What are your Investment Rules?

[kiora]

From the UK

"Private Equity is eyeing up your pension fund, is there reason to be nervous?

https://championsukplc.com/insights/...-to-be-nervous

"target long term is to make sure around 5% of its portfolio invested in private equity."
" US public pension funds generated more than 12% annualised return from their private equity investments, net of fees, between 2010 and 2020."
"Hypothetically, there are advantages for everyone if UK pension schemes begin to invest in private markets and private equity. Pension schemes could potentially benefit from better returns, and the value creation generated could provide the UK economy and entrepreneurial industries with a lift. The only perceived downside is the slightly higher risk involved in a private equity investment."
https://championsukplc.com/insights/...-to-be-nervous

[kiora]

"https://finance.yahoo.com/news/americans-just-harder-europeans-says-104346801.html"
"‘Americans just work harder’ than Europeans, says CEO of Norway’s $1.6 trillion oil fund, because they have a higher ‘general level of ambition’"

But are they more productive?

"Norway's 'trillion-dollar-man' believes America's attitude towards failure is helping propel the nation ahead of its European counterparts—where workers may have a better work-life balance but aren't as ambitious."
"America's performance, particularly in innovation and performance, is "worrisome" in contrast to Europe, Tangen told the Financial Times.

Part of comes down to mindset, Tangen added, and how accepting each continent is of mistakes and risk: "You go bust in America, you get another chance. In Europe, you’re dead,” he said.

But it goes deeper than that—there's a difference in the "general level of ambition," he added. "We are not very ambitious. I should be careful about talking about work-life balance, but the Americans just work harder,” Tangen continued."
"The longest working weeks recorded were in Greece—41 hours a week"
That is amazing ! ?
" U.S. was 38 hours a week. However, of those employees 13% worked 49 hours or more per week, which outstripped the majority of European nations."
"CEOs who earn more than, say, $20 million a year, are “enriching themselves on our behalf.”"
"the world's largest single owner of global stock markets, controlling 1.5% of shares in the world's listed companies."
"We just invest in America in great companies for the long term. It won’t have any implications for how we allocate our capital. We have nearly half the assets in America, we will stay invested in America.”
"Investments into the U.S. now represent 46.9% of Norges Bank's investment, where a decade ago the U.S. represented just under 30% of its portfolio. Going back a further 10 years, in 2003 the organization's investment in America made up just 26.3% of all investments"
"There is, of course, a common thread between all the Magnificent 7 businesses—and it's the current favorite phrase of Wall Street: artificial intelligence.
Again, this is an area Tangen said Europe was making life difficult for itself. Tech CEOs are frustrated, he said, by the amount of red tape in Europe compared to the U.S."
"“I’m not saying it’s good but in America you have a lot of AI and no regulation, in Europe you have no AI and a lot of regulation. It’s interesting,” Tangen added."

[kiora]

"Here's 1 big investing mistake you are probably still making"
https://finance.yahoo.com/news/heres...003020722.html

"When you don't even realize your money decisions are keeping you from unlocking greater wealth, you in effect have the "oh sh*t" moment that Yahoo Finance's Akiko Fujita and yours truly had at the Milken Institute conference this week after chatting with Nuveen chief investment officer Saira Malik."
"In effect, we are part of the crowd making one of the biggest investing mistakes Mailik continues to see as she travels the world to communicate with investors.

"Cash on the sidelines [is one of the biggest mistakes], Malik said. "Studies have shown that when you market time, you lose money relative to if you just stayed invested. This started last year as everyone expected a recession to come. They are holding their cash and 5% returns.""
"you're losing relative money. So I really recommend staying invested.""
"Malik unsurprisingly suggests investing in stocks.

She likes defensive stocks that peddle infrastructure. Apple and Amazon could also be viewed as defensive plays, given their strong fundamentals, Malik says.

One other investing mistake to avoid while I have you: going all in on the Mag Seven such as Tesla (TSLA) and Microsoft (MSFT). Top names in finance, like Apollo's (APO) Marc Rowan (Disclosure: Yahoo Finance is owned by Apollo Global Management) and Avenue Capital Management's Marc Lasry, struck a cautious note on the Mag Seven trade in interviews with us at Milken."

[kiora]

"Big banks complete climate analysis for Fed while Powell tries to avoid becoming climate policymaker"
So why RBNZ?
The head count at RBNZ has increased dramatically?
https://www.interest.co.nz/banking/1...years-it-takes
https://en.wikipedia.org/wiki/Reserv...of_New_Zealand
"More Spin Doctors, Fewer Economics Staff At RBNZ"
https://www.scoop.co.nz/stories/PA22...ff-at-rbnz.htm
https://twitter.com/JeneeTibshraeny/...01581606236210
And now 750?

https://finance.yahoo.com/news/big-b...202001519.html

"JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS) found that 20%-50% of their commercial and residential real estate loans in the Northeast would be impacted by the most severe climate shock— defined as having no insurance coverage for a once-in-200-year event.

The impact would be a change in the estimated probability of default on those loans.

The banks were tasked with determining how heat waves, wildfires, higher average temperatures, a hurricane in the Northeast, and another hazard of their choosing would affect their loan portfolios."
"But they had a difficult time modeling climate risks to assess the impact on those portfolios, noting significant challenges gathering data and measuring climate-related risks.

The goal was for the Fed to better understand banks' risk-management approaches to this issue so it can manage the risks climate poses to the wider financial system.

The climate analysis was exploratory and did not come with any penalties for banks, unlike a separate annual stress test run by the Fed designed to determine whether banks can withstand severe economic shocks.

Yet the test itself created new political complications for the central bank and Chairman Jay Powell, who has gone out of his way in public speeches to make it clear the Fed would avoid making climate policy.

"Policies to address climate change are the business of elected officials and those agencies that they have charged with this responsibility," he said during a speech last month at Stanford University. "The Fed has received no such charge.""
""We are not, nor do we seek to be, climate policymakers," he said during his speech, pledging to avoid "mission creep."

That hasn’t stopped lawmakers and other policymakers from criticizing Powell on this subject.

His remarks on climate came roughly two weeks after Senators Elizabeth Warren and Sheldon Whitehouse sent a letter to Powell arguing the Fed’s high interest rates were delaying clean energy developments.

Sen. Whitehouse told Yahoo Finance last month that other central banks around the world closely consider climate change because "if left unchecked climate change will pose 'systemic risks' to our financial system and the broader economy."

And Republicans have also repeatedly come down on Powell for considering rules that would test banks' ability to withstand climate-related scenarios, arguing it falls out of the scope of the Fed's authority.

Not everyone within the Fed agrees with the approach, either.

Last May, Fed Governor Chris Waller said he doesn’t believe climate change poses a serious risk to the US financial system even as the central bank tested the resilience of banks under different climate scenarios."

[kiora]

"Competition, oddities and RBNZ's conspicuous no-show"
"Jenny Ruth's Just the Business"

https://substack.com/@justthebusines...m_medium=email


"The Reserve Bank was conspicuous by its absence at the first day of the Commerce Commission's conference on competition in personal banking services.

That's even though the subjects for discussion included the impact of RBNZ's prudential regulation on competition and concerns about the impact of the deposit insurance scheme once it comes into effect.

The importance the major banks place on the commission's study of banking competition was highlighted by the fact that all four chief executives of the four major banks were present at the conference.

That made RBNZ's absence all the more conspicuous.

Of course, RBNZ had already published its reaction to ComCom's draft report, basically rejecting everything ComCom had to say about the regulatory barriers to competition.

That could be, and has been, characterised as RBNZ's contempt for the commission's inquiry..."

[kiora]

"Going to the Berkshire Hathaway annual shareholders' meeting
Guest column by Alan Clarke"
https://justthebusinessjennyruth.sub...athaway-annual

Will BH ever be the same again?
RIP Charlie Munger

"Interfering directors

That's a regular fault of NZ boards where independent directors become five minute experts and climb into the management of their operations."

"Boring as bat****

Most AGM’s are as boring as bat****, but BH meetings are simply amazing and then spill over to take over malls and shops in Omaha over a weekend.

The most remarkable thing about this is the meeting is run and presented by two people, Warren and Charlie.

They sit at a table in the front of the the assembled shareholders and discuss investment philosophy, fair taxation, international trends in innovation, and their wisdom on where the world is going.

The even more incredible thing is they run the show, just sitting talking with no power point presentation, drinking coke and eating candy, and keeping their audience riveted.
Both were in their late 90’s until Charlie died a few months ago just shy of his 100th birthday.
The media is full of Charlie and Warren's wisdom, anecdotes and philosophies and they captured their shareholders' imagination and excitement about who they were and where they were going.

They were story tellers of the highest order, never embellishing, never lying, brutally honest, self deprecating, admitting mistakes openly and passing praise to others for BH’s achievements, while being fiercely loyal to their partner businesses and proud of their company.

As Warren once said: “You can lose me money but never loose me reputation.”"
"Two new lieutenants

He did, however, have his two new lieutenants, Greg Able and Ajit Ajin, who would be sharing the stage with him for the first time.

But it was just sad."

"Contrary to financial advisers' opinions, shareholders do not just invest on the dry numbers.

They invest because the company excites them and they listen closely to the management's vision of what could be, as well as what has been achieved.

Keep all promises

Yes, shareholders do not just respond to hype and sizzle. They need an underlying performance and, most importantly, they need all promises kept and met.

A stellar financial performance without a vision and story will falter, just as a vision and story without financial delivery will falter."
"I think this is a real watershed moment for BH.

Without Warren and Charlie telling the BH story, I fear it will stall, as I am not sure Able or Ajin will excite and capture BH shareholders with stories and a vision of what could be.

I hope I’m wrong."

[kiora]

Its good to look for alternative views

"S&P 500 And VOO: Here's The Bullish Case"

https://seekingalpha.com/article/469..._free_eligible

"Smaller sectors of the S&P 500 offer higher reward/risk trade-offs and a shift in market leadership is occurring."
"what behaviors and elements of an investment process provide me with the best trade-off between making consistent positive returns, and not losing "big."
" the definition of an investor is a disappointed speculator!"
"1.Past performance in investing is focused on misleading aspect of that performance"
"period (1999-2013) in which the S&P 500 went everywhere. But after all that time, it averaged about 1% per year."
" neither should we assume that the only range of possible outcomes is the ones we've seen"
"That's a long time to go without many S&P 500 buy points producing more than a 6% annualized return"
"2. Too much focus on "picks" over process"

"The most important part of any investor's genetic makeup should be the constant willingness and ability to adapt"
"I think of every investment decision as being a trade-off between reward potential and potential for major loss"
"I'm constructing a living, breathing portfolio of securities, that work together like a rowing team."
" looking forward. Because when I do, I see a bull case for the market...not a "prediction" about what the market will do, but an analysis of what I think could be a higher-percentage shot for me than a lot of the "stay the course, own the market"
" Energy, Utilities, REITs and Basic Materials. Yet those 4 are a big part of my portfolio now."
"Consumer Defensive or "Staples" is 6% of VOO and Industrials, the most diverse sector of the 11 in that it doesn't tilt heavily toward a few giant stocks, is around 8%."
"that's 6 sectors totaling only 25% of VOO. That leaves 5 others that account for 75% of it. That has worked for a while, but I think the risk many investors are taking is in following the index too closely."
"A top-heavy index that blinds investors to the forward-looking opportunity"
"The index is capitalization-weighted, and when markets go up over time, VOO increasingly favors yesterday's winners. That feeds on itself for a while, but at some point it implodes."
" investors get taken advantage of this ever-present factor in investing, the desire to be part of the "herd.""

"Where's the bull case now?

I think it boils down to this:

1. The smaller S&P 500 sectors are where the higher reward/risk trade-off is

2. A proverbial "stock pickers market" is gradually replacing the dominance of a small number of stocks

3. In every sector, the strongest risk-adjusted performers will likely be companies that are not among the top few in their sector by market cap, but also not among the smallest."

"What's driving all of this?

Valuation is part of it, technicals are another big part of it, and the nature of market cycles is another key contributor"

"Past performance: don't get fooled again"

" Performance leadership can persist for longer than we think, but that "market of stocks" still has a say over time."

"Summing up...for now

My thesis here is simple:

1. The market is not what many think it is, following such a top-heavy, late last century-type period, the long-term value and even a lot of near-term upsides is likely to come from places investors are not accustomed to. That requires them to conduct a more thoughtful type of research than needed to get strong results in the recent past.

2. Past performance is valuable, but not simply applying it in one fell swoop. Markets are cyclical, long-term and shorter-term. That's going to matter more than ever now, given the newer market forces at work.

3. Many parts of the market took a breather the past few years, and that could end up being a "pause that refreshes" as opposed to needing a full flushing of the whole stock market, all sectors. The leading sectors that now dominate VOO are more vulnerable, and the smaller ones are more intriguing based on my stock-specific, bottom-up research I conducted to construct my 40-stock portfolio.

4. Stocks from every sector have potential. But the era of 5–10 stocks driving all performance for years at a time is, in my view, gradually ending."