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Article Archive: 2021

The Stingy News Weekly: February 28, 2021
02/28/21   SNW
This week we have Buffett, Munger, Grant, Dickson, and more.

Drew Dickson on European behavioral investing
02/28/21   Markets
"Mr Dickson holds an MBA from the University of Chicago Booth School of Business, where he was a research assistant for behavioural economist Richard Thaler" [video]

Financial bubbles of historic proportions
02/28/21   Markets
"James Grant on bubbles and bitcion" [video]

Time-varying media coverage and stock returns
02/28/21   Media
"This excess return cannot be explained by mainstream risk factors and has an annualized alpha around 12%. Although this excess return is robust among more firms that are out of the scope of news data, it is bound to a short time horizon."

Charlie Munger AGM
02/28/21   Munger
"Charlie Munger, Vice Chairman of Berkshire Hathaway, speaks at the Daily Journal Annual Meeting." [video]

Where things stand in Canadian dividend land
02/28/21   Stingy Investing
"The long-term results dramatically favour the high-yield portfolio, which climbed by an average of 13.5 per cent from the start of 1977 through to the end of 2020. The market portfolio gained an average of 10.1 per cent annually over the same period while the low-yield portfolio fared nearly as well with a 9.8-per-cent annual gain." [$]

Warren Buffett's 2020 letter
02/27/21   Buffett
"In 1958, Phil Fisher wrote a superb book on investing. In it, he analogized running a public company to managing a restaurant. If you are seeking diners, he said, you can attract a clientele and prosper featuring either hamburgers served with a Coke or a French cuisine accompanied by exotic wines. But you must not, Fisher warned,capriciously switch from one to the other: Your message to potential customers must be consistent with what they will find upon entering your premises."

The Stingy News Weekly: February 21, 2021
02/21/21   SNW
This week we have inflation, timing, value, index funds, and more.

Canada should go 1 dose
02/21/21   Health
"The Covid-19 vaccine developed by Pfizer Inc. and BioNTech SE generates robust immunity after one dose and can be stored in ordinary freezers instead of at ultracold temperatures, according to new research and data released by the companies."

UK value is extremely promising
02/20/21   Value Investing
"While we still like our last named trade of the decade, emerging markets value stocks, the UK equity market, and UK value stocks in particular, are now even cheaper."

Dangerously timeful
02/20/21   Behaviour
"Accidentally adhering to timeful advice is outsourcing a certain part of your life strategy to recent history. But when you outsource decisions that change your life trajectory, do you want to bet the house on the wisdom of yesteryear?"

How to buy a business
02/20/21   Markets
"Most small companies are complete disasters that are held together with bailing wire and duct tape by the owner who works 60-80 hour weeks and knows the business inside-out. If it looks too good to be true, it probably is. Find the catch."

Inflation beating asset classes
02/20/21   Markets
"Some asset classes, such as equities, which many believe to be good at hedging inflation, actually provide poor inflation hedging characteristics but strong returns above inflation over the longer term" [large]

One-click portfolios
02/20/21   Indexing
"I mention all of this to provide some context for a discussion of TD's new trio of One-Click ETF Portfolios. Like other asset allocation ETFs, they offer investors an opportunity to build a globally diversified portfolio at low cost (the management fee is 0.25%) with a single product. But a close look reveals they're far more active than their counterparts from Vanguard, iShares and BMO."

The Stingy News Weekly: February 14, 2021
02/14/21   SNW
This week we have Buffett, Watsa, Chou, emerging markets, inflation, crashes, and more.

A short history of U.S. corrections
02/14/21   Markets
"The longest the stock market has gone without a double-digit correction since 1950 is 7 years from 1990-1997. Then from 2002-2007 there was a four-and-half-year drought with no corrections. This may surprise some people, but the third-longest streak of no market corrections over the past 70 years or so was the four years from late 2011 through late-2015."

The defining trait of bubbles
02/14/21   Markets
Figuring out the greatest bubble in history is like asking someone who their favorite child is. I go back and forth between the South Sea Bubble and 1980s Japan."

The great forgetting
02/14/21   World
"Perhaps the most firmly established proposition in late 20th century macroeconomics is that the Great Inflation of 1966-81 was caused by central banks printing too much money. If that proposition is wrong, then I might just as well give up. Everything else I believe about macro hinges on that being true. If the Great Inflation wasn't caused by too much money, then what can macroeconomics tell us about the world?"

Emerging markets crisis investing
02/14/21   World
"Verdadcap's 55-page study of emerging market crises." [Book]

Variable percentage withdrawal critique
02/14/21   Retirement
"The main assumptions behind the VPW tables are that you'll live to 100, stocks will beat inflation by 5%, and bonds will beat inflation by 1.9%. These figures are average global returns from 1900 to 2018 taken from the 2019 Credit Suisse Global Investment Returns Yearbook."

Undercover surveillance by insurers
02/14/21   Health
"Both public and private insurers say they use this kind of surveillance to try to prove fraud. But lawyer John McKinnon from the Injured Workers Community Legal Clinic, says it's more often used to intimidate injured people into dropping their claims or dissuading others from making claims at all."

Good news on vitamin D
02/14/21   Health
"Calcifediol treatment at the time of hospitalization significantly reduced ICU admission and mortality." [video]

Chou follows Buffett and Watsa
02/08/21   Stingy Investing
"I wish Mr. Chou well on his new venture and hope it proves to be a great success, much like Fairfax Financial or Berkshire Hathaway. But I admit that I'm not a disinterested observer. I own a stake in all three value-oriented companies. With a little luck they'll float higher over the long term." [$]

The Stingy News Weekly: February 7, 2021
02/07/21   SNW
This week we have bubbles, shorts, the wall of money, and more.

Grantham and the next crash
02/07/21   Markets
"Jeremy Grantham, co-founder and chief investment strategist of Boston's GMO, believes U.S. stocks have become an epic bubble and will burst in a collapse rivaling the crashes of 1929 and 2000." [video]

And it's gone
02/06/21   Brokers
"Tesluk, Chang and others lost their money and the benefits that flow from RESPs to a company securities regulators have repeatedly censured but continue to allow to do business."

Shorting stocks
02/06/21   Markets
"The margin calls kept coming. So did sleepless nights. There was no internet at the time and I had to wake up every weeknight at 2 a.m. to run to the store to get the newspaper to see whether there was any news on the deal. Not only did I have financial difficulties, but also my wife started to wonder why I kept running out of our apartment in the wee hours."

Unfortunate investing traits
02/06/21   Markets
"To make money they didn't have and didn't need, they risked what they did have and did need. And that's foolish. It is just plain foolish. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense."

There is no wall of money
02/06/21   Markets
"Prices matter. Buy low, sell high. But don't attribute anything to the 'wall of money.' It is a bogus concept, and should be ignored. The biggest changes in prices happen when the market is closed, and trading is limited."

The Stingy News Weekly: January 30, 2021
01/30/21   SNW
This week we have bubbles, net-nets, book value, diversification, and more.

Book value bargains in the TSX
01/30/21   Stingy Investing
"A portfolio of large stocks with the lowest 30 per cent of P/Bs gained an average of 12.9 per cent annually from the end of June, 1926, to the end of November, 2020. By way of comparison, the U.S. market gained an average of 10 per cent annually over the same period. Unfortunately, the low-P/B value portfolio disappointed in recent years. It gained just 9.4 per cent annually over the 10 years through to the end of November, 2020, while the market advanced by 14.6 per cent annually."

Net-net review
01/30/21   Graham
"We therefore conclude that when viewed from the perspective of a practitioner, the empirical evidence analysed is insufficient to support the view that investing in securities trading below their NCAV provides a reliable source of material outperformance."

Diversification is not dead
01/30/21   Arnott
"Extrapolating the recent superior performance of the 60/40 mix into the future requires the dangerous assumption that US stock market valuations will march to nearly unprecedented levels."

Volkswagen 10 years later
01/30/21   Markets
"Then, over the weekend, Porsche SE dropped a bomb. They issued a press release stating that they had control (via option and swap positions) of an additional 31.5% of the company through option positions, in addition to the 42.6% they already held. This got them to approximately 75%, which not only effectively meant they had a domination agreement (aka they owned VW), but that given the 20% stake already held by the state of Lower Saxony and more by other long-term shareholders, there basically was no float left for the most heavily shorted company in the world."

The GameStop revolution
01/30/21   Markets
"Individual traders banded together this past week to move markets like never before. But the buildup to this remarkable moment has been happening for decades."

Fairfax's stealth rally
01/30/21   Watsa
"I'm long shares for more than just the recent investment performance. Fairfax has been steadily improving its insurance operations and this is far more important to the investment thesis long term. But I wouldn't be surprised if the narrative on Fairfax's investment side becomes much more positive and quickly, pushing shares higher."

The grocery store puzzle
01/30/21   Markets
"If most e-commerce companies have been pulled 1-3 years into the future in terms of their revenue, then the e-commerce businesses of most category leading brick and mortar retailers have been pulled 5-10 years into the future"

The Stingy News Weekly: January 24, 2021
01/24/21   SNW
This week we have bubbles, quality, growth, well-being, and more.

Investing in a bubble
01/24/21   Markets
"This ratio of growth to value valuations has already reached 1999 levels and is trending towards dot-com bubble levels. While this is not a definitive sign that we are in a bubble that is about to burst, it is yet another in a growing number of red flags. And while we believe value will prevail in the full sweep of history, those who want to participate in the bubble.s upside might want to consider implementing trend-following rules that might help cushion the fall if the large-cap technology market turns."

Quality, where art thou
01/24/21   Markets
"Unfortunately, neither quality nor quality income ETFs had significantly lower maximum drawdowns during the global financial crisis of 2009 or the more recent COVID-19 crisis of 2020, which resulted in lower risk-adjusted returns compared to the S&P 500. In contrast, the portfolio comprised of highly profitable stocks achieved meaningful reductions in drawdowns in both crisis periods."

Growth can go out of style
01/24/21   Markets
"Amazon's stock fell from a peak of $113 to a low of $5.51. That means that from the peak, it got cut in half, then it got cut in half again, and then it got cut in half a third time, and then, you guessed it, it got cut in half again. And then it lost another 22% for good measure. So the next time you see somebody say, 'If you invested $10,000 at Amazon's IPO,' you can safely dismiss the second part of their statement."

Randomized control trials and the minimum wage
01/24/21   Economics
"There are four main results: '(1) the wages of hired workers increases, (2) at a sufficiently high minimum wage, the probability of hiring goes down, (3) hours-worked decreases at much lower levels of the minimum wage, and (4) the size of the reductions in hours-worked can be parsimoniously explained in part by the substantial substitution of higher productivity workers for lower productivity workers.'"

Another alpha bites the dust
01/24/21   Markets
"One of the claims of active fund managers is that the rise of indexing and passive investing in general would make the markets less informationally efficient. It would also create more opportunities for exploiting index funds that focus on minimizing tracking error.they are forced to trade, and, thus, likely to take a loss when rebalancing occurs. If that were the case, the rise in passive investing would have led to an increase in the Index Effect. Yet, the exact opposite has occurred."

Well-being rises with income
01/24/21   Behvaiour
"Past research has found that experienced well-being does not increase above incomes of $75,000/y. This finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience (retrospective, dichotomous reports). Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people's day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries."

Asset Mixer Update
01/20/21   Stingy Investing
We've updated our Asset Mixer to include real data for 2020.

Periodic Table Update
01/20/21   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include real data for 2020.

The Stingy News Weekly: January 17, 2021
01/17/21   SNW
This week we have growth, valuations, diversification, styles, willpower, and more.

Stagnating growth
01/17/21   World
"Recently released Census Bureau population estimates show that from July 1, 2019 to July 1, 2020, the nation grew by just 0.35%. This is the lowest annual growth rate since at least 1900."

High stock valuations are fine
01/17/21   Markets
"Let me restate that: most of the excess returns from the best performing stock periods have come from valuations going from really low back to average or above."

Just take the money
01/17/21   Behaviour
"So, from a happiness perspective, the best thing you could do is put some base level of wealth into a diversified portfolio and have the excess be concentrated in riskier assets."

Morningstar's influence on style returns
01/16/21   Markets
"But with the introduction of the style box, Morningstar at least managed to reduce the amount of flows chasing past performance. And this apparently also influenced style returns. If investors put a lot of funds to work in funds that had strong performance in the past, they create a herding effect that perpetuates the price momentum of past winners."

You can't deplete your willpower
01/16/21   Behaviour
"while the early ego-depletion concepts appear to be flawed, experts say that self-control can wax or wane for a number of predictable reasons. Understanding when and how this happens may help people avoid the kind of willpower failures that torpedo their aspirations."

The Stingy News Weekly: January 10, 2021
01/10/21   SNW
This week we have shareholder yield, bubbles, tax tips, dividends, and more.

The value recovery
01/10/21   Stingy Investing
"The economic turmoil of the past year caused many companies to pause their share repurchase programs to conserve cash. But those with the ability, and guts, to continue buying their shares in hard times deserve a second look from investors because such firms have generally fared well over the long term." [$]

Waiting for the last dance
01/10/21   Markets
"The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000."

Dividends power the wealth effect
01/10/21   Dividends
"if politicians sought to exploit the wealth effect the data would suggest that they encourage firms to increase their dividend distributions as much as possible."

Rookie CEOs outperform
01/10/21   Management
"In a study of 855 S&P 500 CEOs appointed over a 20-year period, the researchers found that those with experience in the role consistently underperformed their novice counterparts over the medium to long term. First-timers led their companies to higher market-adjusted total shareholder returns, with less volatility in the stock price. Among CEOs who headed two successive companies, 70% performed better the first time - and for more than 60%, their second companies failed to keep pace with the overall stock market."

Children can't live here anymore
01/10/21   World
"The consistent policy of the US since the 1930s is to make life harder for successive generations. The unique and unusual growth post-WWII hid that, but declining growth is laying that bare now. Social Security was a very sweet deal then for old folks that has become a very sour deal now for young folks. Defined benefits plans are a thing of the past, replaced by modest encouragements to personal savings using defined contribution plans. And now we see the same in monetary policy, where suppressed interest rates relatively favor those who are older. And, increased indebtedness slows future GDP growth."

Capital gains planning to save tax
01/10/21   Taxes
"There's a difference between good tax planning, and tax evasion. Claiming your parrot as a dependant won't work, unfortunately. The good news? There are some legitimate planning ideas you might want to consider in the short term. Today, I want to talk about capital gains."

The Stingy News Weekly: January 3, 2021
01/03/21   SNW
Happy New Year!

A gut punch
01/03/21   Momentum
"If, still an if, as we hope and expect, value continues to perform well over the next 6+ months, we should see the drag from the other factors greatly lessen and the net, we believe, turn sharply positive."

CPP premiums go up
01/03/21   Taxes
"For next year, the earnings ceiling, known as the yearly maximum pensionable earnings or YMPE, was supposed to be $60,200, an increase of $1,500 from the 2020 limit. But the actual amount is going to be higher at $61,600."

2020's lessons on risk tolerance
01/03/21   Stingy Investing
"The problem is, it's easy for investors to overestimate their tolerance for risk in good times, only to wish they'd been more conservative when losses loom large during a market crash. Similarly, after the markets rebound, they might wish they had been more aggressive in bad times." [$]

Asset Mixer Update
01/01/21   Stingy Investing
We've updated our Asset Mixer to include nominal data for 2020.

Periodic Table Update
01/01/21   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include nominal data for 2020.

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Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...