Spooky

This is something I want to devote more time to - curating my news / information sources to only have high quality inputs. I pay for both the WSJ and FT and I've stopped getting my news through social media entirely. I've been poking around with Nikkei Asia and some German sources. What are people's go to publications / sources? I also truly believe in Charlie Munger's approach - read as widely as possible about as many topics as possible. Pick up Poor Charlie's almanack or get a copy of his book recommendations and start there. Lots of books about science, economics, etc. Understanding the world better is key. I'm always looking for insights which are counter-intuitive and go against accepted wisdom. I also have found that some of the great investors have an almost philosophical bent like Bill Miller and I have been reading a lot of books on Stoicism lately. My favourite line from Sam Zell: when everyone is going right, look left.

Also we just hit bull market territory on the S&P 500 again... up 20% since October.

I hope the Fed raises rates more aggressively, it will give me another bite of the apple.

Agreed. It seems like we are back into momentum / fomo for the big tech stocks / QQQ which could run for a while. Still looks like a stock pickers market to me - avoid the S&P 500 and new magnificent 7 (or whatever we want to call them). I have been adding to the S&P 600 in my retirement account but even that is starting to move upwards.

Amen. I hope to never retire but do something I enjoy as long as my health permits to have some kind of purpose. Now I just need to figure out what that is... I need to start some kind of small business.

Great thread. As a recently minted millionaire it certainly doesn't feel like a million goes that far anymore. The average home where I'm from in the Greater Toronto Area is now $1,196,101 in Canadian funny money. I also echo other people's sentiment that the money itself does not make me happy / improve my happiness. Looks like I need to move to a lower cost place to live and use the money for something that will have a real impact on my life.

Is there any credibility to this?

Things have unfolded pretty closely to how I predicted so far. Hard to say where things go from here but I'm being more cautious again now that sentiment has picked up.

I had a similar challenge. What I ended up doing is creating a custom report and then I run it and view the PDF. Not sure if there is a better way...

Exactly, it's hard to ignore the collective judgment / wisdom of all investors in the market. Sentiment has been tilting away from fear to greed for a while now.

My comment is on overall inflation / core inflation. I just don't see inflation going materially higher from here going forward and all the data is backwards looking. The tightness in the labor market is easing, layoffs have been occurring and immigration in the US has actually been surprisingly robust. Companies are not going to be giving 5+ percent salary increases this year. It is just a matter of time until the data catches up. I also agree with Greg that a 25-50 bps change in interest rates from here doesn't make any difference if you are taking a long term view. Doesn't really matter what the Fed does now and it looks like a Volker style double digit interest rate scenario is out of the window. Most likely scenario is that there is maybe one more raise and the Fed will hold rates steady for longer than required just to be safe.

Absurd was a harsh word choice on my end but it doesn’t really change the overall point. I also think looking at monthly inflation data makes no sense since it is noisy and volatile. This is from the WSJ a while back:

Greg is right. Most of the remaining inflation in the CPI / core data is related to real estate which is calculated in an absurd way which significantly lags actual data. It is just a matter of time until this works through the system and shows up in the official inflation data. If the Fed holds rates here we could soon be in a Goldilocks period for stocks again with inflation under 4%.

JPM had an interesting Eye on the Market talking about Japanese / US markets: https://am.jpmorgan.com/ca/en/asset-management/institutional/insights/market-insights/eye-on-the-market/too-long-at-the-fair/

AI is the new thing for the market to get fixated on. Run away from fads. My personal view is that this will probably lead to an increase in productivity across many companies / industries and the best play is probably just a total world index since it is likely impossible to pick the winners and losers at this stage.

Bought some VIOO in my retirement account and a little nibble of BRK

I'm not saying that China can't succeed - their economy will likely continue to expand and society get wealthier (hopefully). My point is that this could still happen but the shareholders won't be the ones reaping the rewards.

Congrats John. I find myself in a similar position, I just kept consistently adding to my positions on weakness over the lifespan of this thread.

But what is the incentive to innovate / invest? What is the point of putting money into R&D to develop something new if all of the competition can just steal it / copy it right away? This is the purpose of patent protection so that companies know they have a period of time protected from competition to make a return on their R&D spending. This is where I think the US and other Western countries have the edge in innovation going forward.

Doesn't what you have written above conflict with the idea of shareholder returns? Brutal competition in every aspect is a nightmare for returns. Unless there is a barrier to entry / moat then firms can't expect to earn more than their cost of capital and growth produces no value. Layer on top of that no shareholder protections... doesn't seem like a good investing environment for shareholders.

Article in the FT with Bullard saying he is open to still raising rates as insurance against inflation. He is one of the more hawkish members and the top of his range is "just above 6%". If true, it still doesn't seem too bad to justify all this doom and gloom. It was pretty obvious back at certain points in 2022 that sentiment had diverged significantly from reality towards pessimism, reaching levels last seen during the financial crisis. Unless something else breaks here (big if) it looks like the bottom has already happened and the stock market has bounced back pretty well this year. There is still also a tonne of institutional money sitting on the sidelines. All that being said in a recent podcast Sam Zell said if he was at the Fed he would raise rates by another 3 or 4 percent....

Rest in peace Sam. Always enjoyed listening to him. The Capital Allocators podcast with him was great: http://sites.libsyn.com/94820/sam-zell-common-sense-and-uncommon-profits-capital-allocators-ep253

Very sad news. I just listened to one of his recent podcast appearances as well. Interesting guy.

Do you have a recommendation for small cap ETFs you like? Do you think the typical small cap ETF actually captures the returns of the small cap factor or are they forced to sell the position due to its size too early? I've always wondered why Buffett recommends buying the S&P 500 rather than something like VTI which includes small caps.