The current economic recovery is the third longest in history, and if it goes on another year, it will be the longest in history — there’s nothing to say it can’t [keep rising],” said Marks, founder and co-chairman of Oaktree, the largest investor in distressed assets in the world. “There are no laws of nature or physics at work here. So there’s nothing to say it can’t go on another year, another two years, another three years. Anything’s possible.
No economic recovery has lasted more than 120 months, or 10 years. The U.S. recovery is in its ninth year. While there is no apparent reason why the recovery couldn’t hit a new record, Marks said it might be one of those historical limits that could stick.
When there’s too much money, when there’s too little risk aversion, when there’s too little fear, too much eagerness, etc. — that’s how you get excesses to the upside that have to be corrected to the downside.
The “supreme irony” of the shift to passive is that the actions of active managers do determine the weightings of the stocks listed in an index in the first place, Marks said. “There’s a trend [toward] passive investment on the premise that the active investors don’t really know what they’re talking about. And yet the [modus operandi] of the passive investor is to emulate the decisions made by the active investors who they think are idiots. It doesn’t make any sense. That’s what passive is doing today and we have to wonder about the wisdom of passive investing.
Read the full article here - http://knowledge.wharton.upenn.edu/article/104717/
Contrary to what Mark Zuckerberg mentioned, the benefits of GDPR regulations are not being made available to people all over the world. Facebook intends to change its terms of service to put all non-European users under the jurisdiction of its U.S. headquarters rather than the international headquarters in Dublin, Ireland. That means users in Africa, Asia, Australasia, and Latin America won’t be covered by the European Union’s General Data Protection Directive, which goes into effect on May 25.
Under the GDPR, companies can be fined up to 4 percent of their annual global revenue for not having sufficient customer consent to process data or ignoring the “privacy by design” principle that states customers’ privacy rights must be handled as a core feature of the product, not an afterthought. In Facebook’s case, that’s $1.6 billion based on 2017 revenue. It’s natural for the company to try to limit its exposure to that kind of punishment, but it undermines its narrative of contrition and a commitment to privacy.
Read the full article here - https://www.bloomberg.com/view/articles/2018-04-19/facebook-fears-the-eu-new-privacy-rules
A tidal wave of retirement dollars flooded the mutual fund industry . The 401 ( k ) was invented in 1981 , just as the bull market began . By 1998 , roughly three of every four new dollars invested in corporate retirement plans were going into 401 ( k ) s . At the end of the decade , two - thirds of all active workers covered by a retirement plan were responsible for directing their own investments . Hands down , they chose stocks . By the end of the millennium, 401(k) investors had stashed 75 percent of their assets in equities. Even older employees preferred stocks: in 2000, 401(k) investors in their 50s had entrusted 49 percent of their savings to equity funds, another 19 percent to company stock.
Mahar, Maggie. Bull!: A History of the Boom and Bust, 1982-2004 (p. 23) - understanding if the impact of retail money through SIPs and pension funds coming into the Indian markets could mimic the US in the 80s, which then went on to have a 20-year bull cycle.
Wonderful commentary by Prof. Bakshi on how to assess a company’s Durable Competitive Advantage (“Moat”).
Our own @basumallick
IIMB research Articles on Small Finance banks .
My second article “Stock Market: Play by the Rules!” was published in Carolina based Saathee magazine April edition.
This article explains difference between Stock Market and a Casino, and how one can lose their shirt if one tries to mix them. It also covers how one can play by the rules to succeed in the stock market.
This may be very simple and “nothing new” article for many of you in this forum, but my main goal is to spread awareness among small retail investors about power of compounding and equities as an asset-class through which serious wealth can be generated over a long period of time. So please feel free to share it with anyone who can benefit from it.
Amit Rupani, CFA
Good information. Business is cyclical and it depends on which floor you take the lift and when you decide get out if you sit on the lift at peak when the lift starts going down you will bust your guts out. Fundamentally businesses are supposed to do better than inflation and generate profit on top to grow. The theme of long term is relevant if the businesses survive and keep thriving(I guess that is moat) … with the technology wave lot of business may become irrelevant in next 30 years so to believe all the composition of sensex companies is still going to CAGR 15% is being really hopeful. But some will do CAGR 30%… some 20% most will do 5 to 10%. Many of the companies will become irrelevant to time. If you are into investing for 30 years you have to wear the future ball gazing glasses
@s11 100% agreed with you re: point of getting in and out of elevator matters to performance, especially, when we are talking about peaks and troughs of 2000-01 and 2008. However, no one can foresee such events and hence “time-in-the-market” is more important than “timing the market”.
I write keeping small retail investors in mind, who have no clue or are afraid of equities as an asset class. My goal through Saathee magazine is to reach such small retail investors and help them in creating the right mindset and approach to equities investing. If an investor has long-term investment horizon, I believe no other asset class can create wealth that will be created by equities.
As all of us know, BSE index is a free-float market-weighted index of 30 well-established and best businesses of India. Aren’t laggard (irrelevant in your term) businesses replaced with better and new businesses ensuring that 30 best businesses are always part of the index. So why will one have to wear the future ball gazing glasses, if the folks responsible for index construction are doing a fine job with keeping best 30 businesses in index all the time.
My belief is that India story has just started and has a huge run-way for many decades to come. Only time will tell what return would index provide, but I think equities would still be a leading asset class as far as performance is concerned. Even if equities index provide 12% CAGR return (including dividends) for next 30 years - a small retail investor would still be better off vs say 9% CAGR return through money in FD/Bonds/Real Estate/Gold/etc.
Disc: 100% of personal portfolio allocated to Equities barring the house that I live in.
Investment is a game of patience, wisdom, knowledge and luck. Getting that mindset in retails investor is a difficult task…You are doing a good job inculcating investment behavior in them. To understanding value of compounding when market is on the upswing is very easy but when it falls the same compounding goes for a toss …but yes long term 10 to 15 % should be the target with averaging up or down as the market flows.
Rightly said @ayushmit
Good read on trump drug price lowering programme
investing in nutshell great insight
Crisil Risk Analysis
Here is my article and video link of my presentation on “TechnoFunda Investing Strategies”
Another article by our own Basumallick.
How to Get Rich (without getting lucky) by @naval:
- Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
- Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
- Ignore people playing status games. They gain status by attacking people playing wealth creation games.
- You’re not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom.
- You will get rich by giving society what it wants but does not yet know how to get. At scale.
- Pick an industry where you can play long term games with long term people.
- The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
- Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
- Pick business partners with high intelligence, energy, and, above all, integrity.
- Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
- Learn to sell. Learn to build. If you can do both, you will be unstoppable.
- Arm yourself with specific knowledge, accountability, and leverage.
- Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
- Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
- Building specific knowledge will feel like play to you but will look like work to others.
- When specific knowledge is taught, it’s through apprenticeships, not schools.
- Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
- Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
- The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
- “Give me a lever long enough, and a place to stand, and I will move the earth.” - Archimedes
- Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
- Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
- Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
- Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
- Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
- An army of robots is freely available - it’s just packed in data centers for heat and space efficiency. Use it.
- If you can’t code, write books and blogs, record videos and podcasts.
- Leverage is a force multiplier for your judgement
- Judgement requires experience, but can be built faster by learning foundational skills.
- There is no skill called “business.” Avoid business magazines and business classes.
- Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
- Reading is faster than listening. Doing is faster than watching.
- You should be too busy to “do coffee," while still keeping an uncluttered calendar.
- Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
- Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
- Become the best in the world at what you do. Keep redefining what you do until this is true.
- There are no get rich quick schemes. That’s just someone else getting rich off you.
- Apply specific knowledge, with leverage, and eventually you will get what you deserve.
- When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.