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 09/19   The Stingy News Weekly: September 19, 2021 
 09/19   ETF taxation in the crosshairs 
 09/19   Amazon and inflation 
 09/19   Betting big and losing it all 
 09/19   Value vs. growth debate 
 09/19   Portfolios in crashes 
 09/12   The Stingy News Weekly: September 12, 2021 
 09/12   Rational at night, irrational at day 

Most Recent Stingy News

The Stingy News Weekly: September 19, 2021
09/19/21 9:34 PM ESTSNW
This week we have value vs. growth, big bets, taxes, inflation, crashes, and more.
More SNW: The Stingy News Weekly: September 12, 2021
The Stingy News Weekly: September 5, 2021

ETF taxation in the crosshairs
09/19/21 5:19 PM ESTTaxes
"The real damage will be done to anyone who's had the temerity to do a little investing outside their 401(k). ETFs have been an incredible boon for smaller investors, giving them access to the same funds, the same fees, and the same tax advantages wealthy investors have so many other ways to access."
More Taxes: A wealth tax will disappoint
Capital gains planning to save tax

Amazon and inflation
09/19/21 4:51 PM ESTMarkets
"Labor productivity among nonstore retailers rose about 20% from 2019 to 2020, which is more than twice the 8% rate of labor-productivity growth experienced by the retail industry as a whole."
More Markets: Portfolios in crashes
Rational at night, irrational at day

Betting big and losing it all
09/19/21 4:58 PM ESTBehaviour
"So many of the people we celebrate today for being geniuses are the result of some combination of hard work, intelligence, luck and survivorship bias."
More Behaviour: Fake honesty
Forms of wealth

Value vs. growth debate
09/19/21 3:33 PM ESTValue Investing
"The opposing view, that a group of stocks whose underperformance is more than explained by their falling relative valuations is actually cheap, seems a far less extraordinary claim. In order for it to be true, we merely need to believe that the future prospects of value stocks are not drastically worse than they have been in either the long term or the relatively recent past."
More Value Investing: Are value stocks cheap for a reason?
The international test

Portfolios in crashes
09/19/21 3:29 PM ESTMarkets
"based on their liquidity requirements, most large institutional investors have no alternative but to adopt cap-weighted strategies. Investing billions in small caps or emerging markets is more expensive than trading large-cap US stocks. Equal-weighting may offer higher returns for equity investors over the long run, but the majority of capital may not be able to access them."
More Markets: Rational at night, irrational at day
Inflation portfolio using asset classes

The Stingy News Weekly: September 12, 2021
09/12/21 9:40 PM ESTSNW
This week we have Graham, value by day, bargains, rules, and more.
More SNW: The Stingy News Weekly: September 5, 2021
The Stingy News Weekly: August 29, 2021

Rational at night, irrational at day
09/12/21 8:32 PM ESTMarkets
"Meanwhile, all the different deviations from the rational model of CAPM appear during the day. Size, value, quality, and investment factors all have very high returns during the day when humans mess up all the nice rational models economists have developed. At night, these factors tend to lose a bit mostly because the stocks that have underperformed during the day catch up some performance based on the overnight news. But the nighttime setbacks aren't strong enough to eliminate factor returns."
More Markets: Inflation portfolio using asset classes
Small stocks pricier than they appear

Buying cheap assets
09/12/21 8:25 PM ESTWorld
"Robert Arnott will discuss why he believes this long era of U.S. large-cap growth dominance could be coming to an end and what could take its place." [video]
More World: Turning Japanese
In defense of global stocks

Negative value-add
09/12/21 8:20 PM ESTFunds
"Low-fee funds tend to have positive net value-added while high-fee funds have negative net value-added, suggesting, again, a systematic relation between net value added and percentage fees. However, in aggregate, the total net value added for the 'All funds (Index + Mutual)' sample amounts to a negative $125 billion USD. This number can be interpreted as a measure of the total economic value added or lost by the mutual fund industry for its investors."
More Funds: Avoid 'breaking the buck'
Deferred sales charges banned

Ben Graham as a quant
09/12/21 8:08 PM ESTGraham
"Imagine - there seems to be practically a foolproof way of getting good results out of common stock investment with a minimum of work. It seems too good to be true. But all I can tell you after 60 years of experience, it seems to stand up under any of the tests I could make up."
More Graham: Net-net review
Lessons from Benjamin Graham

Rule your world
09/12/21 7:59 PM ESTRetirement
"I'm still wary of rules of thumb, but Gigerenzer makes a useful point. It's good to be analytical where appropriate. But sometimes, employing a rule of thumb might be better. Below, for example, are five questions that might be better answered with a rule of thumb than a spreadsheet"
More Retirement: Not a law of nature
Ask the question

The Stingy News Weekly: September 5, 2021
09/05/21 6:20 PM ESTSNW
This week we have the value of value, generational wealth, housing, inflation, and more.
More SNW: The Stingy News Weekly: August 29, 2021
The Stingy News Weekly: August 22, 2021

The wealthiest generation
09/05/21 4:24 PM ESTEconomics
"In this version, Gen X is now richer (30% richer!) than Boomers were at the same age (late 40s). Millennials don't yet have a year of overlap with Boomers, but they are tracking Gen X almost exactly. There is no reason they won't continue to track Gen X, and therefore exceed Boomers as well when they are in their late 40s"
More Economics: Why we don't marry
Defining inequality so it can't be fixed

Future housing returns are stark
09/05/21 4:06 PM ESTReal Estate
"I wouldn't have the success of my financial plan be wholly dependent on further prices increases on residential real estate. Speculating on prices increases in real estate is fine - so long as if the amount at stake isn't material to the success of your financial plan."
More Real Estate: Death of the starter home
Hyper zip code inflation

Death of the starter home
09/05/21 4:04 PM ESTReal Estate
"If we take this to the extreme - the monthly payment for a $1,000,000 home is now $520 lower than the monthly payment for a $750,000 home in 2002. Add in fewer homes being built, a touch of inflation, scarred homebuilders, HGTV messing with our expectations and it's no wonder new home sales prices have risen over the past 20 years."
More Real Estate: Hyper zip code inflation
Canadian home prices a deal vs US bubble

Conspicuous corruption
09/05/21 3:32 PM ESTCrime
"People can exhibit their status by the consumption of particular goods or experiential purchases; this is known as 'conspicuous consumption'; the practice is widespread and explains the market characteristics of a whole class of goods, Veblen goods, demand for which increase in tandem with their price. The value of such positional goods lies in their distribution among the population - the rarer they are, the more desirable they become. At the same time, higher income, often associated with higher status, has been studied in its relation to unethical behavior. Here we present research that shows how a particular Veblen good, illicit behavior, and wealth, combine to produce the display of illegality as a status symbol. We gathered evidence at a large, country-level, scale of a particular form of consumption of an illictly acquired good for status purposes. We show that in Greece, a developed middle-income country, where authorities cannot issue custom vanity license plates, people acquire distinguishing plate numbers that act as vanity plate surrogates. We found that such license plates are more common in cars with bigger engines and in luxury brands, and are therefore associated with higher value vehicles. This cannot be explained under the lawful procedures for allocating license plates and must therefore be the result of illegal activities, such as graft. This suggests a pattern of 'conspicuous corruption', where individuals break the law and use their gains as status symbols, knowing that the symbols hint at rule-breaking, as long as the unlawful practice cannot be incontestably established."
More Crime: A famous con man
My worst investment

Avoid 'breaking the buck'
09/05/21 3:27 PM ESTFunds
"Why penalize those who exit in a crisis? They are causing the crisis. Liquidity is not a free good, and certainly not in a crisis. This will make them think twice about liquidating, because they will absorb a disproportionate amount of the loss."
More Funds: Deferred sales charges banned
Hedge fund performance fees

Inflation portfolio using asset classes
09/05/21 3:18 PM ESTMarkets
"Finally, we calculate the correlation of the portfolio to inflation. Although the asset classes were selected based on their correlation to inflation, the average correlation to inflation was only 0.4 during the period from 2006 to 2021. Investors might regard this as low, but the correlation of TIPS, which are popular inflation instruments, was approximately 0."
More Markets: Small stocks pricier than they appear
Touching the sky

Are value stocks cheap for a reason?
09/05/21 2:51 PM ESTValue Investing
"The value spread remains unusually high, which has led investors to be concerned that value may be cheap for a reason. In this short presentation, our Portfolio Solutions Group (PSG) explains how we evaluate this spread and illustrates our view that the current high value spread is forecasting higher expected returns, and not low fundamental growth rates."
More Value Investing: The international test
Factors in fixed income

What we know about waning immunity
09/03/21 4:26 PM ESTHealth
"Right now, some forms of vaccine effectiveness are slipping, but the most important ones aren't. Unless that changes, widespread boosters in already vaccinated countries are likely to provide diminishing returns, like topping off a drink that's already on the verge of spilling over."
More Health: How the virus spreads
Against alcohol

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