose to invest in the S&P 500, but unfortunately, it does poorly. Since you knew it could go either way, you have no one to blame except yourself.On the other hand, if you choose an active fund and it happens to outperform, you take credit for your brilliant decision to choose that active fund manager. And if it underperforms, you blame the manager and fire them. Here, the ego would much rather play a game of I win, but I don’t lose, which is what happens if you’re an active investor, not a passive one where there’s no one to blame. Larry believes that’s part of why almost half the number of investors, despite all the overwhelming evidence, choose to invest in active...

BIO: Harvey Sawikin is the co-founder and co-manager of Firebird. Launched in early 1994, Firebird’s funds were the first dedicated to the stock markets of Russia and the former Soviet Union.STORY: Harvey invested twice in a bank and a vodka company without due diligence. Instead, he believed that other companies who had invested in those investments had done the job of verifying their viability. Harvey lost huge amounts in both investments.LEARNING: You’ll fail if you rely on someone else’s due diligence and work. The most dangerous time to invest is when it’s the easiest to invest. “Relying on someone else’s due diligence is a mistake because you never know what’s going on or when stuff starts to go wrong.”Harvey Sawikin Guest profileHarvey Sawikin is the co-founder and co-manager of Firebird. Launched starting in early 1994, Firebird’s funds were the first dedicated to the stock markets of Russia and the former Soviet Union. Harvey also co-founded the Amber funds, which do private equity in the Baltic States. Before Firebird, he was an M&A lawyer at Wachtell Lipton after attending Harvard Law School and clerking for a Federal judge. Harvey’s novel, about a young lawyer who becomes an inside trader, was published by Simon & Schuster in 1995. He lives in Manhattan with his wife of 32 years and a neurotic 15-year-old cockapoo.Worst investment everOne of the largest banks in Kazakhstan, BTA Bank, approached Harvey’s company with an investment proposal. Another fund in the region had taken a position in it. The bank was supposedly very close with management and had excellent insight into how the company would build. The company looked cheap, with a reasonable price to book, and the economy was performing well. So Harvey invested in the bank.It turns out the bank’s loan book was crooked, and there was a lot of self-dealing. The guy who was the main power behind the bank was arrested for misappropriating millions of dollars from the bank through bad loans. The bank was put into bankruptcy and was taken over by another bank. The shareholders were almost wiped out. Harvey’s company had invested $20 million and got under a million back.In another incident, Harvey was very interested in getting involved in Ukraine. When a vodka company was brought to their attention, they became keen on investing in it, especially since a famous hedge fund in New York had bought a direct position. The fund said they had maxed out how much they could take and were willing to sell Harvey part of their stake.Harvey’s company made its investment, and within two or three weeks, the vodka company released gross earnings. Its financial results were 40% below where they were supposed to be.Harvey believed they had been duped by the hedge fund and wound up litigating against them. He eventually dropped the case due to the ruinous litigation costs in England and where the loser pays. He surrendered to losing that investment.Lessons learnedYou’ll fail if you rely on someone else’s due diligence and work.Be careful when investing during a bubble because it becomes invisible to you when you’re inside it.Andrew’s takeawaysDo your own due diligence.Don’t overestimate the knowledge, skills, and persistence of other investors.The most dangerous time to invest is when it is the easiest to invest.Harvey’s recommendationsHarvey recommends Twitter as a source of real-time information as long as you follow the right...

BIO: Paul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics.STORY: Paul quit a prestigious job where he had seasoned mentors to start a hedge fund. After a few years, he realized he wasn’t mature enough or emotionally prepared to run a business on his own.LEARNING: Surround yourself with people who are more experienced than you are. Think about all the scenarios where an investment can go wrong. “For every good idea out there, there are a million ways (that you can’t think about) for it to go wrong.”Paul Krake Guest profilePaul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics. View from the Peak, Paul’s consultancy was formed in 2011 after an 18-year career in investment banking and as a macro hedge fund manager, where he covers global institutions on these mega themes. His latest venture is Climate Transformed, a global community of climate investors, entrepreneurs, and corporate leaders who are practically implementing the $100 trillion investment required for us to achieve decarbonization and sustainability.Worst investment everPaul’s dad passed away in November 2004, and a couple of days after his funeral, Paul was sitting in his mom’s backyard at four in the morning. At that moment, he thought of the idea of starting a fund.Paul went ahead with his idea and started a hedge fund even though the timing was wrong, and it was for all the wrong reasons to follow through with this idea. There was such a high degree of emotion involved in making this decision that he didn’t really think through it and consider all that he was giving up.At the time, Paul had a prestigious job at Caxton Associates. He had the support of great mentors and trainers. He gave up all this to start his business.After about three years of running the hedge fund, Paul realized he wasn’t emotionally prepared or mature enough to do what he was doing.Lessons learnedSurround yourself with people who are more experienced than you are.Think about all the scenarios where an investment can go wrong.Think of a business as trade and have an exit strategy if it doesn’t work for X years or if you spend X amount.Andrew’s takeawaysWhen you get that wind of confidence and want to invest, take a step back and think things through.When you quit a job to start a business, you lose support and have to do it alone.Actionable adviceBefore you make any investment:Think about your processes.Consider your entry and exit position and treat everything with the same agnostic clinical approach.Always have an exit strategy for when things don’t work out.Paul’s recommendationsRecommended resources: The secret to not getting stressed over not finding ways to de-stress is to use fewer resources.No.1 goal for the next 12 monthsPaul’s number one goal for the next 12 months is to successfully roll out 30 in-person events in nine countries.Parting words “I love this. I think it’s a great way to get people to seriously think about the benefits of failing.”Paul...

BIO: Noel Smith is the Chief Investment Officer of Convex Asset Management and the Head of Options Trading at Tanius Technology.&nbsp;STORY: Noel and his partner invested in a stock whose price kept falling. Every time the price would fall, Goldman Sachs would come in and buy like 50,000 out of the money calls. This made the partners hold onto the stock, eventually riding it to zero.LEARNING: Have risk measurements in place that you know you will not break. Have some percentage that you're willing to lose.“Learning about options and how they affect the marketplace is much more important than you think."Noel SmithGuest profileNoel Smith is the Chief Investment Officer of Convex Asset Management and the Head of Options Trading at Tanius Technology.&nbsp;&nbsp;A member of the CME, CBOT, and CBOE, Noel has over 25 years of experience trading volatility, market making, and managing risk.&nbsp;&nbsp;Noel was previously the CIO and Portfolio Manager of two separate Chicago-based proprietary derivatives trading firms. Additionally, he was the seed investor who financed the launch of global high-frequency trading firm GETCO LLC (KCG/Virtu), which grew to account for 20%+ of trading volume in the U.S.Worst investment everNoel and his partner had a position in Enron, the ninth largest market cap company at the time. Enron started to lose money. Each time the stock would go down 10%, Goldman Sachs would come in and buy like 50,000 out of the money calls. Such stunts would convince people, Noel included, to hold onto the stock. And so the partners kept holding onto the stock as the price went up and down. Eventually, they rode the stock to zero, losing their entire investment.&nbsp;Lessons learnedHave risk measurements in place that you know you will not break.Have some percentage that you're willing to lose.Andrew's takeawaysA good investor has set up a structure of how to invest and doesn’t second guess the structure.Actionable adviceYou always have to be able to see the cause and effect of everything.Noel's recommendationsNoel recommends learning about options and how they affect the marketplace.No.1 goal for the next 12 monthsNoel's number one goal for the next 12 months is to develop his business and get more people to understand why options are useful and not to be afraid of them.Parting words“Thank you for having me today. Hopefully, everyone got something out of this.”Noel SmithConnect with Noel SmithLinkedInWebsite &nbsp;&nbsp;Andrew’s books&nbsp;● &nbsp; &nbsp; How to Start Building Your Wealth Investing in the Stock Market&nbsp;● &nbsp; &nbsp; My Worst Investment Ever&nbsp;● &nbsp; &nbsp; 9 Valuation Mistakes and How to Avoid Them&nbsp;● &nbsp; &nbsp; <a href="https://amzn.to/3emBO8M" rel="noopener noreferrer"...

What’s interesting about Toyota is that if you buy today, you get its future growth for freeThe right time to buy might be nowICE vehicles are not going away, providing ongoing revenue supportToyota is the world’s largest car manufacturer, ranked by a composite of market cap, revenue, and employees. The company has been a leader in alternative energy solutions such as hybrids and hydrogen-powered vehicles. The prior president has said that the company will “not simply repeat the approach of other companies” when it comes to electric vehicles (EV). Toyota points out the limited battery range, scarcity of lithium resources, lack of a charging network, and consumer preferences towards internal combustion engines (ICE). And developing markets in South America, Asia, and Africa could be decades away from having the infrastructure to implement a massive EV rollout; Toyota is well positioned to grow with these markets. Over the next five years, we expect Toyota to return to its pre-pandemic average growth level and achieve a CAGR of 6.9%.Hybrid and Hydrogen leadership and more EVs coming could prove critics wrongToyota is a pioneer in the mass production of hybrid technology, having rolled out its hybrid “Prius” model in 1997, since selling more than 5m. Currently, hybrids account for about 27% of total vehicle sales. Toyota is pushing ahead with hydrogen-powered cars, currently selling its “Mirai” model. The beaten-down share price is some evidence that observers expect the company’s hydrogen offerings will eventually fail. But there is promise to the technology, and an investor could consider Toyota’s hydrogen to have an option value. Of course, Toyota has not turned its back on EVs; recently, announcing plans to invest US$70bn in electrifying part of its fleet by 2030. We appreciate Toyota’s diversified approach to transition to more carbon-neutral cars and expect total CAPEX spending of about JPY12trn over the next few years.Negative sentiment pressuring price; but at 1x PB, it might be the time to BUYThe sector is unfavorable given recession fears, as well, investors doubts Toyota’s unconventional EV policies and its ability to defend its position as the world’s largest carmaker. The company’s price-to-book ratio (PB) dropped below 1x, which is 1x std dev below its long-term average. With an average net margin of 7.8% over the past 5 years, Toyota is among the most profitable automobile companies in the world. We believe negative sentiment has been too punishing, and the stock deserves a re-rating.FY3Q23 saw strong revenue growthToyota’s 3Q23 revenue was up an impressive 25% YoY due to strong sales volume.The operating profit also grew by 22%, with the positive effect of higher sales volume more than offsetting soaring material prices.Though, the bottom line is slightly weaker YoY due to FOREX losses.Revenue structureWith 10.5m sold cars in 2022, Toyota remained the largest car manufacturer in the world. Its automotive segment, which accounts for 91% of revenue includes the production of passenger cars, commercial vehicles, and related parts.The company produces vehicles under four brands: Daihatsu, Hino, Lexus, and the namesake Toyota. Accounting for 85% of total automotive sales, Toyota was the best-selling brand.It derives 7% of its revenue from financial services. Compared to other car companies, this contribution is relatively low, meaning that Toyota generates most of its sales from its core segment of car production.Toyota gets its revenues from multiple geographic regions. In 2022, North America was the largest region in terms of revenue as it represented 35% of...

BIO: Guillermo Cornejo is the CEO of Riders Share, the Airbnb of motorcycles he started while attending grad school at UCLA.STORY: Guillermo had an insurance company handling claims for his customers. When he realized the insurance company had a 50% profit margin, he decided to start his own insurance business. This became a costly and challenging venture because he had no experience handling claims.LEARNING: Don’t underestimate the value of experience.&nbsp;“Whenever somebody is talking to me about any industry, I'm all ears. I know I know nothing.”Guillermo Cornejo&nbsp;Guest profileGuillermo Cornejo is the CEO of Riders Share, the Airbnb of motorcycles he started while attending grad school at UCLA. Before that, he worked in analytics roles for GM, Nissan, and Hyundai. He grew up in Peru and enjoys anything that makes your heart race.Worst investment everGuillermo launched his company in 2018, and it grew immensely. The company booked over a million dollars in rentals within the first year. Guillermo was on top of the world.The company was working with an insurance partner with pretty good rates but was providing terrible service to Guillermo’s customers. It took many months to handle the claims. When Guillermo looked at his company’s history of accidents and measured the cost of paid-out claims and how much he had paid the insurance company in premiums. He found the insurance company was making a 50% margin in profits. This got Guillermo thinking he should do it himself.Guillermo raised some capital and used most of it to set up an insurance company. This was an expensive venture (millions of dollars). The more the company grew, the more bad customers it attracted—from risk-takers to fraudsters trying to steal his motorcycles. On top of that, he realized how difficult it was to handle claims, and just like the insurance partner, it took him months to pay out claims.Lessons learnedDon’t underestimate the value of experience.Andrew’s takeawaysDon’t let overestimation bias mislead you into thinking you can do more than you’re capable of.Try to shift your mind from I think I know something to I know I know nothing.Actionable adviceDon’t overestimate your skills, abilities, and knowledge. Work with advisors and connect with more experienced people who have done it before. They will help you understand how much you don’t know and then try to fill that gap.Guillermo’s recommendationsGuillermo recommends reading Factfulness: Ten Reasons We’re Wrong About the World--and Why Things Are Better Than You Think, co-authored by a previous guest on our podcast, Anna Rosling Rönnlund.No.1 goal for the next 12 monthsGuillermo’s number one goal for the next 12 months is to double his company revenues while remaining profitable.&nbsp;[spp-transcript]&nbsp;Connect with Guillermo CornejoLinkedInFacebook<a href="https://twitter.com/ridersshare?lang=en" rel="noopener...

BIO: Eugene Ng is the Founder and Chief Investment Officer of Vision Capital &amp; Vision Capital Ventures. He is also the author of the Amazon best-selling book Vision Investing: How We Beat Wall Street &amp; You Can, Too!STORY: Eugene invested in a three-day course in a bid to accelerate investment learning. The course involved playing a simulated stock investment game. Eugene lost in the early stages of the game due to overconfidence.LEARNING: It’s okay to make a mistake. Keep playing the long-term game of investing.&nbsp;“If you want to invest long term, avoid playing Russian roulette. You don’t want to be a hero and then end up in a cemetery sooner or later.”Eugene Ng&nbsp;Guest profileEugene Ng is the Founder and Chief Investment Officer of Vision Capital &amp; Vision Capital Ventures. He is also the author of the Amazon best-selling book Vision Investing: How We Beat Wall Street &amp; You Can, Too! He also teaches investing once a year to educate new investors and to give back.Born and raised in Singapore, Eugene studied economics and finance and received his Summa Cum Laude from the Singapore Management University in 2008.Eugene’s career in finance spans over 11 years. His career started in 2008, joining Citi as a Management Associate for 3 years. Subsequently, he was with J.P. Morgan providing FX and Interest Rates sales &amp; advisory for corporates for over 8 years, where he was a Vice-President.Worst investment everEugene had a near-death accident when he broke his neck almost ten years ago. While intoxicated, he decided to do a somersault into a very shallow swimming pool. Eugene broke the top of his head after hitting the bottom of the swimming pool. This type of injury is so severe that 99% of people who get it die, and of those who survive, 99% become paralyzed in some form or another.After that near-death incident, Eugene got thinking about what to do with his life. Before the accident, he was living a meaningless life and just wasting his money. Being a reasonably logical, curious person, who is also fairly good at numbers, Eugene decided to look into investing. He had never even read an investing book. Now he wanted to master investing. Instead of reading books, taking time to figure it out, and making costly mistakes over a period, he took a different route to accelerate his learning. Eugene decided to pay for a three-day investing course.The participants played a simulated stock investment game on the second day of the investing course. They were given five stocks to choose from, of which the financials were provided. They were to play this for ten rounds. A participant could decide to buy or sell each round. There was an additional advantage; a participant could take up to 10 times leverage on the limited amount of capital they had to buy the stocks.Eugene believed he was brilliant, having been in finance and banking. So in round one, he chose three of the five companies, equally split them, and took the maximum leverage possible. So he took 10X his capital. The stock was 10% up, making Eugene one of the few winners of the 60 participants. Then the second round came, and the stock market was up again by 20%. Suddenly, Eugene was the top guy in his class due to his power of leverage. When round three came, a massive stock crash occurred due to a recession, and the market was down 50%. He was completely wiped out. As the...

Will the global CPI slowdown continue?Global MarketsGlobal CPI is falling fast in both DM and EMsEconomies across the world have a GDP of about US$90trn and an average CPI of 6.2%DM CPI was 5.7%EM CPI was 6.9%World CPI was 6.2%, down 0.4ppts from one year ago; MoM it was down 0.8pptsDM CPI was 5.7%, down 0.9ppts from one year ago; MoM it was down 0.8pptIt has moved from being in line with World CPI last year; to the current 0.5ppt discountEM CPI was 6.9%, which is about flat vs. one year ago; MoM it was down 0.8pptIt has moved from being in line with the World CPI last year; to the current 0.7ppt premiumDeveloped RegionsDM Americas CPI is falling fast, DM Europe is sliding, DM Asia is on a steady riseDM Americas is the largest, with US$25trn of GDP and 4.9% CPIDM Europe has US$14.9trn GDP and 7.1% CPIDM Pacific has US$7.6trn GPD and 4.7% CPIDM Americas CPI is falling fast, DM Europe is sliding, DM Asia is on a steady riseDM Americas CPI was 4.9%, down 3.4ppts from one year ago; MoM it was down 1ppts.It has moved from a 1.7ppts premium to World CPI last year; to the current 1.3ppts discountDM Europe CPI was 7.1%, up 0.9ppts from one year ago; MoM it was down 1.1ppts.It has moved from a 0.5ppts discount to World CPI last year; to the current 0.9ppts premiumDM Pacific CPI was 4.7%, up 2.4ppts from one year ago; MoM it was up 0.4ppts.It has moved from a 4.4ppts discount to World CPI last year; to the current 1.5ppts discountEmerging RegionsEM Europe and Asia CPI falling; Middle East &amp; Africa, and Frontier markets are still on fireEM Americas had a small GDP of US$3.8trn and CPI of 7%EM Asia had a massive GDP of US$25.7trn and 1.9% CPIEM Europe had a small US$3.9trn GDP and a massive 17.7% CPIEmerging Middle East &amp; Africa had a tiny US$1.7trn GDP and a high 11.5% CPIFrontier markets had a US$2.9trn GDP and an extremely high 31.2% CPIEM Europe and Asia CPI falling; Middle East &amp; Africa, and Frontier markets are still on fireEM Americas CPI was 7%, down 2.4ppts from one year ago; MoM it was down 0.8ppts.It has moved from a 2.6ppts premium to World CPI last year; to the current 0.7ppts premiumEM Asia CPI was 1.9%, down 0.6ppts from one year ago; MoM it was down 0.4ppts.It has moved from a 4.1ppts discount to World CPI last year; to the current 4.3ppts discountEM Europe CPI was 17.7%, down 6.1ppts from one year ago; MoM it was down 5ppts.It has moved from a 17.1ppts premium to World CPI last year; to the current 11.4ppts premiumEM ME&amp;A CPI was 11.5%, up 6.4ppts from one year ago; MoM it was up 0.4ppts.It has moved from a 1.5ppts discount to World CPI last year; to the current 5.3ppts premiumFrontier CPI was 31.2%, up 14.7ppts from 1yr ago; MoM up 0.3pptsIt has moved from a 9.9ppts premium to World CPI last year; to the current 25ppts premium. This region was up YoY and MoMDeveloped CountriesOnly US CPI fell YoY; all top 5 DM countries, except Japan, fell MoM; UK CPI is double the USTop five DM countriesUS GDP was US$23trn, CPI of 5.0%Japan US$4.9trn and 3.9% CPIGermany US$4.2trn and 7.5% CPIUK: US$3.2trn, 10.2%France: US$2.9trn/5.8%USA CPI was 5%, down 3.5ppts from one year ago; MoM it was down 1ppts.It has moved from a 1.8ppts premium to World CPI last year; to the current 1.2ppts...

BIO: Nick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence.STORY: Nick invested in a stock he wasn’t familiar with just because his friends were doing it. He suffered a 78% loss.LEARNING: Don’t buy individual stocks. Trust your gut.&nbsp;“If you’re going to gamble, just wager less.”Nick Maggiulli&nbsp;Guest profileNick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence. He is also the author of OfDollarsAndData.com, a blog focused on the intersection of data and personal finance. His work has been featured in The Wall Street Journal, CNBC, and The Los Angeles Times. Nick graduated from Stanford University with a degree in Economics and currently resides in New York City.Worst investment everIt was the summer of 2021, and Nick was having a great night with some friends. One of his buddies, who’s pretty good at stock picking, told the group about this new exciting stock called Matterport (MTTR). Matterport is a virtual reality software that allows you to do 3D imaging of a room.Up until this point, Nick had primarily been a passive investor. The friend convinced the group to invest in Matterport, saying it would be big. Nick put in about 1% of his net worth. The group didn’t do much research. They just discussed the stock in a group chat for a day or two. They didn’t pay attention to it anymore.Over the next few months, the stock starts going up. Nick got excited about the surprising stock performance. He happened to attend an art show in New York. Coincidentally, the gallery was using Matterport to give a tour of their art venues. This was so wild and got Nick even more excited.The stock kept going up, and by November 2021, it had doubled. Nick bought it for $15, and now it was $30. At this point, everyone in the friends’ group doubled their investment.The peak was in November, and then the price started to decrease slightly. Nick figured it was no big deal, as every great winning stock has a decline. So he held onto the stock. The price kept going down. Nick sold his stock in October 2022 at $3.30 a share, making a 78% loss.Lessons learnedDon’t buy individual stocks.Trust your gut.Andrew’s takeawaysWhen you get invested in something, you’ll find every possible reason to justify it.There are a lot of times that we know stuff that we’re not supposed to do, yet we somehow end up in it.Actionable adviceIf you’re going to gamble, make sure you know exactly how much you’re willing to lose.Nick’s recommendationsIf you want to learn about individual stocks, Nick recommends reading Scale: The Universal Laws of Life, Growth, and Death in Organisms, Cities, and Companies. The book talks about the growth of cities, companies, and that type of stuff. To understand asset allocation, Nick recommends books by William Bernstein. He also recommends reading his book Just Keep Buying:...

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this third episode, they talk about mistake number three: Do you believe events are more predictable after the fact than before? And mistake number four: do you extrapolate from small samples and trust your intuition?LEARNING: Know your investment history. Don’t be subjected to confirmation or recency biases.&nbsp;“The key to long-term success is having a deep understanding of history and not being subjected to recency bias.”Larry Swedroe&nbsp;In today’s episode, Andrew continues his discussion with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this third series, they talk about mistake number three: do you believe events are more predictable after the fact than before? And mistake number four: do you extrapolate from small samples and trust your intuition?Missed out on previous mistakes? Check them out:ISMS 8: Investment Mistake No.1: Are You Overconfident in Your Skills?ISMS 17: Investment Mistake No.2: Do You Project Recent Trends Indefinitely Into the Future?Mistake Number 3: Do you believe events are more predictable after the fact than before?People often believe that events are more predictable before the fact than after. Larry says this is a big investment problem because it leads to overconfidence. After all, investors think they know what the outcome is.To avoid making this mistake, Larry’s advice is not to act immediately because if you do, you’re likely acting based on irrational fears. You don’t know the investment history and have a confirmation bias. The cure for this bias of believing events are inevitable is to think before the fact when the events are far from certain, let alone inevitable.Before you invest, Larry says you should keep a diary. Write down what you think will happen and compare it with the results after the fact. This analysis shows that you don’t know the future any better than anyone else. Your crystal ball is just as blurry. So don’t try to make forecasts based on your views because you think events are predictable.Mistake Number 4: Do you extrapolate from small samples and trust your intuition?People make investment judgments based on small samples, typically recent ones. For example, growth dramatically outperformed small-value stocks in 1997, 98, and 99 because of the Dotcom bubble.So people judging by that small sample...

BIO: As an accomplished entrepreneur and respected leader in the fintech industry, Larry Shumbres’s mission is to continuously enhance the investing experience for both advisers and investors through innovative technology.STORY: Larry tried to create a hedge fund, 50% tied to digital gold and 50% tied to the top five cryptocurrencies but faced so many setbacks in the process. He spent too much time and money on this venture, which never paid off.LEARNING: Don’t try to build an investment product around an unregulated industry. Don’t invest in what you don’t know.&nbsp;“If you don’t know anything about private equity, derivatives, or options, don’t do it. First, learn how it works and then look to invest in it.”Larry Shumbres&nbsp;Guest profileAs an accomplished entrepreneur and respected leader in the fintech industry, Larry Shumbres’s mission is to continuously enhance the investing experience for both advisers and investors through innovative technology. He is recognized as an industry expert and has over 20 years of fintech experience with companies such as Charles Schwab, Morningstar, and New York Life Investments.Most recently, Larry founded, built, and exited Totum Risk, a leading risk tolerance platform for the financial industry, through its acquisition by TIFIN. Before Totum, Larry built SmartVision by eVestment, which was later acquired by Nasdaq. He also led the sales team at eMoney before its acquisition by Fidelity.Worst investment everIn 2017, Larry had the idea of building a hedge fund, 50% tied to digital gold and 50% to the top five cryptocurrencies based on market cap. He put a lot of time and money into it. Larry had another business partner that was also putting time and money into it. He even had some friends and family money tied into this venture.Larry completed the private placement memorandum (PPM) to enable him to sell the product and have investors review it. Larry faced a couple of problems during this whole process. One, he didn’t have a track record. Two, he couldn’t sell the product in the United States. Three, it was impossible to distribute the product in other countries that had their own rules and regulations.So after spending a lot of money on attorneys, consultants, rules and regulations, and licenses, it got to the point where it wasn’t worth it. So Larry shut it down and lost the money.Lessons learnedDon’t try to build an investment product or tool around an unregulated industry.Anything that the SEC hasn’t approved is a big risk.Andrew’s takeawaysRevenue is everything. As a startup, your number one goal is to get your revenue up as fast as possible.Actionable adviceWhether you’re an entrepreneur or an investor, investing in what you know and what is regulated is wise.Larry’s recommendationsTo review any investments, Larry recommends going to large financial institutions like Schwab, Fidelity, Vanguard, JPMorgan, Chase, etc. Such institutions have a plethora of information to help you learn about investments. But more importantly, if you don’t have a passion for investments, Larry recommends partnering with a financial advisor to...

BIO: After starting his career at Bear Stearns and then co-founding a multi-billion-dollar hedge fund firm, Jesse Felder left Wall Street to focus his energies on research and writing. Today he publishes The Felder Report and hosts the Superinvestors podcast.STORY: Jesse found a cigar butt stock that was cheap and performed extraordinarily well in just a few months after he took a pretty sizable position. A friend convinced him to hold the stock long-term instead of short-term as he had planned. Government legislation affected the business, and Jesse lost about 50% of his investment.LEARNING: Don’t rationalize a bad trade; get out. Be very careful when you’re in a situation that’s being primed by the government.&nbsp;“When you’re in a situation that’s not working out as you would hope, rather than dig the hole deeper, move on and find something different.”Jesse Felder&nbsp;Guest profileAfter starting his career at Bear Stearns and then co-founding a multi-billion-dollar hedge fund firm, Jesse Felder left Wall Street to focus his energies on research and writing. Today he publishes The Felder Report and hosts the Superinvestors podcast.Worst investment everAbout 10 years ago, Jesse came across an idea that seemed to tick all the boxes for a cheap stock. It looked really compelling. The company was Corinthian College, a for-profit college in the US. The company was a reputable business and had excellent profit margins. The stock was trading about three times the cash flow.From a technical standpoint, the stock seemed like it would turn around positively, so Jesse took a pretty sizable position. The stock did nothing for the next couple of months. However, it took off the following year and doubled in a very short period. In fact, it went 150-200% up. All along, Jesse knew this was a cigar butt stock, and the plan was to hold it short-term.One of Jesse’s friends, whom he was managing money for at the time, called him and said he’d never owned a stock that performed so well in such a short period. The friend asked Jesse to hold the stock for at least a year. Initially, Jesse wanted to take the profits. After his friend’s call, he rationalized why he should keep it longer. Jesse held on to it and kept monitoring it.As time passed, it became clear that the Obama administration would limit for-profit colleges’ ability to offer government-subsidized student loans. This was essentially a death knell for these companies. If their students couldn’t get debt financing to pay tuition, they would go out of business because that was 90% of the people borrowing money to pay tuition. Jesse naively thought there was no way the government would put an entire industry segment out of business.Jesse kept holding on to the stock and reinvested all of the gains. The stock went down about 50% below Jesse’s purchase price. He finally sold the stock before the company went out of business. This ended up being one of the worst losses that Jesse has taken as an investor.Lessons learnedDon’t let your thesis migrate. You need to remember why you bought something and always ask yourself if it’s working out how you anticipated it.Don’t rationalize a lousy trade; get out.Never underestimate the government’s willingness to put an entire industry out of business if it serves a political or economic purpose.Ego has no place in investing. It can be very...

Remember that CPI is not inflationMar 2023 US CPI was 5%, down from 6% in Feb and off its June 2022 peak of 9.1%Mar 2023, the food component was up 8.5% but has come off its Aug 2022 11.4% peakMar 2023, the energy component was down 6.4, a massive fall from its 41.6% June 2022 peakIn Mar 2023, all other items were flat MoM at 5.6%, down from Mar 2022 6.5% highWithout a surge in oil US, we forecast CPI could end 2023 at 4%Two things that could derail YE23 4% …An oil price surge would push end-2023 slightly higher than 4%, but only slightly because it takes a few months for an oil price rise to impact CPIA US recession could quickly bring CPI below 4%&nbsp;Click here to get the PDF with all charts and graphs&nbsp;Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Sachi Wickramage is the Co-founder, COO &amp; CPO of i4T Global, a disruptive Field Service Management ecosystem.STORY: Sachi and his partner created an app that they thought would solve a problem for suppliers. Turns out, the suppliers didn’t need the app at all.LEARNING: Sometimes, you have to take a step back to take a step forward. Understand the moment of intent for each of your customer segments.&nbsp;“Understand the moment of intent for each of the segments of your customer base.”Sachi Wickramage&nbsp;Guest profileSachi Wickramage is the Co-founder, COO &amp; CPO of i4T Global, a disruptive Field Service Management ecosystem.With a track record of co-founding multiple mobile-first startups, Sachi has taken his apps to over 1 million active users across various platforms worldwide.Worst investment everWhen Sachi and his co-founder were building their Field Management Service app, they looked at the problem and figured the consumer in the ecosystem was the one facing the problem. But, they targeted the supplier. The goal was to provide the supplier with a better tech platform to provide better consumer visibility. One thing the partners did not identify at that time was that the suppliers were okay with the way they were operating their business because they knew they were a scarce resource.Now the partners were in a fix. They couldn’t promote the app to the consumer because they needed a critical mass of suppliers on the app. When they tried to promote the app to the suppliers, their question was if there were already many customers who would give them more jobs.The two partners had to step back, look at their model, and figure out who was the target audience with the problem at scale.Lessons learnedWhen building solutions, first figure out who is the target customer with the problem at scale.Andrew’s takeawaysSometimes you have to take a step back to take a step forward.Actionable adviceWait for the moment of intent. Once the moment of intent arises, people are ready for your solution. But if you incorrectly identify the moment of intent, your solution becomes a disturbance because people don’t have a need at that time.No.1 goal for the next 12 monthsSachi’s number one goal for the next 12 months is to expand beyond Australia to Europe and the US while staying true to his purpose.Parting words&nbsp;“Define who you are and who you inspire.”Sachi Wickramage&nbsp;[spp-transcript]&nbsp;Connect with Sachi WickramageLinkedInFacebookTwitterInstagramYouTubeBlogWebsite<a...

In this episode of Investment Strategy Made Simple (ISMS), Dave joins Andrew again as he shares more about his good and bad investments, among other things.&nbsp;“Most of the books I read that helped me invest are not about investing but about history.”Dave Collum&nbsp;Listen to Dave’s previous interview Ep660: What Should the US Be Doing in Ukraine? He shares his views about the UK, the US, and what the US should do about Ukraine.Dave’s early investment journeyIn 1980, when Dave started investing, it was nothing but bonds because interest rates were humongous, and investors could get a great return. Dave didn’t know what he was doing. He just depended on recency bias to make his investment decisions. Luckily, the bonds did great. After the 1987 crash in equities, Dave found himself sitting in the faculty lounge with an old guy who convinced him to buy equities. He looked into it, liked the idea, went in, and flipped equities. Dave was in equities until the mid-90s when he got enthusiastic after starting to accrue some wealth and was very bullish.Dave had a contact who was a traveling pharma salesman who would tell him what all the CEOs and staff were telling him. The connection had good information and gave Dave some ideas, one of which was a small company in Mississippi. The company did well and started acquiring everything under the sun.In early 1998, Dave started getting a little queasy about the markets because he’d read enough books now and better understood investing. At the beginning of July 1998, Dave emptied half of his equities. Then the economy went right into the Asian crisis. At this point, Dave had dumped everything and made 700%, and everything had worked great. So he thought he was a genius.Dave then got into gold. He had no clue what he was doing and simply white-knuckled gold for two years. Prices went from $256 to $1,900 at one point. Energy soared, too, and the decade following the tech boom was Dave’s best decade relative to the world. While the world was getting pounded by two nasty bear markets, Dave compounded 13% a year—that was extraordinary.Dave’s recommendationsDave recommends reading history books to understand investing. He highly recommends The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War.Andrew’s takeawaysIt’s important to understand that the returns in the stock market are a function of two things. The first part of the return is what you’re getting for a company’s earnings which are paid in dividends. The second part is the premium people are willing to pay for those earnings.We have had fantastic times for decades. It’s time to pay attention and think about a different way of looking at things.About Dave CollumDave Collum is a professor of Organic Chemistry at Cornell University who developed an interest in markets, which, in turn, led to an interest in geopolitics. He enjoys the human folly of it all. He has a natural predilection for being contrarian, which makes him a “denier” on almost all hot topics.&nbsp;[spp-transcript]&nbsp;Connect with Dave Collum<a...

BIO: Vincent Deluard is the global macro strategist for StoneX Group Inc., where he authors weekly commentary on global macro topics and advises pension funds on asset allocation.STORY: Vincent decided to overleverage an ETF during the financial crisis of 2008 in the belief that the economy would bounce back. Interest rates, however, fell, and he lost 70% of his investment.LEARNING: Take into account falling yields and falling inflation. Understand the difference between a trade and an investment.&nbsp;“The more volatile something is, the more likely it will lose its value over time.”Vincent Deluard&nbsp;Guest profileVincent Deluard is the global macro strategist for StoneX Group Inc., where he authors weekly commentary on global macro topics and advises pension funds on asset allocation. Prior to joining StoneX Group Inc., Vincent served as Europe strategist for Ned Davis Research, where he created the firm’s Europe product. Before that, Vincent was executive vice president for TrimTabs Investment, where he headed the firm’s quantitative research. Vincent is frequently quoted in the Financial Times, the Wall Street Journal, and Barron’s and is regularly on Bloomberg TV and CNBC.Worst investment everDuring the great financial crisis of 2008, Vincent had just started working and decided to get into investing. The interest rates at the time were stable at 5%—which seemed like a good number to Vincent.Then in a matter of a week, the interest rates went all the way to 2.5% in the wake of the Lehman Brothers panic. As the interest rates went down, bond prices went up. Vincent believed the situation would reverse, so he leveraged an ETF that gave him access to shorting the US Treasury prices. This worked at the beginning.The economy came out of recession, the yield curve steeped, and interest rates increased. Vincent thought they would go higher and back up to the 5% range, so he didn’t sell his position. Unfortunately, the interest rates didn’t go back up, and Vincent lost about 70% of his investment.Lessons learnedThe more volatile something is, the more likely it will lose its value over time.Take into account falling yields and falling inflation.Understand the difference between a trade and an investment.Andrew’s takeawaysAvoid leverage.Be careful about treasuries and Forex. Because basically, you’re fighting against the Fed, banks with a massive balance sheet, and a limited buyer who can move in any direction.Don’t overestimate the genius of the Fed and other bureaucrats.Actionable adviceMake your mistakes when you’re young, and learn from them to become a prudent investor.Vincent’s recommendationsVincent recommends signing up for his weekly reports, in which he addresses risks that people may have missed and other overlooked things. Sign up on his pinned tweet to get a two-month free trial.No.1 goal for the next 12 monthsVincent’s number one goal for the next 12 months is to do what matters to him and live a more meaningful life.Parting words&nbsp;“This was fun, and I like your humility. I think we all need some of that.”Vincent...

BIO: Igor Yelnik founded Alphidence Capital Ltd in 2020 and holds the positions of CEO and CIO. Alphidence is a systematic macro hedge fund management firm based in London, UK.STORY: Igor’s company entered into a forward contract with one of Russia’s biggest banks and sold a very significant amount of the Russian ruble against the US dollar. The company made a considerable profit, but the bank decided not to pay. After a lengthy court battle, the company gave up and counted its losses.LEARNING: Infrastructure and systematic risks can affect your trade significantly.&nbsp;“Non-market risks are really paramount in forward currency trades.”Igor Yelnik&nbsp;Guest profileIgor Yelnik founded Alphidence Capital Ltd in 2020 and holds the positions of CEO and CIO. Alphidence is a systematic macro hedge fund management firm based in London. Previously Igor was the CIO for ADG Capital Management from 2013 to 2019. Prior to that, he spent 9 years at IPM Informed Portfolio Management, where he was a Partner and Head of Portfolio Management and Research. Before this, Igor co-founded St. Petersburg Capital, an asset management firm that specialized in the Russian securities market, and later Unibase Invest, a managed futures business based in Tel Aviv.Worst investment everIn 1998, Asian prices, oil prices, stock prices, and the Russian ruble were going down. Igor was still working in Russia at that time. The Russian Central Bank established a cap—the currency corridor—they set ranges for the ruble. The exciting part was how much the US dollar could appreciate against the ruble. Everybody understood that the ruble was doomed to depreciate in that macroeconomic environment.Then the most popular trade of the summer of 1998 happened. This was the currency forward trade. Russian banks believed the Russian Central Bank would support the currency, so they bought the ruble. Then all the foreign banks played against them and sold the ruble.The ruble was already trading in the Chicago Mercantile Exchange. The foreign price of the ruble on the over-the-counter market in Russia was higher than in Chicago. So in principle, you could sell the ruble in Russia and buy it in Chicago, which was like free money.Under Russian law, Igor’s company entered into a forward contract with one of Russia’s biggest banks. The company sold a significant amount of the Russian ruble against the US dollar. The trade was entered into in July, and the delivery would be on the 15th of September 1998. The price of the trade was 6.37 rubles for $1.On the 17th of August, Russia defaulted on its debt denominated in the national currency. At the same time, it stopped supporting the ruble, so it devalued. By the middle of September, the ruble depreciated relative to the US dollar. It went from 6.37 to around 16. So Igor’s company won in that trade. Then on the 14th of September, the morning trading session set the price of the ruble at 8.25. This was still profitable for Igor’s company.The most interesting thing happened. The Russian bank refused to pay for these contracts, so Igor’s company wasn’t paid for its trade. The company decided to go to court and won. The bank appealed, but Igor won again.At that time, the Supreme Court decided in a similar case, where another major Russian bank was sued by one of the major French banks because of a non-payment on a similar contract. The Russian Supreme Court decided that the law should not protect a currency-forward transaction because it’s akin to betting. Igor and...

BIO: Bogumil Baranowski is a founding partner of Sicart Associates, LLC, a New York City investment firm. He has almost two decades of investment experience.STORY: Bogumil invested a lot of time and money in two companies that were drowning in debt, had poor management, and had a secular decline.LEARNING: Just because it’s cheap, don’t compromise on debt, management, and secular decline. Debt is the number one risk for an existing company.&nbsp;“Yes, you can make money, but keeping it is equally as important.”Bogumil Baranowski&nbsp;Guest profileBogumil Baranowski is a founding partner of Sicart Associates, LLC, a New York City investment firm. He has almost two decades of investment experience. He holds a master’s degree in Finance and Strategy from Sciences Po Paris and a master’s in Finance and Banking from the Warsaw School of Economics. He is the author of Outsmarting the Crowd and Money, Life, Family. He is the host of the Talking Billions Podcast.Worst investment everIn 2011, Bogumil picked up Verifone stock because it was cheap. The company had just acquired Hypercom, one of its competitors. It looked like they were well positioned, with Ingenico being the other competitor to coexist in a growing industry. Bogumil paid attention to how cheap the stock was. However, he had questions about how the merger would go, and the management was questionable. But Bogumil thought the price was so reasonable. So he overlooked the debt added for the acquisition and the fact that management was not exactly the team he was comfortable with.Soon enough, the management changed. There was a temporary chairman who even went to Bogumil’s office for a chat. Bogumil and his team invested so much time in understanding all the Verifone’s pieces, the payment systems, and how its products are sold.Then the stock started going down and got to 50% of his entry point. The earnings were also dropping, but Bogumil kept holding onto the stock. Then the tipping point came when Bogumil met with the new management. He didn’t like their approach, so he finally dropped the stock. He walked away with about a 70% loss at the time.Bogumil also shared an interesting case study, a South African retailer - an example of what can go wrong. The company was importing furniture from communist countries and then reselling it at very good prices. So it was a good business. One of the managers decided to get more aggressive with growth, and the company ran into some trouble.Bogumil looked at this company because some people had told him it was an exciting story. He had reservations about retail but put the company on the list regardless. Bogumil did his research well. Five minutes into reading about the company, Bogumil was ready to say no, no matter who was recommending it. But he decided to use it as a case study to teach his interns.The company was piling up debt quickly, and the market cap reached 20-something billion. It was the zero interest rate time in Europe, and money was so cheap. Businesses could easily get loans. This company accumulated about 20 billion in debt and was not picky about what it bought. The company purchased a US mattress business rolling up at a very high premium (over 100%). Bogumil...

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this second episode of the series, they talk about mistake number two: Do you project recent trends indefinitely into the future?LEARNING: Hyper-diversify and rebalance your portfolio.&nbsp;“You cannot run away from risks; you can only choose which risk you’re going to take. Hyper-diversify on as many different unique risks as you can, stay the cause, and rebalance.”Larry Swedroe&nbsp;In today’s episode, Andrew continues discussing with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this second series, they talk about mistake number two: Do you project recent trends indefinitely into the future?Missed out on mistake number one? Check it out: ISMS 8: Investment Mistake No.1: Are You Overconfident in Your Skills?Recency bias explainedAccording to Larry, most investors suffer from recency bias. Recency bias is that we tend to overweight whatever has happened in the most recent past, whether it’s months or years, and ignore long-term evidence. Say you’re watching a stock and go back to 1995 and notice that technology stocks in ‘96, ‘97, and ‘98 performed well. So you think the same performance will prevail, and now you buy tech stocks based on that recent trend.If you buy things that have done well in the last few years, and now you think it’s safe, what you’ve done is bought high. You didn’t get those great returns but paid high prices. High prices generally mean you’ll get low expected returns.Larry reminds investors that knowing your history is the best way to overcome recency bias. History tells us that all risk assets, gold, real estate, US stocks, small stocks, value stocks, high-yield bonds, etc., go through very long periods of poor performance. That means you don’t want to be subject to recency bias because you think three, five, or even ten years is a long time to judge performance. It’s not; otherwise, there would be no risk for an investor with a 10-year horizon. So you just have to wait it out.An excellent example of that problem is when the S&amp;P underperformed T bills for at least 13 years for three periods, from 1929 to 1943, from 1966 to 1982, and then again from 2000 to 2012. Of course, the stocks did great in the other half of that period, but you don’t get those returns if you’re subject to recency bias.The never-ending game of buying high and selling lowThe message that Larry tries to give investors is that there are no clear crystal balls. So don’t be subject to recency bias because you’ll forever chase and buy high and sell low. This is not a prescription for success. You cannot run away from risks; you can only choose which risk you’ll take. And if you don’t have a clear crystal ball, there’s only one logical answer; you should hyper-diversify on as...

Emerging Countries - China and Russia with stable rates, LT rates up only slightly, yield curve inversion less severe except RussiaInterest rate overviewChina 3m yield 2.5%,&nbsp;India 7.2%,&nbsp;Korea 3.3%,&nbsp;Russia 22.3%,&nbsp;Brazil 13.6%China 1yr yield 2.2%,&nbsp;India 7.2%,&nbsp;Korea 3.3%,&nbsp;Russia 10.0%,&nbsp;Brazil 13%China 10yr yield 2.9%,&nbsp;India 7.3%,&nbsp;Korea 3.3%,&nbsp;Russia 10.3%,&nbsp;Brazil 13.1%Year-on-year changes3m yield went up in most emerging countriesChina 3m yield was up 0.1ppts,&nbsp;India up 3.4ppts,&nbsp;Korea up 2.1ppts, Russia flat, Brazil up 1.9ppts1yr yield increases most prominent in India and KoreaChina 1yr yield was up 0.1ppts,&nbsp;India up 2.9ppts,&nbsp;Korea up 1.6ppts, Russia down 4ppts, Brazil up 0.2ppts10yr yield curve hasn’t changed significantly among emerging countriesChina 10yr yield was flat,&nbsp;India up 0.5ppts,&nbsp;Korea up 0.4ppts, Russia down 0.8ppts, Brazil up 1.5pptsRate progression3m yield was quite stable in developing countriesOverall, developing countries have been more cautious in adjusted their short-term interest rates1yr yield was volatile in Russia over the past year; other developing countries remained flat10yr yield almost stayed constant in all emerging countriesYield curveChina yield curve remained constant over the past 12 monthsBoth short-term and long-term yield haven’t moved muchAs of March 2023, the 10yr yield remained 0.4ppts higher than the 3m yieldIndia yield curve flattened massively and looks set to invert3m yield almost reached the same level as 10yr yield recentlyThis is a massive change YoY as the yield curve was pretty steep back in March 2022Korea yield curve inverted slightly in March 2023Russia yield curve stays invertedBoth short term yield and long-term yield haven’t moved muchBrazil yield curve inversion has widenedThe inversion accumulated to 0.5 ppts which is a bit higher compared to the previous yearKey pointsIndia, Korea, and Brazil raised ST rates significantly; China and Russia were stableLT rates are up slightly in all EM countries but increased less than WorldBrazil and Korea saw yield curve inversion recently, Russia remains worst&nbsp;Click here to get the PDF with all charts and graphs&nbsp;Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor...

Developed Countries - Vast DM Country increases in ST and LT rates, Japan stays an outlier, US looks worst based on yield curve inversionInterest rate overviewUS 3m yield 4.9%,&nbsp;Japan -0.3%,&nbsp;Germany 2.6%,&nbsp;UK 4.1%,&nbsp;France 2.8%US 1yr yield 4.7%,&nbsp;Japan -0.1%,&nbsp;Germany 2.9%,&nbsp;UK 4.0%,&nbsp;France 3.0%US 10yr yield 3.6%,&nbsp;Japan 0.3%,&nbsp;Germany 2.3%,&nbsp;UK 3.5%,&nbsp;France 2.8%Year-on-year changes3m yield in US up the most YoY as it started the interest rate hikeUSA 3m yield was up 4.4ppts,&nbsp;Japan down 0.2ppts,&nbsp;Germany up 3.2ppts, UK up 3.5ppts, France up 3.4ppts1yr yield has risen significantly in developed countries; only Japan’s yield didn’t moveUSA 1yr yield was up 3.1ppts,&nbsp;Japan down 0.1ppts,&nbsp;Germany up 3.3ppts, UK up 2.7ppts, France up 3.5ppts10yr yield grew in all developed countries YOY, even in JapanUSA 10yr yield was up 1.2ppts,&nbsp;Japan up 0.1ppts,&nbsp;Germany up 1.8ppts, UK up 1.9ppts, France up 1.8pptsRate progression3m yield has risen steepest in the USGermany, UK, and France 3m yield follows US, but with a delayJapan remains an outsider and continues with its negative interest rate policy1yr yield in developed countries moved up aggressivelyHowever, in March 2023, US 1yr yield dropped for the first time in 12 monthsOther developed countries also saw a slight fall recently10yr yield has risen in all developed countries, but starts to show flattening behavior recentlySince October 2022, the 10yr yield among the developed countries hasn't moved much and stayed flatYield curve3m yield curve inversion in the US widened after the Fed aggressively increased short-term ratesIn March 2023, the 3m rate was 1.3 ppts higher than the long-term rate1yr yield curve in Japan steepened over the past 12 monthsJapan is among the few countries that haven’t seen a yield curve inversionQuite the opposite is true as the differential between 10yr yield and 3m rates doubled over the past 12 months10yr yield curve in Germany turned into negative territory, but far less severe compared to World10yr yield curve in the UK also saw a slight widening of its yield curve inversion10yr yield curve in France flattened massively and seems likely to invert soonKey pointsAggressive ST rate hikes led by the US and followed by European developed countriesLT rates seem to have peaked and fell MoMJapan with different policy sees almost no movements in both ST and LT ratesUS faced steepest inversion among developed countries; Japan maintains positive yield curve&nbsp;Click here to get the PDF with all charts and graphs&nbsp;Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14...

Developed Market Regions - ST rates about to peak, LT rates are falling, inverted yield curve in DM Americas and Europe widenedInterest rate overviewDM Americas 3m yield 4.8%,&nbsp;DM Europe 3%,&nbsp;DM Pacific much lower at 1.1%DM Americas 1yr yield 4.6%,&nbsp;DM Europe 2.8%,&nbsp;DM Pacific same as 3m yield at 1.1%DM Americas 10yr yield 3.5%,&nbsp;DM Europe 2.9%,&nbsp;DM Pacific 1.4% is higher than 3m and 1yr yield, normal yield curveYear-on-year changesBiggest rise of 3m yield in Developed AmericaWorld 3m yield was up 3.2ppts, DM Americas up 4.3ppts, DM Europe up 3.3ppts, DM Pacific up 1.1pptsFollowing 3m yield, 1yr yield YoY changes were most prominent in DM Americas and DM EuropeWorld 1yr yield was up 1.9ppts, DM Americas up 3ppts, DM Europe up 2.9ppts, DM Pacific up 0.8ppts10yr yield in DM Europe and DM Americas widened fastest, little movement in DM PacificWorld 10yr yield was up 0.9ppts, DM Americas up 1.2ppts, DM Europe up 1.8ppts, DM Pacific up 0.4pptsRate progression3m yield has risen most aggressively in DM AmericasDM Europe yield moved at a similar pace to WorldDM Pacific yield only rose slightly, widening the 3m interest rate differential to other DM regionsUnlike World, 1yr yield has fallen in all DM regions in March 202310yr yield in DM Americas and DM Europe moved up simultaneouslyDM Pacific 10yr yield stayed almost flatAll DM 10yr rates fell MoM in MarchYield curveDM Americas yield curve has inverted the most among all DM regionsIn March 2023, the 3m yield was 1.3ppts higher than the 10yr yieldThe degree of inversion is similar to WorldDM Europe yield curve just inverted in March 2023The yield curve turned to negative territory as the 10yr yield dropped in March by 0.4ppts compared to FebruaryThough the inversion is much less extreme compared to WorldDM Pacific sees flattening yield curve over the past 12 months, but remains positiveAs of March 2023, the long-term 10yr yield was 0.3ppts higher compared to the short-term 3m yieldOne year earlier, the difference was 0.9pptsKey pointsST rates in DM Americas and Europe risen more aggressively than World, DM Pacific much slowerSmall increases in LT rate in all DM regions YoY, but fell MoMDM Pacific maintains a positive yield curve while inversion worsened in DM Americas and EuropeEmerging Market Regions - Massive ST rate hikes in ME&amp;A and Frontier, LT rates more stable, no yield curve inversion in AsiaInterest rate overviewEM Americas 3m yield 12.7%,&nbsp;EM Asia 3.2%,&nbsp;EM Europe 14.6%,&nbsp;EM ME&amp;A 52.7%,&nbsp;Frontier markets 23%EM Americas 1yr yield 12.6%,&nbsp;EM Asia 3.2%,&nbsp;EM Europe 9.4%,&nbsp;EM ME&amp;A at 23% is half 3m rate,&nbsp;Frontier markets 17.1%EM Americas 10yr yield 11.2%,&nbsp;EM Asia 3.6%,&nbsp;EM Europe 8.8%,&nbsp;EM ME&amp;A 10yr yield&nbsp; at 15.4%, 1/3rd of 3m rate,&nbsp;Frontier markets 10yr yield 11.9%, half 1yrYear-on-year changes3m yield has risen in all EM regions; it was most extreme in ME&amp;A and Frontier marketsEM Americas 3m yield was up 3.1ppts,&nbsp;EM Asia up 0.9ppts,&nbsp;EM Europe up 0.3ppts,&nbsp;EM ME&amp;A 3m yield was up 43.2ppts, Frontier 3m yield was up 10.6ppts1yr yield saw a rise in all EM regions YoY, except in EM...

World - End of DM ST rate rise, inverted yield curves remain, high rates in EMLevel – High ST global and EM rates, yield curve inversionWorld ST rates at 5.3%, DM 3.6%, EM 7.7%World 1yr rates at 4.4%, DM 3.4%, EM 5.8%World 10yr rates at 4.1%, DM 3.0%, EM 5.6%YoY rise – ST rates up massively YoY, small increase in LT ratesWorld 3m yield was up 3.2ppts, DM up 3.5ppts, EM up 2.6pptsWorld 1yr yield was up 1.9ppts, DM up 2.6ppts, EM up 0.7pptsWorld 10yr yield was up 0.9ppts, DM up 1.3ppts, EM up 0.1pptsProgression – ST rate rise stopped in DM, DM LT rates fell MoM3m yield consistently grew over the past 12 months, but DM is flat MoMWorld 1yr yield has fallen for the first time in March 2023, driven by fall in DM10yr yield has risen less extreme compared to short-term rates, again DM fell MoM&nbsp;Click here to get the PDF with all charts and graphs&nbsp;Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitter<a href="https://www.youtube.com/c/andrewstotzpage"...

BIO: Peter Ricchiuti is a graduate of Babson College and began his career with the investment firm Kidder Peabody in Boston. He later managed Louisiana’s $3 billion investment portfolio while serving as the assistant state treasurer.STORY: Peter made the mistake of falling in love with a particular stock and hyped it to his clients. The company had no moat and couldn’t stand the competition. Peter’s reputation was severely affected after the stock price fell significantly.LEARNING: Don’t fall in love with a stock. Diversification is key.&nbsp;“If you meet a money manager and they tell you they’ve never had any big losers, just run because losses are part of the game.”Peter Ricchiuti&nbsp;Guest profilePeter Ricchiuti is a graduate of Babson College and began his career with the investment firm Kidder Peabody in Boston. He later managed Louisiana’s $3 billion investment portfolio while serving as the assistant state treasurer.From Memphis to Mars (PA), Peter has addressed more than 1,200 groups in 47 states and several countries. He has been featured in BARRON’S, Kiplinger’s, The New York Times and The Wall Street Journal. He also hosts a popular weekly business show on National Public Radio in New Orleans called “Out To Lunch.”Worst investment everPeter got interested in a new company making soft soap that would replace the bar soap, which it did. The stock was trading at around $19 a share, and Peter just fell in love with it. He got many blatant signals that this would not work, but he ignored them.At first, the stock performed very well. However, the company had no moat. So the stock started falling. It got to $9, and Peter was beside himself because he had the stock in many client accounts as a speculative stock. The stock price just kept falling.As a broker, Peter’s biggest loss was not the money but the fact that his entire clientele and institutional salespeople wouldn’t believe him anymore.Lessons learnedDiversification is crucial.Don’t fall in love with a stock.Andrew’s takeawaysJust because a company or a CEO has an idea and is implementing it well doesn’t mean they can hold on to it.Actionable adviceThink of all the downsides before you take a position.Peter’s recommendationsPeter recommends reading How to Invest: Masters on the Craft to learn more about investing.No.1 goal for the next 12 monthsPeter’s number one goal for the next 12 months is to dig deeper into a few stocks he liked a couple of years ago and are now selling for much lower prices.&nbsp;[spp-transcript]&nbsp;Connect with Peter RicchiutiWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14...

BIO: Jason Hsu is the founder, chairman, and CIO of Rayliant Global Advisors (RGA), a global investment management group with over US$15+ billion in assets managed using its strategies as of June 30, 2022.STORY: Jason bet against the GameStop short squeeze and learned that John Maynard Keyens’ saying that “markets can remain irrational longer than you can remain solvent” still holds true.LEARNING: The market can be crazy for longer than you have the conviction to stay invested. Apply position constraints and diversify.&nbsp;“In the short run, the market can really stay crazy for longer than you have the money to stay on. And if you forget that, the market will remind you in as painful of a way as possible.”Jason Hsu&nbsp;Guest profileJason Hsu is the founder, chairman, and CIO of Rayliant Global Advisors (RGA), a global investment management group with over US$15+ billion in assets managed using its strategies as of June 30, 2022. Rayliant applies quantitative methods to access behavioral-based alpha prevalent in inefficient markets like China. Jason also co-founded Research Affiliates, a smart beta and asset allocation leader with over US$143 billion in assets managed using its strategies.Worst investment everGameStop is a sleepy, almost dead brick-and-mortar retail store selling video games that come in a DVD ROM you put into your laptop to play. It sells cartridges for your Nintendo. In a world where online games are reigning, GameStop is definitely a dying business, and the stock price shows it.Two years ago, the stock price was trading at a couple of bucks. A forum on Reddit started hyping the stock and convincing everyone that hedge funds shorted GameStop since they had realized the company would declare bankruptcy. The forum insisted it was a good time to do a short squeeze and screw the hedge funds. All this started as a joke, but in no time, the share price got to as high as $300.When Jason first caught wind of this, he thought the situation would make a fascinating case study. Jason would do a case study and use it to teach his MBA class about how markets can become inefficient and how these prices clearly violate any rationality.After a while, the stock price started pulling back and gradually falling. By that time, most people had recognized that it was just a crazy short squeeze, and now things were going back to normal. Jason figured the stock price would drop to $30 or $40. He decided to make a bet on that. This was when the second wave of the leading stock rally on GME happened, and the stock, for bout a two-three day run, went from $40 to $200. Jason lost a lot of money on that bet.Lessons learnedThe market can be crazy for longer than you have the conviction to stay invested.Be diversified. Don’t research one stock and bet big on it. Have lots of research and lots of uncorrelated possibilities.Apply position constraints so your portfolio is well diversified.Andrew’s takeawaysThe market can wear you down, but that doesn’t mean you’re wrong. It just means that your timing was terrible.Stop losses is a great way to protect you from an inefficient market.Actionable adviceApply risk management through a stop loss or position constraint. It doesn’t matter how convinced and sure you are about a stock; size it so that if you lose the entire position, you won’t commit suicide because...

BIO: Shreekkanth (“Shree”) Viswanathan is the founder and portfolio manager of SVN Capital, a Chicago-based, concentrated, long-only, global equity-focused fund.STORY: Shree’s biggest mistake is an error of omission. That is, after studying a particular business, he decided not to invest in it for various reasons. The stock turned out to be a multi-bagger a couple of years later.LEARNING: The qualitative strengths of a company are not always readily apparent in the financials. Get out and work in business; it will make you a better analyst and investor.&nbsp;“If you don’t know who you are, the market is an expensive place to find out.”Shreekkanth Viswanathan&nbsp;Guest profileShreekkanth (“Shree”) Viswanathan is the founder and portfolio manager of SVN Capital, a Chicago-based, concentrated, long-only, global equity-focused fund.After graduating from the University of Chicago, Shree worked as an investment banker for a few years before moving over to the buy side. Shree describes his investment style as Value investing with a Quality overlay.Worst investment everBack in 2009, Shree was working as an analyst in Chicago. As the economy struggled to come out of the real estate-centered malaise, Shree studied a company called Copart Inc. Copart is the largest salvage yard company in the US. Its business model is pretty simple. When a vehicle on the road gets into an accident, it’s hauled to a salvage yard. The insurance company covering that vehicle will quickly decide if they will pay the policyholder for repairs or total the vehicle and send it to the salvage yard. For various reasons, more and more insurance companies send damaged cars to the salvage yard.At the salvage yard, these vehicles are auctioned, and buyers will buy them to get parts, fix up their cars, or pull the parts and sell them. So, in any case, Copart is the middleman and gets paid from both sides.From its early days, the founder, Willis Johnson, had decided to own the land on which the salvage yards operate instead of leasing it. Given that real estate was the epicenter of the 2008/9 financial crisis, many businesses were cheap. Shree had been studying Copart and was impressed by the price. The market cap was about US$350 million. At that price, Shree would be paying for just the land in all the salvage yards that the company owns (about 140 yards around the country). He’d be getting the operations for free. That was the hypothesis Shree was working off. He did more research and then concluded that he wasn’t only paying for the land at that price.After reaching that conclusion, Shree decided to move on. There were lots of other options. Over time as the economy improved and Copart’s earnings and cash flow improved, the stock price reflected that improvement. Shree was just on the sidelines, watching the stock go up. By 2020, the stock was up 10x from 2009.Lessons learnedThe qualitative strengths of a company are not always readily apparent in the financials.Try understanding the strengths of the management teams of the companies you intend to invest in.Andrew’s takeawaysGet out and work in business. It will make you a better analyst and investor.Actionable adviceInvesting is an individual sport, and we each have to play to our strengths.Shree’s recommendationsShree recommends finding ways that help you get the vision, courage, and patience to invest.No.1 goal for the next 12...

BIO: Jeremy Kokemor founded Right Tail Capital: a concentrated, fundamental equity investment firm based in Richmond, Virginia.STORY: Jeremy was an intern in an investment management firm where he got to cover small-cap metal miners. He was new to this industry and made several mistakes.LEARNING: Figure out your investment style. Be careful of overconfidence and overestimation bias when looking at stocks to invest in. Be willing to change your mind when the circumstances call for it.&nbsp;“Figure out if there’s a certain type or style of investing that really appeals to you.”Jeremy Kokemor&nbsp;Guest profileJeremy Kokemor founded Right Tail Capital: a concentrated, fundamental equity investment firm based in Richmond, Virginia. Jeremy loves helping people with their investments through owning high-quality, under-valued companies for the long term. Jeremy grew up in New Orleans, Louisiana, prior to attending the University of Virginia. After working in investment banking and investment management, Jeremy graduated from Harvard Business School. He then worked with several fantastic investors at global mutual fund company T. Rowe Price before managing concentrated portfolios at Private Advisors and Thompson, Siegel &amp; Walmsley.Worst investment everJeremy had the great opportunity to work for T. Rowe Price after the financial crisis. He covered a portion of the technology sector for his internship and really enjoyed it. Later, when Jeremy was asked if there were any industries he did not want to cover, he said no because he liked learning about many different businesses. That’s how Jeremy found himself covering small-cap metals miners.Jeremy was utterly new to this industry and often made mistakes investing in this industry. Some of the mistakes include investing in a small hometown Canadian company that announced they were making a significant acquisition of a copper project in Peru. The company had never done anything before in South America.Another one was an investment in a gold mining company that, when they began production, their operating costs were just through the roof and dramatically higher than they had ever envisioned. Jeremy should have realized that the estimates they were publishing were based on the lowest degree of confidence of a feasibility study.Lessons learnedDon’t invest in metals and mining because it’s a more difficult industry to make money in, and not many companies survive for long.Know yourself and figure out where you’ve done an excellent job, where you’ve made mistakes, and where you’ve gotten lucky or unlucky.Figure out if a particular type or style of investing appeals to you as an individual.As public market investors, we always know less than we think we do.Have enough conviction to make the investment, but also hold that conviction loosely and recognize that many things could go wrong, and at times you might get duped.Be willing to change your mind when the circumstances call for it.You’ll learn much more from experience than from reading a textbook.Andrew’s takeawaysSometimes in some sectors, it’s the Wild West, so facing failure is a huge possibility.There’s overconfidence bias and overestimation bias that we’re all subjected to, and certain sectors are more prone to that.Actionable adviceIf you’re a student, start building your investing acumen, even with just a little money. Make some...

BIO: Paul Hodges is a trusted adviser to major companies and the investment community and has a proven track record of accurately identifying key trends in global marketplaces. He is chairman of New Normal Consulting and a Global Expert with the World Economic Forum.STORY: Paul invested in a company in the cinema industry, which according to his research, was a well-performing business. After investing, his bank’s asset manager advised him to sell this stock. The stock grew 10-fold after that. Paul missed out on that windfall.LEARNING: There’s no substitute for judgment. Distinguish between opinion and knowledge. Opinions are not knowledge.&nbsp;“Distinguish between opinion and knowledge. There’ll be many people who know more than you do, but they don’t actually know what they’re talking about.”Paul Hodges&nbsp;Guest profilePaul Hodges is a trusted adviser to major companies and the investment community and has a proven track record of accurately identifying key trends in global marketplaces. He is chairman of New Normal Consulting and a Global Expert with the World Economic Forum.His consulting work focuses on the major paradigm shifts taking place in the global economy in Demand Patterns, Reshoring of Supply Chains, Renewable Energy, Circular Economy, Advanced Manufacturing, and Financial Markets. He is a regular speaker at international and industry conferences.Worst investment everPaul was lucky enough to work for one of the UK’s biggest companies, where he had access to the best pension fund advisors. Paul went to one of those advisors and told them he had 20,000 pounds to invest. The advisor gave him a portfolio of eight businesses.A couple of years later, Paul started seriously thinking about a company he had kept an eye on for a while. It was in the cinema industry. The company was paying a very high dividend of 10%. It had quite a lot of cash in the bank, but everybody hated it. However, Paul went to the cinema a lot. He figured many other people also went to the cinema, so it would be a good company to invest in. Paul invested some money into that stock and added it to his portfolio.One day his bank wrote to him, saying they’d happily give him an expert review of his portfolio. They told him he had an excellent portfolio but advised him to sell the cinema company, which he did. The stock went up 10-fold after Paul sold his shares.Lessons learnedThere’s no substitute for judgment.The key to success in anything is persistence.Distinguish between opinion and knowledge.Andrew’s takeawaysEverybody’s got an opinion, but not everybody has knowledge.Opinions are not knowledge.Paul’s recommendationsPaul recommends reading a lot to continue learning.No.1 goal for the next 12 monthsPaul’s number one goal for the next 12 months is to focus on his family, especially his kids and grandkids.Parting words&nbsp;“It was great being here!”Paul Hodges&nbsp;[spp-transcript]&nbsp;Connect with Paul HodgesLinkedInTwitter<a href="https://new-normal.com/news/" rel="noopener noreferrer"...

BIO: The founder of FI Freedom Retreats, Amy Minkley’s, life changed when she discovered the Financial Independence movement in 2019.STORY: Amy was working in Bangkok, living an unhappy life of overworking and over-saving. This way of life gave her zero balance, and she was burning out. Ultimately, this led her to a new path that saw her quit her job in search of a more balanced life.LEARNING: Be clear about your values and spend on that and not what others value. Separate creating wealth from growing wealth.&nbsp;“Knowing what your enough is allows you to grow the gap between your income and spending and then invest that gap.”Amy Minkley&nbsp;Guest profileThe founder of FI Freedom Retreats, Amy Minkley’s, life changed when she discovered the Financial Independence movement in 2019. After working in Asia for 18 years, she was burned out. In a frantic bid to save her sanity and relationship, a late-night online search led her to the FIRE (Financial Independence, Retire Early) movement. Armed with the knowledge of hundreds of FIRE blogs and podcasts, Amy gained a new sense of hope, overcame the “one more year” syndrome, and quit her job in Bangkok. In 2021, she moved to Bali to live her dream life and share the message of Financial Independence and purposeful living. She is now happily engaged to her Australian beloved and organizing transformational FI retreats.Worst investment everWhen Amy worked in Bangkok, she was unhappy and ran on an old pattern of overworking and over-saving. She was saving 90% of her income and investing it all. This cycle saw Amy tell herself she needed to work one more year and save more. So she continued overworking herself into the ground, leaving her with no work-life balance.Then one day, Amy had this idea to have a conference in Asia. This led her to a new path that saw her quit her job in search of a more balanced life. Amy will host a FI Freedom Retreat in Bali, Indonesia, from September 27 to October 1.Amy will be bringing in great speakers with a lot of expertise. She aims to have speakers offering attendees information and knowledge that will transform their lives.Attendees will not only go on adventures in Bali, connect with the Balinese people, and immerse in the Balinese culture but also get the intrinsic value of community.Lessons learnedBe clear about your values and spend on that and not what other people value.Ask yourself what is your enough. Once you know what is enough to make you happy, you can grow the gap between what you’re earning and what you’re spending and then invest that gap.Even as you create, grow, and protect your wealth, make sure you also enjoy spending on what you value.Andrew’s takeawaysSeparate creating wealth from growing wealth.Once you grow your wealth, ultimately, you have to protect it.Amy’s recommendationsIf you want to learn more about investing and financial investment, Amy recommends reading The Simple Path to Wealth: Your road map to financial independence and a rich, free life, listening to relevant podcasts such as the ChooseFI podcast, and attending in-person events near you.No.1 goal for the next 12 monthsAmy’s number one goal for the next 12 months is to create an incredible FI freedom event where she’ll bring together exceptional speakers and a great group of people. She hopes the event...

BIO: Ben Claremon joined Cove Street in 2011 and has been a Co-Portfolio Manager for the Classic Value | Small Cap PLUS strategy since its inception in 2016.STORY: Benjamin has made the biggest mistakes and lost the most money by buying cheap companies that get less valuable over time.LEARNING: Know what kind of investor you are and let your portfolio reflects that. Just because it’s cheap doesn’t mean you have to buy it. Invest in a business you can own for years.&nbsp;“It’s hard to establish a true margin of safety when the intrinsic value is falling over time. It’s like catching a falling knife.”Benjamin Claremon&nbsp;Guest profileBen Claremon joined Cove Street in 2011 and has been a Co-Portfolio Manager for the Classic Value | Small Cap PLUS strategy since its inception in 2016. His background includes positions on the long and short side of hedge funds as well as commercial real estate finance and management. Ben is the proprietor of the value investing blog The Inoculated Investor, the founder of the 10-K Club of Southern California, and the host of the podcast Compounders: The Anatomy of a Mutlibagger.Worst investment everThe place where Benjamin has made the biggest mistakes and lost the most money is with companies that get less valuable over time. These are businesses facing secular headwinds or outright secular decline. Every day, the businesses become worth a little bit less. They seem lucrative to buy when they’re cheap and sell when the valuation goes from highly depressed to merely depressed. However, businesses that don’t get more valuable, over time, tend to throw curveballs at you that you might not be expecting. Whether it’s a balance sheet issue, a capital allocation issue, or a management change, trouble just breeds more trouble.There was such a company that Benjamin was relatively public on. When investing in this company, Benjamin thought there was a distinctive margin of safety. He believed the management team understood how to create value for shareholders. The company had valuable assets that could be sold at higher prices in the current valuation. And that capital allocation changes could have increased the company’s value relative to the current stock price.For this reason, Benjamin thought that the business connectivity and the business services sides were worth a certain fair amount more than the stock was trading for. He was looking at a situation where the value was much higher if they could just unlock it via divestitures. Amazingly, that’s precisely what the management did. They sold three businesses, all of which were at multiples higher than the stock price. But, to date, the stock is still down.Lessons learnedBefore you invest in a company, ask yourself, does this business look like it is getting more valuable over time and has a chance to compound? If the answer is no, don’t waste your time on it.Know what kind of investor you are, what fits your temperament, and what allows you to sleep well at night. Then let your portfolio reflects that.You’re better off investing in a business you can own for years instead of one meant to be sold.When investing, consider the moat trajectory and determine if the company is stable, expanding, or contracting. If it’s contracting, don’t assume that a cheap valuation will protect you from

BIO: Edward McQuarrie is Professor Emeritus at Santa Clara University. He writes on market history and personal finance, and his research has been mentioned in columns in the Wall Street Journal, Marketwatch, and Barron’s.STORY: Edward opened an account to trade naked puts. When the financial crisis of 2008 hit, he thought it was a good time to sell his puts. He ended up losing almost all the money in his account.LEARNING: Keep your play money small. Never trade your treasury bond until maturity to avoid losses.&nbsp;“I find intermediate treasuries to be superior to total bonds, especially for new investors.”Edward McQuarrie&nbsp;Guest profileEdward McQuarrie is Professor Emeritus at Santa Clara University. He writes on market history and personal finance, and his research has been mentioned in columns in the Wall Street Journal, Marketwatch, and Barron’s. His papers can be downloaded from SSRN.com, and he posts as McQ at Bogleheads.org, where you can view some of the charts mentioned today.Worst investment everYears ago, Edward gave himself a small play account to keep his hands off the money in his 401(k) account. In that play account, which he opened with a broker, Edward began to trade options, and more particularly, he began to sell naked puts.Then the great financial crisis of 2008 hit. Edward had been trading puts and calls for four or five years at that point. By November 2008, the Lehman Brothers had already gone bust, and the markets were going down, so Edward thought this was an excellent time to sell a naked put.At that point, Edward had $21,000 in his play account, and his maintenance requirement was only $11,000. A day later, he logged into his account and found a balance of $11,000 and a $21,000 maintenance requirement. This meant Edward was $10,000 short. His best option was to take the loss and reduce the maintenance requirement. So after 30 minutes of frenzy to position covering, Edward still got a margin of about $2,000, which he had to cover with money outside the play account.Lessons learnedKeep your play money small.Always have a lifeline in case you totally screw it up.Nobody holding a US Treasury to maturity loses their money nominally. It’s when you trade them before maturity that you can lose significantly.Andrew’s takeawaysAlways have a backup plan to survive.Get into a short-duration bond when you think that bond prices will fall. On the other hand, invest in a long-duration bond if you think that prices will rise.No.1 goal for the next 12 monthsEdward’s number one goal for the next 12 months is to write as much good stuff as he can pump out the door.Parting words&nbsp;“Own the total stock market, just like Andrew said.”Edward McQuarrie&nbsp;[spp-transcript]&nbsp;Connect with Edward McQuarrieLinkedInWebsiteBooksAndrew’s books<a href="https://amzn.to/3qrfHjX"...

Is global CPI going to follow the US CPI slowdown?Global MarketsGlobal CPI has leveled off and is slowing in DMs, but still rising in EMsEconomies across the world have GDP of about US$90trn and an average CPI rate of 7.4%The developed world has GDP of US$52trn and CPI of 6.9%And the emerging world has GDP of US$38trn and a higher 8.2% CPI rateWorld Jan. 2023 CPI was 7.4%, up 2.1ppts YoY; MoM DM continues to fall, while EM is risingDM Jan. 2023 CPI was 6.9%, up 1.5ppts YoY, but falling slightly MoMEM Jan. 2023 CPI was 8.2%, up 2.9ppts YoY, and is rising MoMKey pointsGlobal CPI was 7.4% in January, up 2.1ppts YoY, but it was flat MoMDeveloped world CPI was 6.9%, up 1.5ppts YoY, but falling slightly MoMEmerging world CPI in January at 8.2%, up 2.9ppts YoY, and it rose MoMDeveloped Markets RegionsCPI is contained in DM Americas, peaking in DM Europe, and rising in DM AsiaWith in the Developed Markets, DM Americas is the largest with US$25trn of GDP and 6.3% CPIDeveloped Europe has US$15trn of GDP and a higher 8.3% CPIDeveloped Pacific is smaller at US$8trn and has the lowest CPI of the developed regions at 5.1%DM Americas CPI falling, DM Europe peaking, DM Asia rising12 months ago, DM Americas had a 7.4% CPI which is now down to 6.3%, a 1.1ppts fallThis means that CPI went from 2.1ppts above the global average to 1.1ppts belowDM Europe rose from 4.4% 12 months ago to 8.3%, up 3.8pptsThis means it went from 0.9ppts below to 0.8ppts above the global averageCPI is racing up in DM Pacific from 1.5% 12 months ago to the current 5.1%, that’s a 3.6ppts increaseIt has gone from 3.8ppts lower than World CPI to 2.4ppts lowerKey pointsDM Americas 6.3% January CPI is down from 7.4% 12 months ago; and has now shifted from being 2.1ppts above the global average to 1.1ppts belowCPI nearly doubled in DM Europe over the past 12 months from 4.4% to 8.3%, shifting from about 1ppts below to 1ppts above the global averageCPI in the must smaller DM Pacific region raced up from 1.5% 12 months ago to the current 5.1%; despite that massive 3.6ppts increase, it remains about 2.4ppts lower than the global averageEmerging MarketsEM CPI rising in Asia, Middle East and Africa, and Frontier markets on fireEM Americas had a small GDP of US$3.8trn and CPI of 7.9%EM Asia had a massive GDP of US$25.7trn and 3.2% CPIEM Europe had US$3.9trn GDP and a massive 23% CPIEM Middle East and Africa had a small US$1.7trn GDP and a high 10.2% CPIFinally, Frontier markets had US$2.9trn GDP and 30% CPIEM CPI rising in Asia, Middle East and Africa, and Frontier markets on fireEM Americas CPI was 7.9% in January, down slightly from 8.5% 12 months agoEM Asia CPI went from a tiny 1.9% 12 months ago to 3.2% and is still 4.3ppts below the World CPIMost notably, this has ticked up slightly MoMEM Europe CPI was 23% and over the past two months has been falling; though it is still 15.5ppts above the World averageEM ME&amp;A CPI was 10.2% compared to 3.7% 12 months ago. It has now risen to be 2.8ppts above the world average compared to 1.7ppts below 12 months agoConsumer prices are on fire in Frontier markets up 30% YoY in January; this is double where they were 12 months ago; CPI keeps rising MoM and is now 22.5ppts above the world averageKey pointsEM Americas CPI was 7.9% in January, down slightly from 8.5% 12

Did the Fed finally break something with its aggressive rate rises? I’ve been repeating in my investment strategy that the Fed will eventually break something, and yes, they did. They did.Was the collapse of the Silicon Valley Bank the beginning of the 2023 US banking crisis?Has quantitative tightening ended?Are we in quantitative easing?Could this spread throughout the US?Or the global banking system?Was this caused by the government or the bad behavior of banks?Is the dollar going up or down due to what’s happening?Could this trigger a much-anticipated recession in America?And how does this impact Feds tightening and inflation the Fed is meeting this week?Did the Fed finally break something with its aggressive rate rises?Was the collapse of the Silicon Valley Bank the beginning of the 2023 US banking crisis?First, we start with the situation of Silicon Valley Bank, which is going bust. In Silicon Valley Bank’s case, first of all, there was a huge influx of deposits into Silicon Valley Bank over the last couple of years, as well as the whole banking sector in the US.Where did these deposits come from? In the US, those deposits came from the US government pumping money into the hands of individuals and companies through the various and massive stimulus programs during the covid shutdown. Those stimulus packages passed by Congress went into the banks as deposits from individuals and companies.Consider the fact that most countries around the world couldn’t do this. Thailand where I am right now, there’s no way the government could print all that money because the currency would have collapsed. And therefore, most governments did not have the privilege of having a reserve currency asset and the ability to print as much money as needed. So America is quite unique in this, and that’s one of the reasons why what’s happening in the US is may not spread to such an extent globally.What did Silicon Valley Bank do when they got all these deposits?Well, they didn’t have enough loans available to lend this money out. A bank does basically three things with the deposits that it receives: 1) it can hold it as cash, 2) it can buy some security or investment, like a security that could be traded, or 3) the traditional business of a bank, is they lend out money.Now if they had a lot of opportunities to lend that money out, they would have locked that money up in loans. Now imagine that a bank had 5% cash, 5% securities, and 90% loans. If people wanted to pull their deposits out of the bank, the bank would have 5% of the money available of their total, and then another 5%, they could sell those securities and repay deposits.Now they could also go to the government to the Fed and borrow some money to repay deposits to prevent a bank run. But it’s not so easy to get out of loans, right? If you’ve lent money to a company and need that money back, you can’t get that. So the loans are very illiquid, but securities are very liquid.After the 2008 crisis, new regulations tried to force the banks to hold more cashNow, let’s add that after the 2008 crisis, basically, the US government came up with new regulations that tried to force the banks to hold more cash and more securities, with the idea being that the combination of cash and securities would be highly liquid assets. And basically, the banks would then be able to pay back if any depositors came, they would be able to pay back.In fact, at the peak liquidity of the banks, you had almost 20% of the US banking sector’s assets in cash and almost 20% in securities. That means almost 40% of the bank’s balance sheet was in highly liquid assets.Now also what the US government did is they said, look, if you buy US Treasuries, we’ll count them as purely risk-free, meaning that you don’t have to...

Is US CPI going up or down by yearend 2023?Feb 2023 US CPI was 6%, down from 6.4% in Jan and off its June 2022 peak 9.1%Food accounts for 13.5% of CPI and was a high 9.5% in FebruaryFood has come off its Aug 2022 11.4% peakEnergy accounts for 7.1% of US CPI and was up only 5.2%Energy has come down considerably from its 41.6% June 2022 peakWhen oil price rises, it causes a similar, but muted rise in the US CPI energy componentCorrelation between oil price and the energy component of CPI is about 90%Food and energy are a tiny part of US CPI, 79% of the weight comes from all other itemsNon-food and energy items are less volatile and total CPI is coming back down to that levelThis less volatile and slow to adjust group of products and services illustrates why I was previously arguing that overall CPI was unlikely to come down fastMost volatility in US CPI comes from the energy component, which accounts for only 7% of CPIThe largest impact on the food category is “Food at home” which was up 10.2%This is coming from supply chain pressures that take a long time to work throughThough high, food at home peaked in August 2022’s 13.5% high and has fallen 3pptsFood away from home never was exceptionally high and as a result is slowly fallingEnergy is 7% of US CPI and is broken equally into commodities related and servicesCommodities is related to the oil and gas that Americans buyEnergy services show how energy costs feed into the price of electricity that individuals and businesses payGasoline prices were the main driver and at its peak in Jun 2022 was up 60%Biden’s first drawdown of emergency oil stockpiles from the Strategic Petroleum Reserve was in November 2021, just before the electionIn 2022, Biden released 222 million barrels of oil from the Strategic Petroleum ReserveThis 38% reduction increased worldwide supply and helped bring down oil price21% of CPI comes from products like cars and cars, which were only up 1%The cost of homes is the largest part of the US CPI at 34% and it was up 7.3%Services excluding energy services is mainly comprised of owner's equivalent rentOER is still slowly adjusting up as a result of the rise in home pricesThis accounts for 30% of CPI and will take months to adjust downOil price moved from US$39/bbl in Oct 2020 to US$82/bbl 12 months laterThe peak was US$114/bbl in June 2022US housing price were rising at 5% per year since 2012They shot up 12% in 2020 thanks to the Feds near zero interest ratesThen they went up a massive 18% in 202130-year fixed mortgage rate hovered around 3% from July 2020 to October 2021. Now 6%SummaryFeb 2023 US CPI was 6%, down from 6.4% in Jan and off its June 2022 peak 9.1%Food accounts for 13.5% of CPI and was a high 9.5% in February; “Food at home” was up 10.2%, showing lingering supply chain pressuresEnergy is a small component of US CPI and was up only 5.2%, down considerably from its 41.6% June 2022 peakThe correlation between oil price and the energy component of CPI is about 90%, so with oil prices down, US CPI is downBiden’s 38% drawdown of the Strategic Petroleum Reserve in November 2021, just before the election, increased worldwide supply and helped bring about that oil fallOil prices feed slowly into the price of electricity; hence energy services were up 13.3% and will be slow to fall79% of the weight comes from ex-food and energy items, which is much less volatileCars, apparel, and the like are about 21% of CPI was only up...

BIO: Michelle Leder has probably read more SEC filings than just about anyone else on the planet since writing her book, Financial Fineprint: Uncovering a Company’s True Value, and starting her website, footnoted.com nearly 20 years ago.STORY: Michelle invested in a company without going through important SEC reports.LEARNING: Dig deep into the company’s 10-K annual report before investing. Look at the risk factors and what the company says about risk.&nbsp;“Pay attention to the stuff in the 10-K if it is a significant position for you.”Michelle Leder&nbsp;Guest profileMichelle Leder has probably read more SEC filings than just about anyone else on the planet since writing her book, Financial Fineprint: Uncovering a Company’s True Value, and starting her website, footnoted nearly 20 years ago.Michelle recently relaunched Friday Night Dump, a weekly newsletter. It focuses on SEC filings made after 4 pm on Friday afternoons when companies tend to bury the most negative information that they are required to disclose.Worst investment everTwenty years ago, Michelle was relatively new to investing and had been a business journalist for about 10 years. She bought some shares of Quest Communications because she was covering IBM at the time. IBM had just announced a big deal with Quest. Michelle thought this would be an excellent opportunity to buy some Quest shares. She watched the shares go up until they stopped and started plummeting.Michelle went back, and I looked at the footnotes she’d collected while researching IBM. She discovered that IBM had booked the whole billion dollars for the deal with Quest upfront in year one, even though it was a 10-year deal. Michelle had missed this, so she watched Quest go all the way down.Lessons learnedIt’s a great time of year to dive into investing, as 10-K reports have been filed.Before investing, look at the risk factors and what the company says about risk.Dig deep into the company’s 10-K annual report for a clear picture of its financial performance.A 10-K report contains much more detail than a company’s annual report. It will give you enough information before you buy or sell shares in the company.For every significant position in your portfolio, ensure you’re aware of important details such as revenue recognition and inventory disclosures.Andrew’s takeawaysFinancial statements and annual reports are a treasure trove of information for analysts.Michelle’s recommendationsStart with one or two companies you know well. See what you can discover by reading essential filings like the 10k and proxy statements. Does the new information you get make a difference?No.1 goal for the next 12 monthsMichelle’s number one goal for the next 12 months is to focus a lot more on her business.Parting words&nbsp;“Life is a learning experience. In the end, it’s not about the money; it’s about the quality of your relationships.”Michelle Leder&nbsp;Connect with Michelle LederLinkedIn<a...

The Silicon Valley Bank crisis started when the US government shut down its economyThe Silicon Valley Bank crisis started when the US government shut down the economy from 2020 to 2021.Let’s take a step back to January 29th, 2020, when President Donald Trump announced a White House Coronavirus Response task force with the director of the National Institute of Allergy and Infectious Diseases, Anthony Fauci, and Deborah Brix as coordinator.The decision to shut down the economy originated from this body but was ultimately implemented by President Trump, members of congress, and eventually President Joe Biden. This decision was truly the worst decision I have ever seen a government make in my lifetime.Businesses and individuals saw their income collapseDuring that time, businesses and individuals saw their revenues collapse and could not pay the costs necessary to sustain their businesses and livelihood.The US government then came up with various programs to distribute money to these struggling businesses and individuals. Unfortunately, the government did not have this money to distribute.As we all learned in political science 101, the source of any government funds, of course, comes from its citizens, but in this case, citizens and businesses were reeling from the government’s shutdown of the economy and hence had no money.The US government had to borrow moneySo the only choice the government had was to borrow money. But the US Treasury department could not borrow from the population as citizens were in dire straits. Usually, the US government would be able to borrow from foreigners; however, as other countries were suffering and for various geopolitical reasons, foreigners didn’t buy much US government debt.In fact, in 2014, foreigners owned US$6.2trn of US Treasury Department bonds; five years later, in 2019, they only held slightly more at US$6.8trn. Throughout the crisis, the US Treasury Department could only get about one trillion dollars of foreign money to buy US Treasuries.The US government needed trillions of dollarsBut the US government needed a lot more money than that. In fact, between the end of 2019 and the end of 2021, the US government borrowed US$6.4trn, causing total US government debt to rise to US$29.6trn by the end of 2021, 122% of GDP.So, the US government needed US$6.4trn and couldn’t get it from taxpayers or businesses at that time, so where did they get it? As I mentioned earlier, they got about US$1trn of it from foreign investors, which left a US$5.4trn hold.In 2020/21, the Fed stepped in and lent money to the US TreasuryThe solution was for the Federal Reserve to step in and lend the money to the US Treasury. Now the Fed is not allowed to buy bonds directly from the US Treasury, so the largest banks bought these bonds and then offloaded most of them to the Fed. The total assets of the Fed grew from US$4.6trn at the end of 2019 to US$8.8trn by the end of 2021, a US$4.2trn increase.To put this into perspective, from 2020 to 2021, the US government spent US$12trn and took in taxes of US$5.1trn.This massive injection of money raised depositsThis massive injection of money resulted in deposits of individuals and companies at US banks increasing by US$4.7trn during 2020 and 2021. The banks put about half of that money, or about US$2.2trn, into cash. About a third of those deposits, or US$1.6trn, went into securities at a time when interest rates were close to zero. In 2020 US 10-year Treasury bonds yielded about 0.9%, and it was about 1.5% in 2021.Banks receive short-term deposits and lend long-termBanks generally receive short-term deposits and lend that to companies on a long-term basis. But in 2020 and 2021, there was enough concern about the economy that banks didn’t lend much. Instead, they put that money into cash and securities.In 2020...

BIO: Dave Collum is a professor of Organic Chemistry at Cornell University who developed an interest in markets, which, in turn, led to an interest in geopolitics.STORY: Dave talks about his 2022 Year in Review: All Roads Lead to Ukraine.LEARNING: Never trust politicians and bureaucrats.&nbsp;“The more the fact-checkers, the more likely the thing they’re checking is true.”Dave Collum&nbsp;Guest profileDave Collum is a professor of Organic Chemistry at Cornell University who developed an interest in markets, which, in turn, led to an interest in geopolitics. He enjoys the human folly of it all. He has a natural predilection for being contrarian, which makes him a “denier” on almost all hot topics.2022 Year in Review: All Roads Lead to UkraineGiven his interest in geopolitics, Dave has strong opinions about many things. For him, it’s a natural thing to go against everybody. Today, we’ll not talk about his worst investment ever but rather hear more about his 2022 Year in Review: All Roads Lead to Ukraine.Every year, Dave writes an annual survey of what is happening in the world. The reviews started as a handful of pages for friends and family on a simple website, and then it just got bigger. One year he decided to do a serious job. Now every year has gotten bigger and bolder. Dave has a friend who’s binding all the views so he can sell them all on Amazon.Every year, Dave writes about human folly. In his 2022 review, his primary focus was Ukraine. In his true controversial nature, he took the pro-Putin stance. Dave says he can easily make the case that NATO is bad.Dave argues that Putin is making incredibly rational moves and believes that NATO could have stopped the war but chose not to. He gets pretty troubled to watch people become self-righteous about Ukraine while the US is no victim. Going back in history, Dave says the US has bombed more countries than Russia over the last 20 years. The government has also killed more people with military weapons in the previous 20 years. People want to talk about the Ukraine war while ignoring that the US gave weapons to the Saudis to bomb the Yemenis into oblivion. Or the fact that last year, the US bombed Syria three times to send a message to Tehran. In Dave’s opinion, that should be a war crime.Dave predicts that the war in Ukraine will end soon. A Twitter poll he did shows that people are tired of the war and no longer support it. To end the war, the US must stop sending money and weapons to Ukraine.Go to Peak Prosperity to read Dave’s full honest review.Andrew’s takeawaysAndrew has three guiding principles:Never trust politicians.Never trust bureaucrats just like that. They’ve got to earn your trust.The majority of people follow politics blindly.Andrew believes that to really see a change in society, you’ve got to effect that change through the political system and apply that across all boards.&nbsp;[spp-transcript]&nbsp;Connect with Dave CollumLinkedIn<a href="https://twitter.com/DavidBCollum" rel="noopener noreferrer"...

BIO: Bill Blain is a well-known financier and commentator on financial markets, contributor, and editor of the Morning Porridge.STORY: Bill loves airships, and many of his investment mistakes involve airships.LEARNING: Ignore the worst and the best estimates and focus on the middle consensus. In a difficult market, a bid is a bid, and you’ve got to sell fast.&nbsp;“The market has one objective only; to inflict the maximum amount of pain on the maximum number of participants.”Bill Blain&nbsp;Guest profileBill Blain is a well-known financier and commentator on financial markets, contributor, and editor of the Morning Porridge. His day job combines his role as Strategist for Shard Capital, the leading investment management firm, and heading the firm’s Alternatives Group – financing Private debt and equity deals and direct lending transactions. His clients include sovereign wealth funds, hedge funds, insurance and pension managers, credit funds, and family offices.Worst investment everBill absolutely loves airships, and many of his investment mistakes—unsurprisingly—involve airships. When Bill was relatively young, he discussed with his grandfather about going to Dundee. He told him about reading about it and his interest in airships. Bill’s grandfather encouraged him to invest in that airship. Billy took his grandfather’s advice and put his pocket money into the airship company. He lost all his money when the company folded a year later.A few years later, as a young banker again, the airship industry came up, and Bill thought investing in it would work this time. So invested and lost a lot.About 10 years ago, there was yet another airship. Bill tried to invest in it, but somebody else beat him to the race since it was a private equity deal. The guy who beat him in the bid lost all their money.Over time, Bill has also made other poor investment decisions, like buying UK bank stocks just before Northern Rock went into meltdown. He also once did lots of serious analysis and market research and concluded that all the world’s growth would be in Southeast Asia. So he piled into Chinese stocks a couple of days before Ali Baba and Tencent were closed down.Another big mistake Bill made was with Tesla. He learned about Tesla very early on and thought it was interesting. He even invested in it. But his confidence in the stock evaporated because he let it get personal.Bill was distraught by the behavior of Elon Musk, particularly his attitude towards a British cave diver trying to rescue children stuck in a cave in Thailand. He felt the way Elon treated that diver, accusing him of being a pedophile, was unforgivable. So Bill decided to exit Tesla at that point. He decided for all the right moral reasons, and it cost him millions in the foregone upside that he would have made if he had held on to the stock.Lessons learnedMarkets are not clever themselves. They’re not artificial intelligence. All they are is a voting machine.The market has one objective; to inflict the maximum amount of pain on the maximum number of participants.Things are never as bad as you fear but seldom as good as you hope.Ignore the worst and the best estimates and focus on the middle consensus.In a difficult market, a bid is a bid, and you got to sell fast.Bill’s recommendationsAccording to Bill, a phone is the best resource for understanding what’s happening in markets and what you should do. Bill recommends calling...

BIO: Jeroen Blokland is a long-term multi-asset investor with a long-term track record in financial markets. Jeroen worked at Robeco, the largest independent asset manager in The Netherlands, for almost 20 years before launching his independent investment research company, True Insights.STORY: Jeroen’s first investment was in a Dutch company selling PCs. He barely did any research or due diligence. The company reported a loss of $27 million in the same year Jeroen invested. It later went bankrupt, leaving Jeroen with a massive loss.LEARNING: Know the actual outlook of a company before investing. Diversify your portfolio.&nbsp;“90% of the investing population doesn’t know the actual outlook of a company.”Jeroen Blokland&nbsp;Guest profileJeroen Blokland is a long-term multi-asset investor with a long-term track record in financial markets. Jeroen worked at Robeco, the largest independent asset manager in The Netherlands, for almost 20 years before launching his independent investment research company, True Insights.True Insights offers institutional and retail clients high-quality investment research to make better-informed investment decisions based on a proven investment framework covering Macro, Sentiment, and Valuation.True Insights is currently offering a discount on its Subscriptions. Get a 20% discount on your Monthly Premium Subscription (add ‘MONTH’ in the ‘Have a coupon?’ section.) You can also get a 25% discount on top of the regular discount on our Annual Subscription (add ‘YEAR’ in the ‘Have a coupon?’ section.’)Worst investment everWhen Jeroen decided to dive into the investment world, he knew nothing about investing and had no framework. He came across a Dutch company, Tulip Computers, the second biggest PC seller, next to IBM in the Netherlands.Jeroen didn’t know anything about the company besides what they did. He looked in the newspaper and ranked the company’s 12-month performance from high to low. He figured it was a good investment. His genuine belief was this is how you make the most money.The company reported a loss of $27 million in the same year Jeroen invested. In 1979 that was a very massive loss. Then the company went bankrupt, and Jeroen lost his entire investment.Lessons learned90% of investors don’t know the actual outlook of a company, even if they’re experienced in reading a balance sheet.Though difficult, invest in a couple of companies based on their fundamentals.Diversify your portfolio.Andrew’s takeawaysJust like investors, most companies also don’t know their actual outlook.Actionable adviceDiversify your portfolio and limit your risk by buying more companies or investing less.Jeroen’s recommendationsJeroen recommends using information and research that’s already been done by others. Then determine if you need to gather additional information by yourself. He recommends Twitter as a massive source of helpful information—as long as you follow the right people.No.1 goal for the next 12 monthsJeroen started a new business, and his number one goal for the next 12 months is to grow the knowledge part of the business so that more people have access to it.Parting words&nbsp;<blockquote...

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this first series of many, they talk about mistake number one: Are you overconfident in your skills?LEARNING: Don’t be overconfident. Look for value-added information when researching an investment.&nbsp;“When you trade, understand that you’re competing against the market’s collective wisdom.”Larry Swedroe&nbsp;In today’s episode, Andrew chats with Larry Swedroe, head of financial and economic research at Buckingham Wealth Partners. You can learn more about Larry’s Worst Investment Ever story on Ep645: Beware of Idiosyncratic Risks.Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this first series of many, they talk about mistake number one: Are you overconfident in your skills?The majority of people are naturally overconfidentThere’s a lot of research showing that human beings tend to be overconfident in their skills. If you ask people, are you liked by others more than the average person? Are you a better lover than the average person? Can you drive better than the average person? It doesn’t matter what the question is; the answer from a vast majority is that they think they’re better than the average person. According to Larry, this is actually a good healthy thing. Imagine getting up daily, looking in the mirror, seeing yourself, and thinking you’re dumb, ugly, stupid, and nobody likes you. You’d live a sad life. So it’s good to feel better about yourself as long as you don’t make mistakes.Overconfidence isn’t such a good trait when it comes to investingLarry says that the market is made up of all types of investors. If some investors are going to outperform, then some investors must underperform. The market must have victims to exploit. Most investors tend to be overconfident and think they’re a lot smarter than the average person, so they will be able to control them. But according to evidence, that’s dead wrong because people are not competing one-on-one.Female investors get better returns than men due to underconfidenceWomen are not better at stock picking than men. The stocks they buy perform just as poorly as those that men buy. And the stocks they sell go on to outperform in equal measure. However, men have overconfidence in skills they don’t have, while women simply know better. They don’t overestimate their skills as much as men do, so they trade less and have fewer turnover costs, resulting in better returns. Interestingly, married women do worse than single women because they get influenced by their husbands, while married men do better than single men because they have the influence of the sage counsel of their spouses.Does hard work, training, and knowledge play any role in outperformance?Generally, the more knowledge you have, the wiser you become. But the game of investing is very different than, say, the game of tennis, where you’re playing one-on-one. During a one-on-one match, whether tennis, chess, or any other similar game, minor differences in skill lead to considerable differences in outcome. As the competition gets more challenging, it becomes harder to win. And luck becomes more...

BIO: Brian Feroldi is a financial educator, YouTuber, and author. His career mission statement is “to demystify finance.”STORY: Brian invested in an oil pipeline company with take-or-pay contracts. This meant that the company would get paid either way if the price of oil or natural gas went up or down. Prices went down and despite the contract, the pipeline’s stock went down because its customers couldn’t afford to pay. Brian lost 70% of his entire portfolio.LEARNING: Don’t use options as an investment strategy. Never let one company become your largest position. Be careful about trying to leverage beyond your capability.&nbsp;“When my research makes me unbelievably bullish about something, that probably means I’m blind to some risk.”Brian Feroldi&nbsp;Guest profileBrian Feroldi is a financial educator, YouTuber, and author. His career mission statement is “to demystify finance.” He loves to help other people do better with their money, especially their investments. He has written more than 3,000 articles on stocks, investing, and personal finance for the Motley Fool.Worst investment everBrian invested in a company in 2013, about nine years into his investing journey. Though not an expert, he completely understood business fundamentals. He had a framework for what kind of companies he was going after. The company Brian invested in was Kinder Morgan, an oil pipeline company. That means they don’t go out and find the oil but own and operate pipelines that move oil and natural gas from the extraction point to a processing plant. The company then takes a fee for moving the oil.What really attracted Brian to that business model was that it had take-or-pay contracts in place. Meaning that if the price of oil or natural gas went up or down, Kinder Morgan would get paid either way.In theory, this company had locked in guaranteed recurring revenue. In addition, it was run by its founder, Richard Kinder, who owned tons of stock and continually bought more. The company had a 4% dividend yield at the time, plus a realistic growth plan for them to expand that dividend by about 10% per year. So from the outside, it looked like a very low-risk company that could earn Brian a high dividend yield.The more Brian studied the company, the more bullish he became on its potential. So over time, he would add to the stock because he thought it was attractive. Within no time, Kinder Morgan became Brian’s number one position.At the time, Brian was learning about options and how they work. He set up a synthetic long on Kinder Morgan. Synthetic long is when you sell a long-dated put, which brings in cash today, and you use that cash to buy a long-dated call option. Essentially, you get to benefit from the upside. So if that stock goes up, you get paid for that stock to go up ahead of time. So the returns to the investor are enormous on a percentage basis. The downside to a synthetic long is if the stock price falls, you’re on the hook for pure leverage because you don’t own the shares. Brian’s confidence level in this thing was sky-high because it looked so bulletproof. After he set up this position, the oil and natural gas prices suddenly tanked by more than 50%. There was simply an oversupply on the market.What confused Brian at the time was that Kinder Morgan’s stock was going down a lot during this downturn. The company had take-or-pay contracts in place, and it got paid no matter the energy price, so...

BIO: Matt LeBris is a born and raised NY’er who inevitably caught the hustler’s spirit that fills his hometown streets.STORY: Matt got an opportunity to be part of a successful business venture in his early 20s. He was making good money and living a good life. Unfortunately, the business went down, and he took an unpaid internship with Daymond John of Shark Tank. Matt’s biggest mistake was to continue living large even though he no longer had money coming up. He blew over $80,000 of his savings by living way above his means.LEARNING: Understand how you’re subconsciously programmed about money. Live below your means.&nbsp;“Understand how money works. If money’s not coming in, be very cautious of how it’s going out.”Matt LeBris&nbsp;Guest profileMatt LeBris is a born and raised NY’er who inevitably caught the hustler’s spirit that fills his hometown streets. A Forbes 30 Under 30 nominee, Matt has worked with Daymond John of Shark Tank as well as hosted a top 1% globally ranked podcast, Decoding Success. His life mission: impact one person a day, and that’s what he’s here to do today.Worst investment everWhen Matt was in college, he was very fortunate to have had an opportunity to surround himself with individuals a little older than him in a particular business venture. It was a New York City hospitality throwing various events. Matt was in his early 20s and raking it in. He was doing good for himself and felt proud to make a lot of money, drive a nice car, travel, and eat out without making a dent in his bank account.At a certain point, the business started to change. Matt also began to change as a person. This led him to intern with Daymond John of Shark Tank. It was a leap of faith for Matt because it was an unpaid internship. What Matt didn’t do was change his lifestyle. He wanted people to still think he was the rich young man he was before. Even though Matt now had no money coming in, he continued to live above his means just to maintain an image. He ended up blowing $80,000, taking Ubers instead of taking the train and eating at the most lavish restaurants instead of eating at home. Matt’s need to appease his ego was his worst investment ever. He is still trying to forgive himself for that.Lessons learnedUnderstand how you’re subconsciously programmed about money.Live below your means.Turn your worth inward.Andrew’s takeawaysYour life is going to be full of ups and downs. You’ve got to manage during your uptimes to have the cushion you need to survive the downtime.Spend as little as you can and take pride in that. This will keep you happy even during your worst times.Actionable adviceUnderstand how money works. If money’s not coming in, be very cautious of how it’s going out. Put your ego aside and find any possible ways to make money.Matt’s recommendationsMatt recommends talking to somebody like a therapist if you’re feeling down or struggling to regularly work through these issues.No.1 goal for the next 12 monthsMatt’s number one goal for the next 12 months is to adopt the mindset of John Gordon’s simple equation: E+P=O (events plus perspective equals the outcome.)Parting words&nbsp;“I’m giving you your kudos, Andrew. Thank you so much for...

BIO: Pim van Vliet is Head of Conservative Equities and Chief Quant Strategist at Robeco. He is responsible for a wide range of global, regional, and sustainable low-volatility strategies.STORY: Pim wanted to make more money investing, so he decided to go all in on a cheap stock. He believed the price would eventually go up as it had done a few years back. Unfortunately, the company went bankrupt, and Pim lost 75% of his investment.LEARNING: Don’t be overconfident and over-optimistic when investing. Just because it’s cheap doesn’t mean you have to buy it.&nbsp;“I thought taking risks gives you a return. That’s not always the case. Taking more risk could give you a lower return.”Pim van Vliet&nbsp;Guest profilePim van Vliet is Head of Conservative Equities and Chief Quant Strategist at Robeco. He is responsible for a wide range of global, regional, and sustainable low-volatility strategies. He specializes in low-volatility investing, asset pricing, and quantitative finance.He is the author of numerous academic research papers and various books.Worst investment everPim has been fascinated with money-saving ever since he was a small kid. His father was an entrepreneur who had a family business. Growing up, Pim would sometimes work at the family business and save the money he made in a savings account. He would get good interest. He learned about the compounding of interest in the process. As Pim learned more about saving, he decided to go into a mutual bond fund to earn more return on his money. Now he would make an 8% yield, up from 6%.This was during the 90s when the stock market became increasingly popular. The newspapers started to write more about it. Pim was getting a bit bored by mutual bond funds because he wanted to make more money. Bonds were just very low, volatile, and boring. Being an eager kid, Pim started to follow the news and learned about a Dutch aircraft manufacturer trading for $13. He researched and discovered that the stock price had once been $40, so it was cheap he thought.Pim believed the stock price would return to $40, so he invested in it. His advisor at the bank cautioned him against investing in just one stock. But of course, Pim was overconfident that the stock price would only go up. So he put a sizeable amount of his wealth into this one stock. Then things went sour. The stock price went down and down. The company eventually went bankrupt. Luckily, Pim could get out at $3 but lost 75% of his investment.Lessons learnedDon’t be overconfident and over-optimistic when investing.It’s more important to protect your downside than to keep your upside.Andrew’s takeawaysJust because it’s cheap doesn’t mean you have to buy it.Don’t go all in on one stock.As an individual investor, having more than 10 stocks would be overwhelming. And to have less than five would leave you with too much risk if any of them went bad. So invest in 10 stocks and put stop losses on them.Actionable adviceIf you’re young, take some risks. Risks allow you to learn even if you don’t get a reward for it in investing. So take some controlled risks with the objective of learning instead of becoming rich.Pim’s recommendationsPim recommends reading good investment books that are time-tested such as Benjamin Graham’s books and <a href="https://amzn.to/3J8WPCT" rel="noopener noreferrer"...

In this presentation, I will introduce you to our MSCI Sectors and their attractivenessClick here to get the PDF with all charts and graphsWhat do you think: Which of the global sectors is most attractive?We use GICS sector classificationGICS The Global Industry Classification Standard (GICS®) is an industry classification system developed by Standard &amp; Poor’s Financial Services LLC (S&amp;P) and MSCI in 1999GICS works well for the global financial communityMSCI separates stocks into 11 different sectorsEnergy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Communication Services, Utilities, and Real EstateThen 25 Industry groupsSome sectors such as Industrials have three Industry groups as follows:Capital GoodsCommercial &amp; Professional ServicesTransportationThere are 74 industriesWithin Transportation Industry Group there are five main Industries1) Air Freight &amp; Logistics, 2) Passenger Airlines, 3) Marine Transportation, 4) Ground Transportation, and 5) Transportation InfrastructureThere are 163 Sub-IndustriesFinally, within the Industrials Sector, the Transportation Industry group, the Transportation Infrastructure Industry, are 3 Sub-Industries1) Airport Services, 2) Highways &amp; Railtracks, and 3) Marine Ports &amp; ServicesGICS sectors include 1,508 Developed Market companies, total market cap is about US$53trnThe largest sector is Info. Tech. at US$11trn market cap and consists of 183 companiesThe smallest is Real Estate with a market cap of US$1.5trn and 96 companiesWhat is your investment framework?Our investment strategies for ETFs and stocks come from our FVMR frameworkWe backtest and optimize the strategy for the factors that have worked best in each marketWe do all our research in-houseWe don’t rely on other people’s researchWe might of course get ideas from others, but we then test those ideas in our FVMR frameworkThe benefit of an investment framework is that it forces discipline when emotions run highEmotions from wild market events can cause you to make rash and costly decisionsTo avoid this, stick to a frameworkOur framework relies on data &amp; structure, not just a feeling or opinionManagementIs responsible for producing earningsInvestorsSet the price the company trades atThere are 4 Elements to our FVMR frameworkFundamentals: Strong profitability shows a company is managed well.We prefer high or rising profitability.Valuation: Shows how the market perceives the stock.We prefer good fundamentals at relatively cheap valuations.Momentum:&nbsp;We try to avoid “value traps” by looking for positive price and earnings momentum.At times, low momentum signals an out-of-favor opportunity.Risk: We prefer low business and price risk.Not every stock is going to fly; some just provide stable returns and strong dividends.FundamentalsInfo. Tech has a 23% ROE; Health Care, Cons. Staples, and Energy are each earning 20% ROE15%

BIO: Logan Nathan is the founder and CEO at i4T Global. He’s a digital transformation specialist, a serial startup entrepreneur, a board director and advisor, and an angel investor.STORY: Logan offers time-tested advice on how to launch a successful software product.LEARNING: Focus on customer experience and satisfaction to win confidence.&nbsp;“The culture within you as a supplier is vital in building trust with your client.”Logan Nathan&nbsp;Guest profileLogan Nathan is the founder and CEO at i4T Global. He’s a digital transformation specialist, a serial startup entrepreneur, a board director and advisor, and an angel investor.We won’t discuss Logan’s worst investment story in today’s episode because he shared that in Ep374: Your Solutions Are with Your Advocates Talk to Them. Today we’ll discuss what’s been happening with his business over the last few years. He’ll also offer time-tested advice on how to launch a successful software product.Logan’s business—i4T Global—provides a Field Services Management platform for people or companies that manage property assets on behalf of their clients. The platform automates most of the work creating efficiency, compliance, and safety easier. In doing so, it brings more tenants.How to hire and work with the right developersIf you’re looking to hire a developer/s for your new software, Logan’s advice is to go to credible supplier platforms, such as LinkedIn. Here, you can independently verify client testimonials of various developers. This will help you ascertain whether they can do what they claim to do.Secondly, before you hire a developer, ensure you make them understand your business requirements, not just your technical needs. Agree on what happens if you don’t get what you want, how changes will be made, and the penalty for not delivering on the agreed deliverables.A frank conversation with the supplier about current and future business requirements is crucial. Agree on what should happen as your business grows and requirements change. Will the supplier grow with you? Do they have the agility to deliver what your business needs promptly?Focus on the customer experience and satisfactionLogan believes delivering top-notch customer experience is the key to running a successful software business. His advice is to have a process that allows you to fully understand the customer’s requirements and deliver them as requested. To achieve this, you need a communication channel that collects customer feedback regularly.To continuously offer services that fulfill your customers’ requirements, you need to understand the changes in your industry. Then reiterate to provide more benefits, even if your customer hasn’t requested them.How to win the confidence of your customersBuilding a relationship with your client will guarantee you a return customer. The best way to build a relationship is to win their confidence by delivering your value proposition. When a customer requests for a piece of change—which will happen often—document the request, understand the business requirement and then deliver it on time, every time. Doing this will show the client you’re reliable and want to stay with you long-term.Andrew’s takeawaysCreate a minimum viable product (your...

BIO: Louis-Vincent Gave is the Chief Executive Officer of Gavekal, a Hong Kong-based company he co-founded over 20 years ago with his father, Charles, and Anatole Kaletsky.STORY: Louis’s father invested one million dollars in a portfolio of 10 Asian companies. Louis was managing this portfolio, whose size was disproportionate to his earnings. He was earning $50,000 annually at the time and had never owned a portfolio this big, which made him sick.LEARNING: Portfolio sizing matters tremendously. Never under or over-position yourself. Invest with people who have experience.&nbsp;“Know your own weaknesses and don’t put yourself in a situation that plays to those weaknesses.”Louis-Vincent Gave&nbsp;Guest profileLouis-Vincent Gave is the Chief Executive Officer of Gavekal, a Hong Kong-based company he co-founded over 20 years ago with his father, Charles, and Anatole Kaletsky. Gavekal has grown to become one of the world’s leading independent research providers to institutional investors around the globe. Louis has written seven books. His latest, Avoiding The Punch, published in 2021, deals with the challenges of building resilient portfolios in inflationary times.The real challenge of venturing into ChinaBefore getting down to Louis’s worst investment ever, he spoke to us about his strategy to build a market for his company in the Chinese market. His company, Gavekal, has operated successfully for over 20 years.When Louis started Gavekal in Hong Kong in the early 2000s, it was evident that China would be a massive factor in the global economy. There was a huge gap in understanding China’s role in the world and people’s understanding of it. Louis and his father figured they could try to monetize that gap. So they started an independent research firm. It was a macro research firm but with a strong China angle. Louis has tried to build up his expertise in China over the years.According to Louis, the real challenge in China is always getting a clear picture. Many foreign investors don’t trust the available data.How to succeed in the Chinese marketLouis says that the important thing for a foreign investor eyeing the Chinese market is to put things into context. You need to relate the economic data and the policy pronouncements to what you hear from corporations.So when Louis and his father entered the market, they talked to the corporates and policymakers to put together a picture that was as close to the truth as possible.Worst investment everLouis grew up very privileged. His dad had been a very successful money manager and had made much money selling his firm to Alliance capital in the mid-90s. After the sale, he retired. At the time, Louis was in Asia when the Asian crisis hit, and everything went bust. Louis’s dad called and told him he wanted to invest a million dollars in 10 high-quality blue-chip Asian companies. This was in August 1998.Louis earned $50,000 a year, so managing a one-million-dollar portfolio was a huge deal for him. Between August and October, the portfolio fell by 60%. Louis was literally sick of looking at these positions where, on every individual position, he was losing more than his annual salary. Then between October and December, the market started stabilizing. By March, the portfolio was...

BIO: Adam Rosen is an entrepreneur who loves to support business owners and share his rollercoaster startup journey to help those on a similar path.STORY: As soon as Adam was done with college, he co-founded a business. He gave his all to the business for four years and enjoyed little success.LEARNING: Get to product market fit as quickly as possible. Focus on delivering something that the client wants to use forever.&nbsp;“Every single business owner has a responsibility to build their company to sell it from the start.”Adam Rosen&nbsp;Guest profileAdam Rosen is an entrepreneur who loves to support business owners and share his rollercoaster startup journey to help those on a similar path. He is the founder of Email Outreach Company, where they do automated email outreach to get startups on more sales appointments without the hassle.Worst investment everComing out of college, Adam had an excellent opportunity to make a good amount of money. He decided to start his first business—with two other college mates. The company wasn’t funded in the first year. The founders didn’t take any salary from the business. Adam had to work in a restaurant on weekends to keep his bank account going. In the second year, the founders raised capital.The next four years were a roller coaster. The company had some decent success, but Adam never paid himself. He was literally living on his credit card for years, thinking he would get his big break soon. And it never happened.The founders sold the company but didn’t get much for it. They simply took the exit deal to ensure their customers could end up in a good spot and the business could live on.Lessons learnedGet to product market fit as quickly as possible.Churn can be a killer for any business.Find the reality of your business as soon as possible; are you profitable or not?Andrew’s takeawaysBefore entering the startup world, understand that you’ll be trapped in that situation. So be sure you’re doing the right thing with the right people.The startup world has no badge of honor for not paying yourself.Focus on delivering something that the client wants to use forever.Actionable adviceFocus on profitable systems. Can your system get you new customers and keep those customers? Can it make your business profitable? On top of all that, build to sell from the start.Adam’s recommendationsIf you want more sales appointments, or you’re doing cold emails alone and not getting the responses you wish, Adam recommends checking out eocworks.com. You can book a call through his calendar directly on the website. He’ll talk with you about either his company doing this for you, helping you with your current approach, or just talking about startup sales and getting more sales opportunities.No.1 goal for the next 12 monthsAdam’s number one goal for the next 12 months is to get a 2x revenue offer for his company. On top of that, he wants to be happy, enjoy life and keep traveling the world.Parting words&nbsp;“Thank you, Andrew; keep up the good work. For everybody, just keep on going. Perseverance and spirit have done wonders in all ages.”Adam Rosen&nbsp;[spp-transcript]&nbsp;Connect with Adam...

In this presentation, I will introduce you to our FVMR investment frameworkAnd will apply it to assess the attractiveness of the top five developed countries in the world: US, Japan, Germany, UK, and France.Click here to get the PDF with all charts and graphsWhat do you think: Which of the largest country’s stock markets is most attractive?What is your investment framework?Our investment strategies for ETFs and stocks come from our FVMR frameworkWe backtest and optimize the strategy for the factors that have worked best in that marketWe do all our research in-houseWe don’t rely on other people’s researchWe might, of course, get ideas from others, but we then test those ideas in our FVMR frameworkThe benefit of an investment framework is that it forces disciplineIt’s easy to be emotionally affected by market events, which can cause you to make rash and costly decisionsTo avoid this, we stick to our frameworkA robust framework means our strategy relies on data and structure rather than just a feeling or an opinionManagement is responsible for producing earningsInvestors set the price the company trades atThere are Four Elements to our FrameworkFundamentals: Strong profitability shows a company is managed well. We prefer high or rising profitability.Valuation: Shows how the market perceives the stock. We prefer good fundamentals at relatively cheap valuations.Momentum: We try to avoid “value traps” by looking for positive price and earnings momentum. At times, low momentum signals an out-of-favor opportunity.Risk: Prefer low business and price risk. Not every stock is going to fly; some just provide stable returns and strong dividends.For this study, we look at the top 5 Developed Market countries ranked by GDPUSA – US$23trnJapan – US$4.9trnGermany – US$4.2trnUK – US$3.2trnFrance – US$2.9trnEBITDA margin remains high in the US and UK at above 20%, lowest in Japan at 13%Net margin is a remarkably high 12% in the US and UK, double the global LT averageAt 7%, Japan is still double its long-term net margin of 3%At 7% Germany is nearly double its long-term average of 4%US companies have a relatively high 19% ROE, above its 16% LT averageJapan’s low 9% ROE&nbsp; is partially driven by the low interest rate environmentGermany is just slightly above its 11% long-term averageEuropean companies have paid out more cash to shareholdersUS companies also return cash to shareholders through buybacks in addition to dividends, a reason this number is relatively lowShareholder yield is about equal across these marketsUS remains the most expensive market at 19x PEJapan, Germany, and France at 13xUK super cheap at 10xOn a PB basis, the US is very expensive at 3.7xUK companies are asset-heavyUS revenue/asset: 0.70xJapan: 0.69x, Germany: 0.58x, UK: 0.57x, and France: 0.52xUS companies are most expensive again with price-to-cash flow at 13xAbout 50% higher than the others, which hover between 7x and 8x price-to-cash flowSuper low US dividend yield due to expensive market and payouts coming from share buybacksThe UK market now pays a high 4.2%This shows that the market is cheap and also that inflation expectations are highConsidering ROE/PB, UK is super...