james22

Not really mine either, but I've made a small bet on it. We'll see.

Maybe, but every money manager who is behind because they hid out in cash the beginning of the year and missed the run-up will likely now overweight what's worked (the Magnificent Seven/Eight). Why not? Nothing to lose if already at risk of being fired. And at least their holdings at year's end will look good, if not their performance.

The market was significantly down by the beginning of 4Q 2022, it's up now. I expect a catch-up trade in Tech as or more likely as anything else.

Can China contain Evergrande’s collapse? There has long been a sense that China can somehow defy economic gravity, that the normal rules do not apply, and more gullible analysts have praised the quality of the country’s economic technocrats. That has always been something of a myth; more so under Xi Jinping, when control and security trump all else and markets are supposed to do as they are told. The mythical technocrats are now facing their sternest test in navigating what now seems like the inevitable demise of Evergrande. They will now have to ensure that the fallout does not hammer the rest of China’s economy. https://archive.ph/UW3es

This. We value investors have bored momentum investors for decades by trotting out the axiom that the four most dangerous words are, “This time is different.” For 2017 I would like, however, to add to this warning: Conversely, it can be very dangerous indeed to assume that things are never different. https://wealthtrack.com/wp-content/uploads/2018/01/This-Time-Seems-Very-Very-Different-by-Jeremy-Grantham.pdf When people say things are different, 20% of the time they are right. John Templeton

Everything that can be Invented has been Invented?

Are you arguing there is no such thing as Tournament Theory? Are you arguing organizations don't compete with others for top talent?

Because the organization has no one to underpay (to come out ahead) if they overpay the janitor.

No, you couldn't.

It's not the CEO working harder, it's all those competing for the job. "Tournament Theory" How would that benefit shareholders? You only come out ahead overpaying one or a few if you can underpay more.

It's not higher equity incentives they are talking about. It's that overpaying CEOs allows you to underpay those vying for the job. Shareholders come out ahead. And sure, you could make the same argument for any other job that has the same ratio of contenders. Can you name any?

Nah, different dynamic. Another interesting argument for high executive pay is called tournament theory. See Milgrom and Roberts (1992). This applies to large enterprises with a sizeable team of executives, with a highly paid chief executive officer (CEO), along with several other vice presidents who are in line for consideration to become a future CEO. By paying the CEO generously and well beyond what is economically justifiable on the basis of the CEO’s contributions per se, there is a strong incentive for the other executives to put in extra effort so they will become that chief executive, with all the high pay and perquisites, in the future. From the perspective of the shareholders, the gain from those collective extra efforts is worth the high salary to the last winner of the CEO “tournament.” https://saylordotorg.github.io/text_principles-of-managerial-economics/s05-11-manager-motivation-and-executi.html

America Just Hit the Lithium Jackpot The world’s largest known deposit was just discovered in Nevada. What does that mean? https://archive.ph/rCmJZ

A much better comparison would be dollar-cost-averaging over the period.

Auto CEOs Struggling With Whether To Replace Striking Workers With Robots Or Mexicans https://babylonbee.com/news/auto-ceos-struggling-with-whether-to-replace-striking-workers-with-robots-or-mexicans Spoiler: At publishing time, automaker leadership elected to compromise and go with the robots but hire Mexicans to build them.

Only ~30% invested in the market in 1980, double that since late 1990s. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx

I believe so, yes. For all the same reasons.

No, you're right. The take-away is that at the recommended 4% SWR, up to 50% bonds make little difference when it comes to ensuring survival, and over 50% hurts. Why you'd prefer the 100/0 over 50/50, knowing the survival risk the same, lies in the terminal value (multiples difference).

A 50-year old has to plan to live to 90. That's 40 years. He'd better allocate a significant fraction to equities. See any of the withdrawal rate studies. They all show bonds riskier than stocks over a 30-year period. https://www.whitecoatinvestor.com/the-4-rule-safe-withdrawal-rates/ First of all, you need stocks! You need a significant allocation to stocks to sustain your lifestyle. Unless you plan a withdrawal rate of less than 3%, you will need at least 50% stocks in your portfolio. https://thepoorswiss.com/trinity-study/ And that's with sequence-of-return risk. In accumulation, that's not an issue.

Most everyone working is investing for 20 years. And those near retirement and retired are investing a fraction of their portfolio for 20 years. As investors recognize this, the equity (risk) premium will fall (and valuations will rise). Of course you can do better if you can guess right. But why bother? Buy-and-hold (better yet, dollar-cost-average) an equity index fund and you'll most likely do better.

Sure. But again: The lowest annual return over any 30 year period going back to 1926 was 7.8%. That’s what you got had you invested at the peak of the Roaring 20s boom in September 1929. You would have lost more than 80% of your investment in the ensuing crash and still made more than 850% in total over 30 years. The past 30 years were up 9.8% per year. The most recent 30 year period since 1993 includes: The Asian currency crisis, the dot-com crash, 9/11, the Iraq/Afghanistan wars, the Great Financial Crisis, the biggest global pandemic since 1918, the war in Ukraine and 9% inflation not to mention flash crashes, a few recessions, government shutdowns, trade wars, an insurrection, multiple impeachment hearings, 4 legitimate bear market crashes, 9 other stock market corrections and a whole bunch of other crazy and/or bad things I can’t think of right now.

Buy-and-hold the S&P500 for over ten years and there's little risk. The lowest annual return over any 30 year period going back to 1926 was 7.8%. That’s what you got had you invested at the peak of the Roaring 20s boom in September 1929. You would have lost more than 80% of your investment in the ensuing crash and still made more than 850% in total over 30 years. https://awealthofcommonsense.com/2023/02/deconstructing-10-20-30-year-stock-market-returns/

The addition of retirement accounts and automated contributions was a game-changer for financial markets. https://awealthofcommonsense.com/2023/09/how-individual-retirement-accounts-changed-the-stock-market-forever/