Tariffs Hurt the Heartlands
Surf the site and note the bi-partisan nature of a growing groundswell of opposition to the tariffs. Will this force Trump to reverse his ill-advised policies? I think "yes". A serial bankruptcy artist hardly qualifies as a figurehead for the American economy.
Hemp Report
The hemp industry is on the point of a major expansion. Why?
- a change in regulations both federal and state
- the emergence of CBD for medical use
- a desire on the part of farmers to diversify and exploit new market opportunities
An interesting observation about the role of regulation: While many decry regulation by government, there is ample evidence that government regulatory standards for quality can actually confer a marketing advantage to producers. For example, Canadian marijuana products are prized internationally because of the "government seal of approval" for growing conditions (no pesticides) and qualities such as potency.
The Value of a Picture
I like reading Musings on the Markets, a blog maintained by Aswath Damadoran.
I especially like the thinking behind one of his recent posts, The Pricing Game. It is elegant.
The reason that I reuse this picture so much is because, to me, it is an all-encompassing snapshot of every conceivable investment philosophy that exists in the market:
Efficient Marketers: If you believe that markets are efficient, the two processes will generate the same number, and any gap that exists will be purely random and quickly closed.
Investors: If you are an investor, whether value or growth, and you truly mean it, your view is that the pricing process, for one reason or the other, can deliver a price different from your estimate of value and that the gap that exists will close, as the price converges to value. The difference between value and growth investors lies in where you think markets are most likely to make mistakes (in valuing existing assets or growth opportunities) and correct them. In essence, you are as much a believer in efficient markets as the first group, with the only difference being that you believe markets become efficient after you have taken your position on a stock.
Traders: If you are a trader, you start off with either the presumption that there is no such thing as intrinsic value, or that it exists, but that no one can estimate it. You play the pricing game, effectively using your skills at gauging momentum and forecasting the effects of corporate news on prices, to buy at a low price and sell at a high price.
Market participants are most exposed to danger when they are delusional about the game that they are playing. Many portfolio managers, for instance, claim to be investors, playing the value game, while using pricing screens (PE and growth, PBV and ROE) and adding to their holdings of momentum stocks. Many traders seem to think that they will be viewed as deeper and more accomplished if they talk the value talk, while using charts and technical indicators in the closet, to make their stock picks.
Take-away message
When assessing a potential investment one should be flexible and approach the analysis from a variety of perspectives. All too often, a one-size-fits-all approach will either expose one to undue risk or miss opportunities for profit.
Thinking About Investment Leads
It's always interesting to learn from another person's perspective on potential investments. Here's one take by a venture capital firm:
Collaborative Fund - about
It's worth exploring the web site. For example here are a few leads:
And we’re not alone. We increasingly see more investors joining us at the intersection of for-profit and for-good. Established partnerships like Sequoia Capital and Founders Fund have evolved to stress world-changing aspirations. New entrants like Obvious Ventures, Social Capital, Sherpa Capital, and others have joined the fun as well.
Recession Risk
Two articles about the risk of a recession. To my mind, it's a question of "when" - not "if". One never gets poor by avoiding losses and as John Mauldin opines,
When people say they’re worried about holding cash, I remind them cash is an option on the future. It’s not earning very much right now but could potentially earn a lot more when you buy at the bottom.
I’m not looking at this and panicking at all. I’m rubbing my hands at the coming chance to buy solid assets cheap.
Debt-clogged world close to tipping point of recession
2019 Economic Outlook: Recession Probability, Credit Conditions And Stock Valuations
This said, economists are bad at forecasting. However, it is useful to take a peak at their thinking in order to get a sense of the market buzz as they do influence institutional money managers.
I generally discount the "noise" produced by economists and talking heads on business networks. For example, with agriculture, I am more interested in following indicators:
The Value of a Picture
I like reading Musings on the Markets, a blog maintained by Aswath Damadoran.
I especially like the thinking behind one of his recent posts, The Pricing Game. It is elegant.
The reason that I reuse this picture so much is because, to me, it is an all-encompassing snapshot of every conceivable investment philosophy that exists in the market:
Efficient Marketers: If you believe that markets are efficient, the two processes will generate the same number, and any gap that exists will be purely random and quickly closed.
Investors: If you are an investor, whether value or growth, and you truly mean it, your view is that the pricing process, for one reason or the other, can deliver a price different from your estimate of value and that the gap that exists will close, as the price converges to value. The difference between value and growth investors lies in where you think markets are most likely to make mistakes (in valuing existing assets or growth opportunities) and correct them. In essence, you are as much a believer in efficient markets as the first group, with the only difference being that you believe markets become efficient after you have taken your position on a stock.
Traders: If you are a trader, you start off with either the presumption that there is no such thing as intrinsic value, or that it exists, but that no one can estimate it. You play the pricing game, effectively using your skills at gauging momentum and forecasting the effects of corporate news on prices, to buy at a low price and sell at a high price.
Market participants are most exposed to danger when they are delusional about the game that they are playing. Many portfolio managers, for instance, claim to be investors, playing the value game, while using pricing screens (PE and growth, PBV and ROE) and adding to their holdings of momentum stocks. Many traders seem to think that they will be viewed as deeper and more accomplished if they talk the value talk, while using charts and technical indicators in the closet, to make their stock picks.
Take-away message
When assessing a potential investment one should be flexible and approach the analysis from a variety of perspectives. All too often, a one-size-fits-all approach will either expose one to undue risk or miss opportunities for profit.
Thinking About Investment Leads
It's always interesting to learn from another person's perspective on potential investments. Here's one take by a venture capital firm:
Collaborative Fund - about
It's worth exploring the web site. For example here are a few leads:
And we’re not alone. We increasingly see more investors joining us at the intersection of for-profit and for-good. Established partnerships like Sequoia Capital and Founders Fund have evolved to stress world-changing aspirations. New entrants like Obvious Ventures, Social Capital, Sherpa Capital, and others have joined the fun as well.
Recession Risk
Two articles about the risk of a recession. To my mind, it's a question of "when" - not "if". One never gets poor by avoiding losses and as John Mauldin opines,
When people say they’re worried about holding cash, I remind them cash is an option on the future. It’s not earning very much right now but could potentially earn a lot more when you buy at the bottom.
I’m not looking at this and panicking at all. I’m rubbing my hands at the coming chance to buy solid assets cheap.
Debt-clogged world close to tipping point of recession
2019 Economic Outlook: Recession Probability, Credit Conditions And Stock Valuations
This said, economists are bad at forecasting. However, it is useful to take a peak at their thinking in order to get a sense of the market buzz as they do influence institutional money managers.
I generally discount the "noise" produced by economists and talking heads on business networks. For example, with agriculture, I am more interested in following indicators:
- trade barriers e.g. tariffs
- competition between North and South America
- commodity prices
- the state of farm finances and sentiment in the farming community
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