WM 13 November 2021

 Quotes

Natural selection makes sure of that! The rule of the game is simple: adapt or die.

Time is Money . Money can buy you time.

Cut your loss, run with your profit. Here is a good one by Paul Tudor Jones

Focus on simple & reliable

Lessons & Thoughts

Are we in a bubble?

The bubble model always involves a “displacement,” which leads to extraordinary profit opportunities, overtrading, over-borrowings, speculative excesses, swindles and catchpenny schemes, followed by a crisis during which fraud on a massive scale comes to light, then by the closing act during which the outraged public calls for the culprits to be taken to account. In each case, excessive monetary stimulus and the use of credit fuels the flames of irrational speculation and public participation, which involves a larger and larger group of people seeking to become rich without any understanding of the object of speculation. 

Wave

One explanation of the divide between boomers and generation Y and Z. Bitcoin is the only main option for the young generation to get rich. There is some logic in their madness

Free will and accountability ?

Writing = thinking

Questions > Answers

Growth= Population x (Capital x Ideas = productivity)

Signs of a Bottom / Signs of a Top

Extroverts make more money

And yet

Team

Problem Solvers

Wealth managers

Cogito ergo sum?

Be Believe Live Love Do Have Reflect Think

Intentions Attentions Extensions

Cultures

In portfolio management there are four risks = liquidity, concentration/correlation, leverage/Beta and quality of the asset (duration). Rising volatility is a symptom of such risks, such that the quality of returns is often gauged by the quantity of return by the quantity of vol. This is what is calculated with the Sharpe Ratio. Then, volatility is not all bad. If your return is high when vol rises on upward move and not too bad when vol rises on dowward move, you will have great performance. This is what the Sortino ratio tries to determine. As such, the ROE of an assets must be compared to the volatility of its returns, while the volatility of volatility can gives you invaluable clues about pending changes. 

What is volatility?

Volatility of returns vs Volatility of risk (Volatility or volatility) 

ROE / Vol 

Volatility of SPX (VIX) and volatility of volatility (VOL)

Volatility Smile = Vol is high at the top and during bear markets

Bollinger bands

ATR

Buffet ratios

Game theory

Invest for the long term

Otto Von Hasburg to the "Raven of Zürich" in 1960

Bill Miller, the beat who beat the S&P

Adopt the strength, not the weakness of the competition (on outperforming the S&P500)

Seek companies with superior business models and ROIC

Concentrate portfolio into 15-20 positions

Maximise the expected return of the portfolio not the frequency of correct picks

Invest in four companies. If three of them go zero and the fourth goes up 6x= 50% return. Bill Miller typically has poor stock picking record, but his winners have been big and offset a lot of big losers. 

Information rules: Information is costly to produce and cheap to reproduce. Information follows Moore's Law (computing power doubles every 18 months) and Metclaf's Law (the value of a network increases as a square function of the number of users). « A wealth of information creates a poverty of attention”. What is known is worthless. Competition among sellers of commodity information push its price to zero. In a digital world therefore, there are only two competitive advantages: network effects (to have demand scale effects) + differentiated product to add value and attract attention (preferably personalised products and prices). Network effects lead to demand side economies of scale and positive feedback loops. In a digital world: winners take all.

Price information according to its value not to its cost

Price vs Time

Elliott Wave using Fibonacci (Pythogoras) and Gann angles

What did Gann say about trading?

Anti Bubble

Don't follow the crowd

Macro news

The big story of this decade: USD 4tn a year needed to decarbonise economy! Who's gonna pay?   

Money: if this was as good as it gets?

   

When money dies

What are they doing with your money?

History of money and crises or too much of a good thing

Central banks are trapped. If you raise, it falls (PE contraction). If you do nothing, inflation will get you (earnings fall in real term).

Everybody is long financial assets in the absence of earnings

Beware of the Cantillon Effect

Class war will get worse

Asset classes

FX

When tightening + fiscal spend = strong US dollar

Strong dollar = rising appetite for destruction (deleveraging!)

CHF: risk off

Is it time to reconsider Brazil? 

    

Gold & precious metals

What if gold could rise along with strong US dollar?

Gold as a macro hedge

Gold miners > Gold

In Gold we trust

Nice cup and handle

Crypto: don't stop til you get enough?

The Bit is on

One ring to control them all?

Why is Solana gaining share? In two words: cheaper faster

Internet and crypto adoption rates

Fixed income

Yield Curve

Inflation close to peak = buy long bonds?

China high yield now at 24%, as property sector collapses

Mortgages

Who is indebted?

Equities

Equities don't care: who said the drugs don't work

Concentration risk

This time is different?

How big the downside?

Which country has delivered the best returns in the last decade?

Seasonal rally

Earnings are behind rally

Not all markets are equal

Bubble valuation

Sentiment still high

Options = the new leverage

So far SPX has ignored strong Dollar

No more bears. Rydex Index shows net bear vs net bull fund flows

MAVs

US households have never been so long equities

Creating an interesting gap between low confidence and markets. Something is going to give soon.

Earnings have been ok so far this season

Beware tax is about to go up

M&A back to top

IPO withdrawals

Volatility

Commodities

Oil

Nat gas

Ironic consequence of renewables? Let's import Vladimir's gas when it is not windy. Wait a minute. It's gonna get worse!

China slow down has crushed a number of commodities, but not all

Baltic dry

Steel and iron ore

Iron ore has collapsed, but copper stands tall, mind you inventories are falling

Copper / Gold

Lithium

China is asking its people to store food before the winter! Fertilisers are reflecting energy costs, the rest follows (food = energy derivative play)

Uranium: loving it

Growth

Less money = less growth

Covid is back. Will it ever stop?

Employed, vaccinated but not happy: 

Can it get worse? Sure it can

Small businesses are pessimistic

Inflation

Small businesses concern about inflation. It will hurt margin soon

0.6% in a month= 7% inflation officially

The headlines could be underestimating the reality

Where inflation coming from

History of pandemics and inflation

Supply chain congestion

No supply = lower demand + higher price

Wage inflation surging: this is sticky and there is some catch up to do

Themes, Sectors & Corporate news

What a good time to take profit, bro. Musk sells some stock to pay for his USD 20bn tax bill

Time to revisit Chinese Internet?

Semi Con: Micron breakout. Enjoy while it lasts

Richemont in the centre of attention after activist Dan Loeb takes a stake

Look who's back?

Synlab benefiting from PCR tests boom in Germany

Warrent Buffet is buying an elephant silently

Media

Fiber optics: Juniper

Art & NFT

  

 

Sectors