WM 5 February 2023

Quotes

"The question is not why, but why not?" Dalai Lama

Lessons & Thoughts

Timing

The seven signs of ethical collapse

M. Jennings, a business ethics professor at Arizona State University, published the model in her 2006 book, "The Seven Signs of Ethical Collapse."

Her seven signs are:

1. Pressure to maintain numbers.

2. Fear and silence.

3. Young ‘uns, and a bigger-than-life CEO.

4. A weak board.

5. Conflicts (of interest).

6. Innovation like no other.

7. Goodness in some areas atoning for evil in others.

Focus

Comfort zone

Suck it up

Too much of a good thing..

NASA the decision to go ahead with Challenger was not a failure of quantitative analysis but was to rely on quantitative analysis too much.

Anecdotal inference is not proof

"Don't tell God how to run the universe"

Foxes and hedgehogs

Simple rules work

Creative thinking

Time

Delegate. Automate. Focus. Set deadlines. Set priorities.

Writing

ChatGPT knows that

Believability

Opinions, fakes or facts?

Market cycle

Contrarian investing

Sentiment

Return to normal is the B phase of the Elliott Wave ABC

Catalysts

Bubbles

Trading plan

Decision making for investors

Passive

Buy the following

Don't forget change

Information edge: external edge x internal edge

Rochon

Over the long run, stock performance matches the "owners earnings", i.e. the ROE of the stock. The stock price is owners' earnings x multiple expansion/contraction. Buy and hold for the long term. Don't be fuss by short term fluctuation. Be patience and concentrate on what matters. Buy businesses not stocks. Understand what you buy

Li Lu

Compounding

Excel shortcuts

Habits

four dimensions

Macro news

This week, the Fed and other central banks raised rates. The view is more moderate than expected, as first signs of disinflation are for everyone to see. Meanwhile employment data are strong, suggesting economy still showing supply tightness as demand remains ok. The market rallied in sympathy. But valuations look high and earnings are not great.

Money

GDP

ISM and PMI surveys surprised on the upside. Relief from energy price pressure in Europe, China reopening and low levels of sentiments creating some relief. It's not good but not as bad. Question can it last for a soft landing or are we still heading for a recession?

ifo
Conference board

CPI

Yield curve

Geopolitics

Asset classes

Gold

Crypto

Fixed income

It's time to buy bonds. Debt ceiling will be raised, but spending will be cut. Avoid junk bonds at this juncture after the rally.

Real estate

Equities

Analogs

50d

Liquidity

20% up moves

Bottoms during recession not before

PE

Earnings

Lead indicator
Stocks anticipate. Expectations are now set for a relief and no earnings pressures. This may prove overoptimistic.

Buybacks

Sectors trending up

New highs/new lows

Advances vs declines

DSI

Advisers sentiments

Fear and greed

Insiders buy/sell

Smart vs dumb money

Greed and no fear

Golden cross?

Oversold?

Positioning

Monthly returns

3rd year of the presidential cycle

As January goes, so goes the year
February could be big pullback

Extreme risk taking

So bear market rally or new bull market?

Put/Call ratio

Volatility