WM 23 October 2021

Quotes

On time

Time flies and yet in Einstein's world, time is a persistent illusion. Time only exists if we think of past and future. Doesn't exist in the present. Yet the present is the only thing that is real. In Einstein’s world, there is no time. Just an waves and particles moving in relation to each other. For us, humans, time is change and the circle of life. Time is the the law of entropy, as our body is ageing and losing energy past a certain point. Growth is the best medicine against decay.

And as time is money, a few on inflation. If time is money, and money loses its value, does time becomes more or less valuable?

And the last words to Huxley

Lessons, Thoughts & Disgression

Investing is about betting on the future, the future is uncertainty and constantly changing. That change is not predictable but cyclical. To be successful, you must eliminate the noise, know and try to correct your biases and focus on the signals that matter and what is probabilistically closer to the truth.

Biases

Trust the expert?

You must gain a edge and minimise your costs

It is better to be too early than too late. In investing, it pays to make time your friend rather than your ennemy

For that, avoiding leverage is also a good idea

You must not only know the market, but also yourself

It is about the thinking AND the doing

Colin Powell died this week.

Peter Lynch

Macro news

Why focus on macro

Being on the receiving end of money flows

Beware of the tappering

Asset classes

Global wealth

USD ticket to rise

GDP to weaken

In Turkey, the decline of the Lira continues. Indeed, if your interest rates do not cover the inflationary rate, then the currency value falls. The decision to cut rates is accelerating the debasement instead of slowing it down. The weaker the currency, the higher the inflation, the higher the inflation, the weaker the currency.

Australian dollar looking stronger

NOK

In the long run, they re all dead (talking about fiat currencies)

Gold & Precious metals, the solution?

Testing resistance

Moment of truth

Silver lining

Or do you prefer digital currencies?

Bitcoin and Ethereum reached new ATHs this week before correcting hard after fat finger incident.

Fastest selling ETF in history is... the first Bitcoin ETF

Ethereum is outperforming Bitcoin as supply shrinks just as demand accelerates

Fixed income

Your pension fund does not like falling bond prices

Blame inflation as 5years breakeven breaks out

The yield curve has changed

Lots of debt out there

Investors have never been so bearish on bonds since the 1970s

Yet, some seem to like US high yield

After getting punished on Chinese high yield

Real estate: as safe as house?

Equities is still the main game in town

So long for the correction

It is not your usual bull market

Capital growth without income

Fuelled by a new generation of investors

And a major innovation cycle

Mid and Mega cap participating in this lates episode

It comes with the season

Greed is making a comeback

Less risky

Investors have cash

Now about earnings

Could be the main problem

US does not seem to care

Volatility crushed to lows

Too low to last?

Equities vol (VIX) now low relative to bonds (MOVE)

Not cheap

But buy backs are helping

In EM not so bright

Breadth not great in the US too

China: one country, two systems

Commodities: start of a bull market

Coal in China

Oil

And it could get a lot more expensive

Uranium

Copper

Tin too

Nickel

In demand, for stainless steel and batteries, nickel is a hot commodity, which happens to be heavily concentrated in terms of its deposits. There are 94m tonnes of known reserves worldwide today for an annual production of 2.5m tonnes. Looking at the growth of electrical vehicles (43kg per car x 13m cars =0.5m tonne additional demand alone) and renewable energy, the needs will explode to 4m tonnes a year, suggesting massive deficits in sight and a surge in price. It has already begun. I play it through Eramet, the world’s eight largest producer and sitting on some of the world’s largest reserves in New Caledonia. The other big players are either Russian or big diversified miners.