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 12 April 2020:
1. Message from Ser Jing’s friend
Last week, Ser Jing’s friend shared a list of wholesome activities we can all do to add more meaning to our lives during this difficult Circuit Breaker period. It bears repeating:
– Picking up a book that you have been wanting to read
– Taking this period of time to rest and re-calibrate yourself
– Spending quality time and doing stuffs for your loved ones
– Taking up online courses. Think Coursera and etc
– Starting up your own side line business
– Developing a new skill or hobby
– Practicing meditation, yoga and journalism to master your inner thoughts and emotions (Ser Jing meditates regularly)
– Spending some time alone in nature
– Getting in touch with your friends
– Spend time reflecting
2. The places that escaped the Spanish flu – Richard Gray
“Although they knew about the flu and did what they could to prevent it from coming, it arrived anyway,” says Katherine Ringsmuth. “The disease struck so quickly, most people didn’t have a chance to respond.” A fall in salmon stocks may have ultimately helped the Egegak village. “It was a terrible year for salmon as they had been producing so much canned salmon for the war effort in Europe, it caused the fish numbers to decline.
“It might have meant no one had any reason to visit the area. It was just chance.”
Survival, it seems, can sometimes come down to blind luck.
3. What Next? (Two Questions) – Morgan Housel
Covid-19 has separated workers into two clearly defined buckets: Those who can work from home and those who can’t.
You can break it out further into those who work for companies that can do business online and those that can’t.
In human terms, there are now flight attendants and waiters whose careers vanished overnight, and lawyers/bankers/consultants/programers who continue earning their nice salaries and benefits while in their pajamas.
That’s generalizing. There are exceptions on both sides. But it’s directionally accurate. And it’s a big deal because a key income inequality characteristic over the last three decades has been the disparity between those who work with their hands and those who work with their heads. That trend just sped up exponentially.
4. FUNDSMITH Annual Shareholders’ Meeting 25th February 2020 [link goes to video] – Fundsmith
Ser Jing here: Fundsmith is one of the best fund management companies I know of. Its founder, CEO, and CIO (chief investment officer), Terry Smith, is one of the best fund managers I know of. In late February 2020, Fundsmith held its annual shareholders’ meeting for the investors in its funds. Smith gave a presentation and answered questions from his investors together with his team. The entire meeting was recorded on video and it is 1 hour and 30 minutes of pure investing goodness. One of my favourite parts of the video is when Smith talked about investing during recessions and the current COVID-19 crisis (watch from 34:20 onwards).
5. My New Theory About Future Stock Market Returns – Ben Carlson
Said another way — if stocks don’t have the risk of a Great Depression-like crash on the table, does that mean expected returns should be lower going forward?
Looking at valuations over the long-term, you could make the case that the market has been pricing this in for some time now. Robert Shiller has pieced together U.S. market data going back to 1871 to calculate his cyclically-adjusted price-to-earnings ratio.
This valuation measure is far from perfect but it is telling to see how the averages have changed over time:
There is an obvious upward move in the average over time. There are a number of explanations for this increase — interest rates and inflation have fallen over time, accounting rules have changed on corporate earnings, the underlying structure of the market has changed (think more tech companies), the U.S. economy and markets are more mature, etc.
But another reason for this is the Fed now plays a larger role in the economy and management of the financial system, and thus, financial assets. If the stock market is “safer” over time, in that the Fed will do its best to smooth economic cycles, it would make sense that valuations should rise over time.
6. I Became a Disciplined Investor Over 40 Years. The Virus Broke Me in 40 Days – James B Stewart
At least I didn’t commit what Mr. Murtha considers the most serious error, which is to sell into a steep decline. “That’s where people really get hurt,” he said. “Once you’re out, the emotional leverage works against you. Either the market drops further, which confirms your fear. Or it goes up, and you don’t want to buy after you just sold. Then it gets further and further away from you. People don’t realize how hard it is to get back in.”
7. Calibrating – Howard Marks
The old saying goes, “The perfect is the enemy of the good.” Likewise, waiting for the bottom can keep investors from making good purchases. The investor’s goal should be to make a large number of good buys, not just a few perfect ones. Think about your normal behavior. Before every purchase, do you insist on being sure the thing in question will never be available lower? That is, that you’re buying at the bottom? I doubt it. You probably buy because you think you’re getting a good asset at an attractive price. Isn’t that enough? And I trust you sell because you think the selling price is adequate or more, not because you’re convinced the price can never go higher. To insist on buying only at bottoms and selling only at tops would be paralyzing…
…The bottom line for me is that I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value. I don’t find these statements inconsistent.
Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life.