Saturday 1^st January 2022

Happy New Year!

Morgan Housel tweeted this from Michael Batnick’s blog, The Irrelevant Investor. It’s wisdom:

‘Investors don’t necessarily get better with experience because markets are adaptive, unlike most of our learning environments. I won’t ever touch a hot stove again on purpose because I know it’s hot. I won’t go in a cold shower because I know it’s cold. But “I won’t ever buy stocks again when the CAPE ratio is above 25 because I remember 1999” is not the same thing.

The greatest lesson we can learn from history is that those who learn too much from it are doomed to draw parallels where none exist.’

Being aware of and untying our biases is work. A lot of work! Morgan Housel recent article ‘I Have A Few Questions’ is a sensational real. Highly recommend checking it out https://www.collaborativefund.com/blog/i-have-a-few-questions/

 

Thursday 6^th January 2022

The US market had its worst day in 11 months over night. The ASX today also reflected this. It’s probably to do with the last Fed meeting minutes released and their talk about interest rate rises and QE tapering.

This contraction has been happening in tech stocks for a few weeks and now its expanded to the broader market.

A video emerged today of US President Joe Biden publicly congratulating GM CEO Mary I’ve forgotten her last name, that’s she’s ‘electrified the industry’ in relation to electric car sales. GM sold 26 electric cars in the 4^th quarter and no that’s is not a typo nor a mistake. Tesla on the other hand, who the President refuses to acknowledge, below away all analysis’s expectations sold and delivered over 306,000 cars in the 4^th quarter 2021.

But it’s clearly Mary who’s electrified the industry… This is a fantastic example of deliberate misinformation to create a preferred narrative from the establishment.

 

Friday 14^th January 2022

From https://www.collaborativefund.com/blog/what-a-world/ by Morgan Housel:

President Clinton noted in his January 2000 State of the Union speech:

We begin the new century with over 20 million new jobs; the fastest economic growth in more than 30 years; the lowest unemployment rates in 30 years; the lowest poverty rates in 20 years; the lowest African-American and Hispanic unemployment rates on record; the first back-to-back surpluses in 42 years; and next month, America will achieve the longest period of economic growth in our entire history.

That wasn’t an exaggeration. But it marked the beginning of the worst decade for the stock market in modern times.

In January 2010, President Obama noted in his State of the Union speech:

One in 10 Americans still cannot find work. Many businesses have shuttered. Home values have declined. Small towns and rural communities have been hit especially hard. And for those who’d already known poverty, life has become that much harder.

That wasn’t an exaggeration. But it marked the beginning of one of the best periods for the stock market in modern times.

Morgan Housel is a fantastic financial writer. His blog is full of wisdom. https://www.collaborativefund.com/blog/getting-rich-vs-staying-rich/ The getting wealthy vs staying wealthy blog from 2017 is definitely worth checking out.

 

Saturday 15^th January 2022

COVID is spreading like a wild fire the past 10 days. I could name 30 people I know who’ve now had or got it currently. Symptoms vary with no real rhyme or reason of who gets what symptoms. The age range has been from 16yo through to 76 years old and on the whole symptoms have been mild to moderate, nothing worse than getting the flu.

Most used rest, sleep, optimal doses of vitamin D, C, multi's, fish oil, zinc, healthy eating, sunlight, fresh air, isolation and in some cases Ivamectin. Symptoms lasted from a few days to around seven days in most cases. A few had some fatigue hang around for around a couple of weeks.

 

Wednesday 19^th January 2022

Vanguard DRP’s executed today.

Lot’s of red again over night in the USA, also found it’s way here on to the ASX today.

Crypto currencies (using BTC and ETH as proxy’s) have had a significant pullback. I’m not sure of the reason, but it’s interesting that crypto’s have mirrored many tech stocks in their price fluctuations of late.

 

Thursday 20^th January 2022

I recently made a change to my portfolio, selling out of what I’d call a satellite holding (if using the core/satellite analogy) putting that capital and profits into another existing satellite holding I have. Obviously I’m bullish on this existing holding, as it’s rare for me to sell anything.

My reasoning is simple. I see far greater upside of where my money has gone compared to where it was (but as always time will tell!). The holding I no longer have was also the smallest holding in my portfolio, so divesting it doesn’t have huge ramifications but I have lost some exposure to global markets in favor of a more concentrated bet.

There are always costs to our decisions, which is one of the reasons I do my upmost to minimize fiddling with my portfolio, plus this old saying rings true: Investing is like a bar of soap. The more you handle it the smaller it gets.

On average, I’ve probably sold once a year putting those sold funds into existing holdings for long-term accumulation.

 

Tuesday 25^th January 2022

The market is contracting quickly at the moment. A friend owns GEAR (a leveraged ASX200 ETF) and has done wonderfully since the COVID correction in March 2020. That said, because leverage works both ways, it’s getting pounded at the moment. Around 10 months of gain have been erased in a couple of weeks. The ASX 200 isn’t going anywhere though, so he’s DCA’d in today and probably will if this continues.

Stacks of ‘tech’ companies are down 40%-70% from their highs and the media loves it. The reality is prices of publicly traded companies go up and down, often overreacting on both the upside side and the downside. If people aren’t realistic and prepared for 50-80% drop in prices a few times in they’re long-term (lifetime) investors, they maybe best to find another asset class to invest in.

Morgan Housel says it best: ‘all past declines look like an opportunity, all future declines look like a risk’.

One point of note, again on the topic of what I believe to be false narrative, is the reserve bank here in Australia posturing they’ll keep interest rates on hold until 2024 last year. Inflation is rising faster than ‘expected’. Its nuts how out of touch they are, what with QE, the lowest interest rate in history, government stimulus and supply chain shortages due to covid, that inflation wouldn’t rise...

 

Wednesday 26^th January 2022

xxx is up visiting for the first time in two years. He and his wife have booked a fantastic villa across the road from the Rainbow Bay SLSC. A few of us have taken time off to hang out and surf. Going to be a fantastic week!

 

Sunday 30^th January 2022

Censorship and in my mind ‘narrative control’ is an issue playing out at the moment. Actually, it’s always been the way; just now it’s clear as day.

The establishment is attempting to cancel the Joe Rogan Podcast on Spotify. A number of artists are taking their music/content off the platform in protest of Joe being on there and in their words ‘spreading mist information’. 270 doctors wrote an open letter in protest of some of his guests.

What a joke.

In my mind, censorship/controlling speech is a form of though control. Governments/influential people cannot control our actual thoughts, but if the can control what we’re allowed to say and post about online, it’s the next best thing.

What’s really happening here is a form of tall poppy syndrome. Joe is a unique individual, his podcast reach dwarfs Fox, CNBC, ABC, etc. He cannot be controlled and is a super curious person keen to learn and open to a wide range of discussion. The polar opposite to a an easily controllable fear based person.

Joe’s response to this is all class. Check it out here if you’ve not seen it:

https://www.instagram.com/p/CZYQ_nDJi6G/

We’re seeing a similar thing play out with Tesla and Elon Musk now too.

President Biden refusal to mention Tesla/Musk and insistence on repeated promotion of Mary, CEO of GM. The establishment doesn’t like competence. Elon created reusable rockets; he can’t be controlled, he speaks his mind, goes direct to the public and engages with the public (twitter), manufacturing in the US, doing what no one else in the world can do. When you stop being like people, people stop liking you.

GM sold an incredible 26 electric vehicle in the 4^th quarter 2021 while TLSA only sold 306,000 electric vehicles… To me this is another clear example of the government unexplainably manipulating the narrative.

It’s for these reasons I post on this website and via this podcast. Naval said it best, ‘not your platform, not your followers’. Censorship on social media platforms is out of control.

Ironically, I’m editing this in early February and Facebook just reported 4^th quarter 2021 earnings and for the first time their user numbers didn’t grow. The stock is down 26% over night…

 

Monday 31^st January 2022

I mention these two things all the time. One, time frames matter and two, all time highs in the stock mark. Let’s start with time frames and two fantastic examples.

Yesterday Tesla’s one-year return was 0.78%. Changing the time frame by just one day to today, Tesla’s one-year return is 11.54%.

Another example, Morgan Housel shared on Twitter today. Both are accurate and different people posted both within one minute of each other:

S&P500 finished January down ~5.3% -- worst month since March 2020.

S&P500 index posts biggest two day gain since April 2020.

It’s actually insane just how much time frames matter (start and end dates) in outcome and therefore creating a narrative. If you don’t understand this and make an effort to keep it front of mind, it’s easy to get nudged off track.

Next, is all time highs. Apple just reported a huge quarterly profit of $124 billion dollars for the quarter, the largest quarterly profit ever, so shouldn’t Apple be valued be greater than it’s ever been?

To put it another way.

Globally there are approx. 60,000 companies in the world:

2019 – $2.9 trillion dollars profit (pre-covid)

2020 - $1.7 trillion dollars profit (covid)

2021 - $3.5 trillion dollars profit

Companies generated more profits last year than pre-covid.

2022 will probably do around $4.2+ trillion dollars profits, so it’s no wonder valuations continue to increase. Company profits are the dog and company share prices are the tail. As profits continue to climb so will company values/share prices.