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 09/19   The Stingy News Weekly: September 19, 2020 
 09/19   Hitting return targets 
 09/19   Persistent high volatility 
 09/19   CROIC, CFROI, CROCI, and CROCS 
 09/18   There is no size effect 
 09/18   The billionaire who wanted to die broke 
 09/18   Accruals and momentum 
 09/18   Why Buffett bought Japanese stocks 

Most Recent Stingy News

The Stingy News Weekly: September 19, 2020
09/19/20 1:59 PM ESTSNW
This week we have momentum, small stocks, the value island, volatility, and more.
More SNW: The Stingy News Weekly: September 11, 2020
The Stingy News Weekly: September 6, 2020

Hitting return targets
09/19/20 1:57 PM ESTMarkets
"For many decades the expected rate of return was close to that of prevailing interest rates so not only was it a simpler time to be an allocator, but an easier time. That relationship has broken down in recent decades."
More Markets: Persistent high volatility
There is no size effect

Persistent high volatility
09/19/20 1:51 PM ESTMarkets
"A situation has been set up by the functional equivalent of the 'Wizard of Oz' where small changes to interest rates or economic activity will have big impact on stock prices. And so I am telling you, be ready for whippy markets."
More Markets: There is no size effect
Settling the size matter

09/19/20 1:50 PM ESTValue Investing
"Running a Value fund is somewhat like being stranded on a tiny tropical island out in the ocean. You can't really run away and are exposed to the harsh forces of nature. If you're lucky, there might be a coconut tree or big rock providing some shade. But it will still be hot most of the day, regardless of where you're sitting, and often you have to watch out for falling coconuts."
More Value Investing: The value premium in Canadian stocks
2 decades of value with Chris Mittleman

There is no size effect
09/18/20 9:55 PM ESTMarkets
"Adding in lags to account for illiquidity takes the historically weak small firm effect and renders it non-existent."
More Markets: Settling the size matter
The 60/40 Portfolio

The billionaire who wanted to die broke
09/18/20 9:37 PM ESTCharity
"It took decades, but Chuck Feeney, the former billionaire cofounder of retail giant Duty Free Shoppers has finally given all his money away to charity. He has nothing left now - and he couldn't be happier."
More Charity: Secretary donates $8.2 Million
The best ways to give to charity

Accruals and momentum
09/18/20 9:31 PM ESTMomentum
"Summarizing, the evidence demonstrates that investors have been well served to either short or avoid (for long-only investors) high accruals momentum firms."
More Momentum: Market timing with multiples
Momentum and reversals can coexist

Why Buffett bought Japanese stocks
09/18/20 9:25 PM ESTBuffett
"Japan is one of the few value investments available in today's global developed markets. Large caps in the United States have gotten dramatically more expensive compared to Japan in the last 10 years."
More Buffett: When Buffett was a quant
Berkshire Hathaway AGM

The Stingy News Weekly: September 11, 2020
09/11/20 9:53 PM ESTSNW
This week we have failing bonds, the 60/40 downer, seasons, dividends, crowding, and more.
More SNW: The Stingy News Weekly: September 6, 2020
The Stingy News Weekly: August 30, 2020

Government bonds are duds
09/11/20 8:57 PM ESTBonds
"But while the income side of the equation for bonds was clearly not what it once was, until very recently we have continued to assume that bonds could accomplish their other important task, providing capital gains in the event of an economic disaster. This winter, U.S. Treasuries once again did their hedging job admirably, providing substantial positive returns when riskier assets fell in the early stages of the Covid-19 crisis. But that success has come at a cost. At today's yields, U.S. Treasuries not only fail to provide a useful amount of yield to investors but also have likely lost their ability to hedge in the event of further economic trouble."
More Bonds: Moar Income
Surge in defaults

Settling the size matter
09/11/20 8:50 PM ESTMarkets
"We conclude that size is weak as a stand-alone factor but a powerful catalyst for other factors."
More Markets: The 60/40 Portfolio
Drawdowns in wonderful companies

The 60/40 Portfolio
09/11/20 8:40 PM ESTMarkets
"The 10 year treasury yielded 2.2% at the outset of 1940. By the start of 1980 it was up to 10.8%. Today it's roughly 0.7%. The 60/40 portfolio will assuredly have lower returns over the next 40 years than it had over the last 40 years. That's simple math based on starting yields for bonds."
More Markets: Drawdowns in wonderful companies
Crowding in large tech

Drawdowns in wonderful companies
09/11/20 8:23 PM ESTMarkets
"Investors in the greatest companies faced a drawdown of 32.5%, on average, despite being one of the greatest decades of performance ever. That was just the largest drawdown, on average. It says nothing of the second, third, and so on drawdowns during the same decade."
More Markets: Crowding in large tech
Seasonal patterns in the Canadian market

Crowding in large tech
09/11/20 7:59 PM ESTMarkets
"I say to you 'lighten up on your large cap tech positions.' Those who own those positions have short time horizons, and may bolt. There is no way these companies grow into their valuations, so don't think you can hold on for years. This is just a mania, and as such, it will meet its end."
More Markets: Seasonal patterns in the Canadian market
The new normal

Dividend investing success
09/11/20 7:32 PM ESTStingy Investing
"The U.S. market generated annual gains of 11.4 per cent versus 10.2 per cent gains in Canada. It was a good period for stocks. Similarly, the high-yield portfolios outpaced the markets in both countries. The Canadian high-yield portfolio fared particularly well with gains of 14.1 per cent versus 12.4 per cent in the United States." [$]
More Stingy Investing: Falling dividend yields
A nearly two century winning streak

Seasonal patterns in the Canadian market
09/11/20 7:29 PM ESTMarkets
"There is a January effect in Canada and, more importantly for this time of the year, a 'sell in May and go away' effect. In fact, the average annual rate of return over the last 60 years (1957-2018) would have been 17% had investors gone long in the equally weighted index in November-April and gotten out of risky securities altogether in the May-October semi-annual period and, over that period, invested instead heavily (and exclusively) in government of Canada bonds. It would have been 18% in the 1988-2018 sub-period."
More Markets: The new normal
The game of Tesla

Pleasures of sex and berries
09/11/20 7:28 PM ESTScience
"Our ancestors have spent a few hundred years in cities at most. Before that, they spent a million years or more on what was essentially a perpetual camping trip, most of it in Africa. Little wonder then that people are more easily scared of snakes than cars, of deep water than speed, of spiders than guns. We are, to a significant extent, adapted to the environment we evolved in, rather than the one most of us now inhabit."
More Science: The bus ticket theory of genius
Age vs success

The Stingy News Weekly: September 6, 2020
09/06/20 8:52 PM ESTSNW
This week we have Tesla, low returns, saving, indexing, and more.
More SNW: The Stingy News Weekly: August 30, 2020
The Stingy News Weekly: August 22, 2020

The new normal
09/06/20 8:26 PM ESTMarkets
"I think the days of a simple 60/40 allocation or even something fancier like the All Weather Portfolio generating meaningful real returns are probably behind us for at least the next decade."
More Markets: The game of Tesla
Only a trickle

The game of Tesla
09/06/20 7:58 PM ESTMarkets
"This is the Common Knowledge Game in action. It is the power of the crowd watching the crowd. It is the power of - not what you think is true, and not what you think the crowd thinks is true - but of what the crowd thinks the crowd thinks is true."
More Markets: Only a trickle
Distorting the prices of small-cap stocks

Only a trickle
09/06/20 7:20 PM ESTMarkets
"The S&P 500 model is forecasting returns of 2.23%/year over the next 10 years. Even if you compare that to the 10-year Treasury Note yielding 0.66%, that's not enough of a risk premium. We are in the 97th percentile of valuations."
More Markets: Distorting the prices of small-cap stocks
Long-term reversal in equity returns

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