We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.
Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!
But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.
Here are the articles for the week ending 10 May 2020:
1. How To Achieve 12,000% Returns Against The Odds – Chin Hui Leong
The table below is a sample of stocks that I have held for nine years or more.
The returns may look phenomenal now… but the outlook was not like that over a decade ago….
There I was, in the middle of the Global Financial Crisis, back in early 2008, a downturn so severe that it was eventually billed as the worst recession to happen in over 50 years.
Things were looking bad. Really bad.
And there I was, right in the centre of the economic storm.
If today’s COVID-19 economic scenario feels similar, you might want to stick around for what I am about to share.
2. Why Isn’t The Market Down More? – Sean Stannard-Stockton
The most important thing to keep in mind is that S&P 500 is often referred to as “the market,” but of course the S&P 500 is essentially the 500 largest companies in the US, which, especially during this crisis, are not indicative of the economy as a whole. And the largest 25 companies make up nearly 40% of the S&P 500…
…Now whatever you think about those companies, most all investors would agree that they are far, far more likely to survive this crisis than the average company. And, in fact, with so many smaller companies struggling it seems very likely that many of these large companies will thrive in a post-Coronavirus world in which their competition has been dealt a huge setback.
So looked at this way, the fact that the S&P 500 is only down 16% from its highs does not suggest that the market thinks the economy will be OK, but rather that the largest companies in the world will see their way though, and as demand returns they will face much less competition.
If instead, the market was reflecting investors being naively optimistic about the economic impact of Coronavirus, then you would expect to see economically sensitive stocks leading the recovery. But the reverse is true.
3. Scientists Create Jet Engine Powered By Only Electricity – Dan Robitzski
A prototype jet engine can propel itself without using any fossil fuels, potentially paving the way for carbon-neutral air travel.
The device compresses air and ionizes it with microwaves, generating plasma that thrusts it forward, according to research published Tuesday in the journal AIP Advances. That means planes may someday fly using just electricity and the air around them as fuel.
4. What Have We Learned Here? – Morgan Housel
The two most important economic stories are the size of the business collapse and the magnitude of the stimulus. It’s easy to focus on the former because it’s personal and devastating while ignoring the latter because it’s political and hard to contextualize. But they are equally huge. Despite 15% unemployment, Goldman Sachs estimates household income will be higher in Q2 2020 than it was in Q2 2019, largely because of stimulus…
…Done right, forecasting is a delicate balance of probabilities. But people want certainty, especially when the stakes are high. The people who make forecasting models probably have less faith in their accuracy than those who read them, if only because things like confidence intervals are rarely discussed in the media.
5. Inside the Biggest Oil Meltdown in History – Leah McGrath Goodman
Many of the market participants caught in the crossfire were not sophisticated investors, but simply members of the retail public who did not understand how oil futures contracts work — and that they can expire or trade negative.
When pressed about these investors’ portfolio losses, CME chairman Terrence Duffy, who appeared on CNBC in the aftermath of negative oil prices, did not mince words. “Futures contracts have been around for hundreds of years and I will tell you, since Day 1, everybody knows that it’s unlimited losses in futures,” he said. “So nobody should be under the perception that it can’t go below zero.”
6. Owning Stocks is a Long-Term Project – Safal Niveshak
“Mountains should be climbed with as little effort as possible and without desire. The reality of your own nature should determine the speed. If you become restless, speed up. If you become winded, slow down. You climb the mountain in an equilibrium between restlessness and exhaustion. Then, when you are no longer thinking ahead, each footstep isn’t just a means to an an end but a unique event in itself. This leaf has jagged edges. This rock looks loose. From this place the snow is less visible, even though closer. These are things you should notice anyway. To live only for some future goal is shallow. It’s the sides of the mountain that sustain life, not the top. Here’s where things grow.”
7. Why Most Post-Pandemic Predictions Will Be Totally Wrong – Rob Walker
When a cataclysmic event is fresh or still unfolding, it’s hard to see beyond its immediate contours and even harder to imagine what the next unpredictable events will be and how those will affect whatever change is in motion right now. As this moment ought to remind us, the most influential and important events are the ones that emerge spontaneously and with little warning — like the coronavirus itself.
But it’s so seductively easy to double down on sweeping pronouncements: E-sports will replace football and basketball, movie theaters will never return, and telemedicine will become the new normal. (We’ve even made a few.)
Anything is possible, but take a closer look at how often definitive predictions about permanent change are simply extrapolations of recently observable trends taken to some maximum extreme.
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