perulv

A while ago I started subscribing to https://thefelderreport.com/. Can't remember where I came across the site first place. Every week is seems there is a new graph showing how the market is horribly overvalued, or in some other way a bad place to invest. I tend to agree with this sentiment (and also remind myself that I should not try to predict anything, especially not the future), but my question is this: Is he known for being generally bearish? What's your take on his insights? They make sense to me, but I almost feel I also should read the opinions of some super-bullish person, to balance it out a bit :)

Bill Gates just (one hour ago) hosted an "Ask Me Anything" session, where he wrote this: "(...)even in the case of electricity you have to cover the times when the wind doesn't blow and the sun doesn't shine and electrcitiy storage (batteries) are not likely to be cheap enough to cover this. My friend Vaclav Smil gives the example of Tokyo's electricity needs when the renewable sources are not available for a number of days." I haven't read these links myself yet, but definitely something I will digg into: https://www.gatesnotes.com/Books/Energy-and-Civilization https://www.sciencemag.org/news/2018/03/meet-vaclav-smil-man-who-has-quietly-shaped-how-world-thinks-about-energy On a more general level, are there some historical lessons to be learned (and avoided) if one were to find a way to invest in "gravity storage"? (Or electrical energy storage in general). What I mean is: There are plenty of ways to be right (the world needs to store electrical energy) and not make money. Price vs value of course, but there also seems like plenty of ways to end up with the Betamax or HD-DVD of energy storage here. The Buffett quote about airlines ("(...)farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.") also comes to mind.

There is a quite interesting thread about this here: https://news.ycombinator.com/item?id=17789456 I tried to do some research (*random googling) on investing in "Gravity storage" without much success. I guess finding a publicly traded company with little debt and years of profits is hard in a capital-intensive industry that doesn't really exist yet :-\ However, it would be nice to find some way to make a small bet on this field.

I've read this book, and I think it's great. Hans Rosling was a great man, and fantastic at communicating facts and numbers (check out his TED-talks). the book is an easy read, and will probably provide a new insight for many people. At least it did for me. If i remember correctly, he also touches areas of "behavioural economics" / cognitive biases etc.

I don't know if this was a reference to my post (the headline "2019 will be a great year" etc), but just to be clear: What I meant was that the more negative the stories get, the more confident I will be of positive future returns. And right now I see a mix of positive and negative stories. Not much "blood in the streets". Buffet also says "Buy when there's blood in the streets". My view (on ignoring the market) changed a bit after reading Howard Marks "Mastering the market cycle". There is a big difference between trying to time the market, and having a general opinion on where we are in the market cycle.

This is my view too. Two days ago the front-page headline in a local paper (in Norway) read "2019 will be a great year". The financial papers write about the market decline, with some "experts" saying it's a great time to buy, others that things will get worse. For the most part, it seems "main street" is not (yet?) giving this much thought. I tell myself not to try to call the bottom, but I do think the most probable scenario is that things will still get worse. When the local newspaper declares that the future is bleak, I will hopefully have accumulated a bit of cash. I am still mostly invested btw, just a bit less than before.

I ended the year down 30% in 2018. Perhaps a concentrated portfolio can take some of the blame (I was up 49% in 2017), but I also made som really stupid mistakes the first half of 2018. In an effort to hedge against currency-changes (my local currency vs Dollar), I bought an highly leveraged ETF, which was not even USD <--> NOK (my local currency), but USD <--> SEK. Half way trough 2018 USD <--> NOK was the same as the start of the year, but I'd lost around 5% of my portfolios value on this. This was a mistake I could have avoided, had I thought it trough, and actually did some math. Most of the loss however, is simply stock prices going down. When I evaluate the companies that I own, I still see quality companies at cheap(er) prices. I will hold these positions, and hopefully add to them at some point. Perhaps the only "right" thing I did in 2018, was to be skeptical of the high valuations of the market. I did to some extent act on it, by converting a small part of my pension savings (similar to a 401k I guess?) to interest-rate funds/instruments, and stop buying stocks in september (So the actual loss is a bit better than the -30% suggests) . I guess my new year's resolution should be to not get paralyzed, not try to "time the bottom", but take my time to think before acting (reminds me of this great list).

This. If you can buy shares in a company that have "real earnings", high margins etc, at a price below what you believe it is worth, that's value investing, isn't it? If that happens to be a "tech company" or not, so what? As more and more routine work are replaced by software, more businesses will become "tech" in some way. That a tech-company can be asset light, require little debt, and have high returns make them great potential value investments, imho. Some will be over-priced, some will under-priced, just like any other company. The value investing "tools" still apply, it's just that more of the companies that provide value are "tech".

My reasoning has partly been the opposite: Since Europe is a mess, and US is firing on all cylinders, I see more upside potential in European companies. If it is a mess, and everybody agrees it's a mess, the prices will likely reflect that. And if US companies are generating all time high earnings, partly because of corporate tax cuts (which is my limited understanding, please let us keep this to economics not politics), that is also baked into the price. That being said, my reasoning this year has so far left me with only (unrealized) losses. And I find it much easier to find great companies in the US than in Europe. Earlier I thought that if I owned a company with a strong balance sheet, long and positive earnings history, high returns etc, that would partly insulate me from market downturns. It still makes sense to me. In a downturn the stronger company will not only survive, but it could strengthen its position by buing other companies, its own stock, etc. But in practice, I feel that the "A rising tide lifts all boats" works both ways. In the short run, the stock of "great companies" fall just as much when the market turns sour (*I have no data on this, would love to be proven wrong). Then again, as long as one does not realize the short time losses by selling, it doesn't really matter I guess. But this makes me more reluctant than I used to be, to buy what I believe to be low priced quality companies in a too-high-priced market.

Howard Marks defines the three stages of a bear market (from http://s.wsj.net/public/resources/documents/WSJ_oaktreememo0803.pdf) • the first, when just a few prudent investors recognize that, despite the prevailing bullishness, things won’t always be rosy, • the second, when most investors recognize things are deteriorating, and • the third, when everyone’s convinced things can only get worse. For the last couple of weeks, I've been wondering if perhaps we are easing into the second stage of a bear marked now. One could argue that it fits nicely with the recent (current?) long bull-market, with high valuations (https://www.starcapital.de/en/research/stock-market-valuation/) and plenty of leverage. Actually, I have no source to back up the "plenty of leverage" claim, and I would love for someone to provide one. The funny thing is that even if I _knew_ I was right, I'm not sure what I would do about it. Most of the stocks in my portfolio have decreased quite dramatically in price the last months, and I still believe the companies and the underlying business to be sound. So selling now seems foolish. On the other hand, buying would not be such a great idea either, if we are in fact in the second-ish phase of a bear market. I think we are far from " everyone’s convinced things can only get worse". And since the business I've invested in doesn't exist in a vacuum, there's no reason they wont be dragged down if the market falls (further). The best move I've come to right now is to sit on my hands for a while. I see more reasons for future returns to be bad, than good. If I am right, there will be better buying-opportunities down the road, and I might have accumulated some cash (I'm a regular person with a regular day-job income, this is my hobby). Of course, if I'm wrong I lose out on not being fully invested. Thoughts?

In this interview, Daniel Kahneman (one of the pioneers of the discovery of cognitive biases, nobel price winner etc) says that he still experiences (or is not "immune to") cognitive biases: https://soundcloud.com/bloombergview/interview-with-daniel-kahneman-masters-in-business-audio (37:00 into the interview, but the whole thing is great). "I am not smarter than I was when I started in this line of research more than 50 years ago. Because my system 1 is just the same way that it was". But then he says that he recognizes "This person is trying to anchor me. It still works by the way. But I can recognize it". If Daniel Kahneman is still "fooled by" cognitive biases, I think it would be arrogant of most of us to think we can avoid it. I am struggling with this myself. Am I under the influence of the typical biases (e.g. Endowment effect), or is my hypothesis just as valid as it was when I bought it? I don't have a definitive answer, but I think that for me personally, it might help to mechanize parts of the decisions somehow. Or make some rules, checklists etc, that take part of the second-guessing out of the equation. Perhaps a rule could be "after I have bought, I have to hold the stock for at least a month before re-evaluating it". Given that I did proper research before buying. I like many of the points on writser list. In particular, I have started writing down my reasoning before buying or selling a stock. In addition to help crystalize my thoughts, I hope that it can help accelerate my learning by looking back on the notes later.

SharperDingaan, Spekulatius, John: You mention the way german companies are run / governed. I must admit this is something I have not thought much about, or have knowledge of. Being European myself (well, Norwegian, so European-ish ;) ), my knowledge of the "US way" is also limited. Can you elaborate on what you mean, and how this impacts shareholders? In Norway there are strict rules for letting people go. I'm guessing this might be the case for many European countries. Is this an example of what you mean? that a US company will be better at cutting costs quickly? (Hmm, just googled and found this btw. http://www.plasticsnews.com/article/20181025/NEWS/181029944/covestro-cutting-900-jobs-globally) Looking at https://www.covestro.com/en/company/management/board-of-management (I bought some shares in Covestro earlier, as mentioned in another post) how would I go about looking at the governance structure? What would I look for, and how would this typically be different in a US company (Which I take it you both mean have a more shareholder friendly structure)? It seems I have quite a blindspot here. Not only to the way it works in Germany, but to the whole issue in general. Any more details on how I would educate myself about this, and do an assessment of this on individual companies, would be greatly appreciated. ebdem: Thanks for the links. I see that the forums have english language in the menu, but that the discussions are in german. Do you know if it would be acceptable to post there in english, or should I avoid doing that?

John: Thank you for the introduction, and for the link. I will certainly check out the country reports. ajc: Thank you for the link. I've briefly seen the site before, but was unsure about the quality of the data. Not that I had any reason to doubt it, but just general scepticism about "random sites on the internet" :) Great to see it recommended here, I will start using it more.

I've read about 2/3rds of this book now. I have not read his previous book, or any of his memos before. I've subscribed now, and plan to read "The most important thing" next. He does "warn" at the start of the book that he repeats some content from of his memos. For a first time reader like me, I think this is fine. I listen to the audible-version, and it can sometimes be a bit hard to know when the part from the memo stops and the "book" continues. In general, I find the book valuable. He emphasizes that the point is not to try to predict where the market is going (if he did, I would probably stop reading), but that there is great value in knowing where we are in the cycle(s). I think the subtitle of the book is describing: "Getting the odds on your side". E.g. if valuations are high, credit is widely available, and everybody is optimistic, the probability of future high returns is likely to be lower. At least that is how I read it. I also find it useful that he describes the many different cycles (credit, fundamentals, economy, psychological etc). I also find some of his observations that are not specific to "the market cycle" to be highly valuable. Like the fact that in addition to having an opinion, one should have some idea how how likely this opinion is to be correct. Behavioural economics. It is hard to say if I will end up being better at knowing / having-an-opinion-of where the market cycle is, after reading this book. But I do think there is wisdom in it, which I will hopefully be able to retain some of. And hopefully, perhaps, I will be a bit better at adjusting my exposure/actions according to the phase in the cycle(s).

Hi, I'm currently reading the book "Mastering the Market Cycle" by Howard Marks. One of the key points (as I read it) is that while we cannot predict where the market will go, we should try to understand where we are in the cycle. This includes the emotions of the market participants, the general "tone" of the news, etc. I own stocks in a couple of german companies (on DAX), but I now realize that I really don't know much about the market conditions in Germany. Or perhaps more important, the opinions and feelings of/on "the market". Does anyone have tips for sources for information like this? A problem of course is that I don't read much German. I live in Norway, we had it a couple of years at school, but in practice I would end up using Google Translate on a german site. In general, I've ignored "the market" and macro conditions in general, focusing on individual companies, on the basis of knowing that I cannot predict the market. But after reading this book, I'm starting to see value in having some opinion on where we are in the cycle(s). What are your thoughts on this? If you find an interesting company in a market / region that you are not familiar with, do you have some favorite way of researching the market / region?