WM 30 August 2021

Quotes

Lessons, thoughts of the week & other snipets

Cut your loss, run with your profit works, but only if you’re patient and disciplined enough. Below is an interesting example (Arbonia Foster), whereby after first leg of rebound, stock went into consolidation mode. It took six month of range bound and numerous tests of investors’ resolve, to finally break out on the upside on the confirmation that the transformation efforts of the company finally paid off. Here the use of moving averages once again proved to be extremely useful.

Indeed, the trend is your friend… until it stops or something gets in the way (Newton's first law of motion). Thus, when the trend is in place, buy the dips

What goes up does not have necessarily to go down

Bullish trends = higher highs, higher lows

In the long run, the odds favour the bulls

Sometime it does not pay to be smart

You need more than IQ to be successful

There are 3 types of intelligence: IQ (intellect), EQ (emotional intelligence) and SQ (social intelligence). You might also need a fourth: courage/grit (your ability to accept adversity, deal with failures/bad luck and fight loss/pain aversion, accept that you are not in control and move forward). Most schools promote IQ, when facts show that people with higher EM/SQ and AQ (Adversity Quotient) do better.

If you want to build a company

What investors can learn from Buddha?

No pain, no gain; keep your emotions and ego in check; greed, fear, ignorance, hopes are the enemies, nirvana follows an Elliott Wave pattern. The eight fold path to nirvana is a good checklist (nb: samadhi = deep meditative state of higher consciousness

Want more friends? Robin Dunbars says it takes 200 hours to move someone from stranger to close friend.

Americans believe in themselves more than most nations. But who do they trust (the dollar bill says "in God we trust")?

Serendipity vs targeted research

How do you find ideas? The general approach is; Input, process, output, feedback loop

It implies you know what you are looking for and focus on it. But there is another way: you think you know what you are looking for and you find something else. Below are some illustration of the “process” of serendipidity or how to foster random discoveries and creativity. Main conclusion: be curious and alert to the novelty and to change.

Macro news

China's clampdown on "inequality" (big tech/education/luxury sector in focus) is a major turning point. Question: why now? Clue = falling current account surplus and slow down.

Apart from China, what matters in macro?

A "well functioning market" according to the Fed

USD 48tn of incremental global equity value since bottom of the Covid crisis, but USD28tn more from 2019 peak (vs USD 22tn CbK money creation)

The excess is = credit/margin debt. Watch out because deleveraging is already taking place, while Tim Cook is selling USD 750m of Apple stock

Helping the economy according to the ECB

Note the political countertrend of rising property pri ces

Managing the economy according to the PBOC

As money growth slows and closing in on nominal GDP growth, asset prices start to plateau

Just as supply of new stocks rises

Also, note the narrative talking about "unstoppable" tech rally and the hope for new normal

The drugs don't work?

Seasonality says, time to take profits

Bad breadth

Time to favour defensive value?

Sentiment gauge

Fear: where the known is ending and the unknown is beginning

Look who's back?

Canada Prime Minister and Korean central banks express concerns about house prices! Wondering why? See below

Autodesk profit warning not so surprising in this context

Stimulus to the rescue?

How did FX and rates react?

Metals

Bitcoin

Slow down

Supply bottlenecks

When industrials tell you, they are at full capacity utilization, this means margins are about to fall (higher costs or capex to meet demand) and/or risk > rewards