Nyheterna fokuserar på mellanårsval och kvartalsrapporter, men det är inte där det viktiga händer

Topic: my guest blog in Swedish about US midterms and the most recent earnings season

Idag skriver jag som gästkrönikör hos Vontobel om vad mellanårsvalet i USA betyder för aktiemarknaden


Här hoppar jag rakt in i texten:

När en spänd bågsträng möter ett rakblad…

…alltså, mellanårsvalet i USA var positivt men marknaden sänder ändå ut en negativ signal och en vilja att sälja uppgången. Detta sker dessutom efter en av de mest positiva kvartalsrapportperioderna någonsin, men då aktiemarknaden paradoxalt nog föll med tio procent på en månad.

Tolkningen blir att det nu är helt andra faktorer som styr flödet av kapital och viljan att ta risk.

Med höga värderingar, tilltagande attraktivitet hos alternativ som bland annat räntepapper, ädelmetaller och jordbruksråvaror, samt stigande räntor som medför ökade kostnader för allt från bostads- och aktielån till investeringar, blir helt enkelt en enstaka rapportperiod eller valomgång nästan helt irrelevant.

Glöm således bort vad som hänt i oktober och november och fundera på om det är dags att byta strategi. När man har två jämbördiga strategier som gett liknande performance över närmare ett sekel, är det logiska att byta från den som fungerat ovanligt bra i flera år till den som släpat efter. I annat fall måste man anta att den ena strategin plötsligt blivit dominant för alltid. I praktiken gäller det alltså i dagsläget i så fall att byta från Köp Och Behåll För Evigt till Våga Sälj Dyrt och Köp Billigt Senare. Med justerat CAPE på 45 och tio års börsrally bakom oss känns inte det som någon större risk att minska exponeringen mot de aktier och aktiemarknader som gått starkast.

Frågorna du behöver ställa dig är 1) om…

Här hittar du resten av min gästblogg hos Vontobel

My 12 (ish) rules for life

Don’t  be a mechanical turk

“A mechanical fruit is no fruit at all. The anti-social and hyperviolent rapist in A Clockwork Orange is a despiccable human being, but still a real, live person. SPOILER ALERT: At the end of the movie he is broken down, his (evil) spirit killed, replaced by a well-behaved clockwork. The message is that clockwork predictability has no human value, even compared to diabolic freedom of action”


My shortest version possible for getting things done, and done well

Start with your why, your purpose
-Without a driving force, you’ll never put enough effort into the endeavor

Aim low, start early and small, Wu Wei
-Avoid apathy, fatigue, being overwhelmed, just take one small step at a time, maybe even telling yourself you’ll quit right after…

Just One more
… then take just one more small step

Systematic feedback
Record, analyze and improve


More detailed rules:

Celebrate every small win

Grit
Stick it out until the end; keep grinding

Fail
Pick yourself up and keep going. Successful people are the ones who got up one more time than they failed

Course correct, use feedback
Do, correct, do again. Don’t make just one single big plan. Start small, start early, try, fail, analyze, course correct and keep grinding

Be systematic, record all insights and important information
Use a commonplace system

Growth mindset, Deliberate Practice: Peak, mental models
Integrate the knowledge that we can change and grow, we’re not set from birth. It’s not you who are being judged, it’s your ability to pick yourself up that counts, not your innate nature

Use a coach or mentor
You can’t move outside the box without somebody guidning you from the outside, noticing what you can’t. You can never see your own blind spots

Ignore what other people think
Never mind criticism; who are they anyway?

Seek variation, novelty
Learn new things

Meditate
Know thyself, know your driving forces, motivations, purpose

Take care of your body at least as well as your mind
Sleep, food, exercise

Be quiet
Experience silence, boredom, let your mind wander

Socialize

Recent research shows people who socialize less die earlier on average

Reason

Use logic, not feelings — the latter are for experiencing, not creating

Mental models

Make mental tools to get to the next level, where you design ever more sophisticated models

Prioritize with Bubble sort

Compare two and two, not all at once when having trouble prioritizing

Intuition + verification = accountable Blink

Trust your intution to provide interesting starting points, but not for providing solutions

It’s a PROCESS

You’re never done, and be thankful for that

Debate religion, spirituality, the supernatural

Debate it, but don’t discard it out of hand. Debating impossibilities hones your logic and rhetoric

Disregard what you can’t change

Put it away and focus on what’s important

Break it down by the 5 why:s

Problems, obstacles and challenges usually consist of ridiculously easy steps, if you go deeply enough. Ask why five times.


Song of the week (electronic trance kind of, instrumental Robyn): An analog guy in a digital world (for work, focus, meditation, enjoyment). Thank me by leaving a rating or review for Future Skills on iTunes

P.S. Just for fun: check out my awesome, world record-breaking all electrical ESURFjetboards on Facebook (pictures, videos, and more)

Why being permanently bullish is the best place to be

Topic: there is always a good opportunity to invest somewhere

Conclusion: I’m a perma bull, and you probably should be one too


Hi,

“I felt like a one-eyed person, lacking depth of vision, stumbling around, missing half the picture, often being blind-sided and having to correct my inputs and bearings. It still beats everybody else though, in this land of the blind.”

There’s always something to be happy about
The grass is always greener where I am, or how does that saying go again?

I am what you would call a perma bull; I’m always happy about something, looking forward to things to come, enjoying planning for them, or simply relishing in whatever activity I’ve chosen for the moment.

The world of investments works in the same fashion; there is always a good opportunity to invest somewhere. At any one point there is a fixed amount of wealth (people, tools, machines and assets), even if the amount of debt and currency associated with that wealth varies. Over time, wealth usually rises (more people, more tools, more buildings, more dug up gold and gems). The receipts (e.g., dollar bills) on that wealth always need to go somewhere, bidding up the price for that particular piece of wealth – and that’s where you want to be exposed.

It’s never exactly clear where the dollars are going next, but sometimes it’s slightly less difficult than other times, to guess at a likely turn of events. In any case, there is always some asset being significantly underrated compared to other assets. Usually investors will find it sooner or later; first a few hesitant hands and later attracting the masses, thus with time making it overappreciated and promising low or even negative returns. By then, there are tremendous opportunities somewhere else.


Swedish Central Bank:

Our best estimate for a reasonable rate hike

50 000 basis points

Back in 1992, I had studied business administration, accounting, securities and derivatives valuation etc at Stockholm School of Economics for two years. From a macroeconomic perspective those were turbulent times: One of my professors actually suggested students change banks due to the risk of bankruptcy, and the Swedish central bank raised its policy rate by almost 50 000 basis points to 500 per cent.

Sprezza:

Buying call options on banks heading for state receivership

 

Meanwhile I was trying to buy call options on all but defunct Swedish banks.

Yes, I was a perma bull with no regard to the downside.

The year after, in 1993, I started buying tech stocks in earnest. My “well diversified” portfolio consisted of two stocks: Ericsson (the “safe” bet) and Måldata (a small IT consultancy; “to add some upside volatility”).

In 1994, bears be damned, I became a finance pro: I took a job at a small brokerage, while the doomsday debt clock on the central square outside my window counted the steps toward default and ruin for the Swedish model.

Armed with DCF and CAPM models, straight out of my still warm textbooks, I promptly issued Buy recommendations on construction companies, medical technology firms, computer manufacturers and IT services and software companies. I even through in a few chemical industry companies in the perpetual Buy Everything mix back in 1994-1995.

A perma bull is hard to slow down apparently

In 1996 I took a new job as the head of IT research at Sweden’s largest bank. By then I had become bolder than ever (albeit quite fitting, considering the budding tulip bubble IT boom), thinking others just lacked the right visionary capabilites that I had. My bullish research reports on mainly software companies knew no boundaries at the time, and soon I included so called internet consultancies and a Virtual Reality firm as well. Buy Buy Buy.

Visionary Sprezza

The LTCM and Asian currency crises in 1997-1998 didn’t deter me the slightest: “Temporary!” and “Buy the dip!”, were my mantras.

Toward the end of 1999, however, I finally realized things had gotten out of hand, and by February 2000 I threw in the towel regarding IT shares as well as my then employer, and moved to a hedgefund instead. With my sunny disposition there was always only upside (a start-up hedge fund in March 2000; what could possibly go wrong). For me, that is. For the market not so much.

And that recent LTCM hedge fundcrash in 1998? I couldn’t care less. I was joining a “completely different” hedge fund. With only upside! (actually that turned out to be true — or how does “European Hedge Fund Of The Decade 2000-2009” sound to you?

The three years that followed we (Futuris/Brummer) could do no wrong. E.g., there were always interesting new opportunities to sell short ridiculously valued and cash consuming IT companies. Despite personnel issues at our firm, perma-bull me saw only rainbows and gold all around and in the future. Sure, regarding the stock market, I thought many stocks would fall to just a tenth of their values, but every one of those were “special cases”, and I never predicted doom for the economy or the stock market or financial system as a whole. I definitely was a bull. For me that is, and for the firm, and for short positions on tech stocks.

At the time, and quite often today too, I felt like a one-eyed person, lacking depth of vision, stumbling around, missing half the picture, often being blind-sided and having to correct my inputs and bearings. Yes, I actually gradually became aware of my shortcomings. It still beat everybody else though, in this land of the blind called finance.

In 2004-2006 I focused more on banks, hotels, cruise ships and professional services rather than purely on software companies; and boy was I bullish on banks back then!

There were buybacks to the tune of 7 per cent a year, and dividends at a similar rate on top of that, while P/B ratios were between just 1 and one and a half. Growth was fast, returns were high and credit losses were non-existent. Perma-bull as I am I bought everything, including the recycling company Tomra (Wait, what? Software, Banks,… and Tomra?) which gave me a 100% return in less than a year. What can I say, if you’re bullish, you’re bullish.

In 2006, my bullishness toward stocks waned, but I still managed to find a handful of promising small cap companies and took outsized positions in them. Bad move. Blind bull move. When markets started turning downward in the run-up to the bursting of the housing bubble, and onset of the financial crisis, those smaller companies proved very hard to sell.

“Yes, I’m currently perma bullish on gold”

Stock market bullish-me took a harder hit than ususal in 2007-2008, since I was 1) hit hard on a few long positions right before, and 2) I was proven right* on my house bubble thesis, as well as 3) made a killing on bank shorts* throughout 2008. I imagine gambling addicts are hooked by similar principles*.

* there is nothing more detrimental for an investor than being right on a bearish call

Since then, I’m still a perma bull in every aspect that counts, but not quite so much regarding public stocks. When they are expensive relative to sales, profits and the price of commodities and precious metals, I’d rather stay away and project my inherent and eternal bullishness on other things.

The Buying Opportunity Of The Decade
Actually, in the fall of 2010, when my partners were leaning towards going short again, I wrote a couple of memos (e-mails), where I called the situation “the buying opportunity of the decade”, based on a lot of slack in the economy (exactly the opposite of the current situation).

Since 2015 I’ve regularly been called a “perma bear” (typically by people with less than 10 years of investing experience), and it’s true I’ve had a very negative view of the prospectice returns for the stock market as a whole for a few years. On the other hand I’ve invested heavily in start-ups and scale-ups, all probably depending on the economy staying strong. At the same time I’ve increased my exposure to gold manyfold. Yes, I’m currently perma bullish on gold too.

I’m writing this as I once again saw somebody caliing John Hussman a perma bear on Twitter. Actually, dr Hussman’s history is similar to mine; just longer, better and more objectively based on research. Still, being wrong-footed in just the latest up-cycle is enough to make people, with no understanding of the word, call out thoughtful and accomplished investors like him as “perma bears”.

How about you? Is the grass always grener where you are? Are you too a perma bull like me? What does your bull/bear story look like? And if you don’t have one, due to too little experience, I suggest you tread very carefully the coming years.

My most humble regards,

/Sprezza

P.S. Check out my interview on Future Skills with Erik Townsend from MacroVoices. That guy has a lot of wisdom to share about skills, education, analysis and much more. You can find a direct link to the episode here