Ted Aronson AJO Hangs It Up……”drought in value is the heart of the challenge”
5 Year small cap value vs. small cap momentum…..DWAS Small Cap Momentum ETF+69%vs. VBR small cap value ETF+18%
· The average contract interest rate for 30-year fixed-rate mortgages decreased to 3% from 3.01%.
· Applications for a mortgage to purchase a home fell 2% for the week but were 24% higher annually, the Mortgage Banker’s Association said.
· Applications to refinance a home, which are most sensitive to weekly interest rate movements, fell 0.3% for the week.
https://www.cnbc.com/2020/10/14/mortgage-rates-set-yet-another-record-low-but-applications-fall.html
30 Year Mortgage Rate 1971-2020
“Somebody, somewhere, still wants to bet against this market,” writes Jason Goepfert, head of SentimenTrader and founder of independent investment research firm Sundial Capital Research, in a Tuesday research note.
Goepfert writes that so-called short interest, or the total number of shares of a particular stock or fund that have been sold short by investors, but haven’t yet been covered or closed out, on stocks trading on the Nasdaq Composite COMP, -0.10% rose in the last two weeks of September to around the highest level in 10 years, at around 9.7 billion shares (see chart below expressed as a percentage below a chart of the Nasdaq Composite’s absolute value).
LPL BLOG
Growth beat value for the quarter despite losing ground in September. The growth style of investing continued its impressive 2020 run during the quarter, shown in the LPL Chart of the Day, but underperformed during September as markets pulled back and rotated some from the winners to the laggards. Value’s outperformance for the month was its first such feat in 12 months, based on the Russell 1000 style indexes. Over the full quarter, growth got a boost from strong gains in technology, while value was hurt by weakness in the energy sector.
Consumer discretionary topped all equity sectors for the quarter. Gains were broad-based, though homebuilders stood out with outsized gains as the housing market remains quite strong. The internet retailers lagged slightly behind the sector as some of the pandemic winners took a breather late in the quarter. Energy struggled mightily with a nearly 20% decline even though oil and natural gas prices rose, bringing the sector’s 2020 loss to 48% through September 30.
Dollar bears are dialing back on their aggressive bets for further weakness. Net short non-commercial positions in futures linked to the ICE US Dollar Index have been cut to the least in four months. – CFTC
Chris Preston -River and Mercantile.
Supply chain linkages
Beyond direct trade, the U.S. and China have also become “increasingly interdependent through rising supply-chain linkages over the past decade,” Fitch Ratings said in a report last month.
Supply chains are a complex network of companies that work together to provide raw materials, intermediate parts or expertise in order to produce a final product or service that can be consumed either domestically or globally.
It’s hard to gather accurate data that breaks down specific supply chain contributions by each company. However, the OECD — or the Organisation for Economic Co-operation and Development — launched a database in 2013 that provides some insight into how global supply chains work.
Latest available estimates by the OECD showed that in 2015, foreign input accounted for 12.2% — or around $2.2 trillion — of total goods and services consumed in the U.S. China was the largest contributing country of that foreign input, the data showed.
Some manufacturers within the U.S. were especially reliant on China for intermediate input or final products, said Fitch, citing the OECD data. Those include American producers of textiles, electronics, basic metals and machinery, the agency said.
In China, foreign suppliers made up around 14.2%, or $1.4 trillion, of total goods and services consumed within its borders in 2015, according to OECD data. The U.S. was also the largest single contributing country to that foreign input, the estimates showed.
In contrast with U.S. reliance on Chinese input in the manufacturing sector, China is “much more” dependent on American contribution in services, said Fitch.
5 charts show how much the U.S. and Chinese economies depend on each other
Rent or Buy? Eight Home Hunters Explain Their Real Estate Moves During Covid-From New York to Sydney, the fallout from the pandemic has changed the calculus for those searching for a house.By Jack Pitcher-Emily Cadman-Oshrat Carmiel-Julia Fanzeres-Kristine Aquino
WSJ
The Oil Market Has an Aviation Problem-Passenger-flight activity is mired at around half of pre-pandemic levels, leaving a hole in global oil demand
https://www.wsj.com/articles/the-oil-market-has-an-aviation-problem-11602235754?mod=itp_wsj&ru=yahoo
Fidelity
From Nasdaq Dorsey Wright
JP Morgan Asset
https://am.jpmorgan.com/us/en/asset-management/gim/per/insights/guide-to-the-markets/viewer
Felix Salmon, author of Capital
Government spending on testingand contact tracing pays for itself more than 30 times over, according to a new paper published by the American Medical Association.
What they found: Harvard economists David Cutler and Lawrence Summers (yes, that Larry Summers) calculated the total cost of the coronavirus pandemic at more than $16 trillion in the United States alone. Of that, about $7 trillion is attributable to loss of life and long-term impairment from the disease.
The bottom line: “Currently, the U.S. prioritizes spending on acute treatment,” write Cutler and Summers, “with far less spending on public health services and infrastructure.”
https://www.axios.com/coronavirus-testing-investment-eca1e901-8cbe-4015-b77a-594e4dc6c16d.html
Would you rate yourself as highly productive?
We’ve learned a lot about personal productivity and what makes some people more productive than others. Last year we published a survey to help professionals assess their own personal productivity — defined as the habits closely associated with accomplishing more each day. The survey focused on seven habits: developing daily routines, planning your schedule, coping with messages, getting a lot done, running effective meetings, honing communication skills, and delegating tasks to others.
After cleaning up the data, we obtained a complete set of answers from 19,957 respondents across six continents. Roughly half were residents of North America; another 21% were residents of Europe and 19% were residents of Asia. The remaining 10% was comprised of residents (in descending order) from Australia, South America, and Africa.
Our survey had its limits — for example, respondents were a self-selected sample of readers of HBR.org, and the ratings were self-assessments of habits rather than objective measures of people’s productivity. Nevertheless, we believe the survey results provide useful insights into important productivity habits and challenges facing professionals.
Three general patterns stood out: First, working longer hours does not necessarily mean higher personal productivity. Working smarter is the key to accomplishing more of your top priorities each day. Second, age and seniority were highly correlated with personal productivity — older and more senior professionals recorded higher scores than younger and more junior colleagues. Third, the overall productivity scores of male and female professionals were almost the same, but there were gender differences on particular habits that promote personal productivity.
More specifically, we found that professionals with the highest productivity scores tended to do well on the same clusters of habits. They planned their work based on their top priorities, and then acted with a definite objective. They developed effective techniques for managing a high volume of information and tasks. And they understood the needs of their colleagues — for short meetings, responsive communications, and clear directions.
Let’s go deeper into the survey results. On geography, the average productivity score for respondents from North America was in the middle of the pack, even though Americans tend to work longer hours. The North American score was significantly lower than the average productivity scores for respondents from Europe, Asia, and Australia. On the other hand, the North American score was significantly higher than the average productivity scores for residents of South America and Africa (though recall these were the areas where we had the least data).
Drilling down into the data, we found the higher productivity scores for Europe, Asia, and Australia were driven by strong habits in areas such as daily schedules, not constantly checking messages, focusing early on the final product, and thinking carefully before reading or writing.
While our survey turned up significant differences in productivity scores by continent, it showed minimal differences between the average scores of male and female respondents. Overall, the respondents were 55% male and 45% female.
Yet there were some noteworthy differences in how women and men managed to be so productive. Women tended to score particularly high when it came to running effective meetings — women were more likely than men to send out an agenda in advance, keep meetings to less than 90 minutes, and finish meetings with an agreement on next steps. Women were also more likely to say that they prepared their calendars the night before and responded promptly to important emails.
By contrast, men did particularly well when it came to coping with high message volume — not looking at their emails too frequently and skipping over the messages of low value. Men were also more likely than women to report keeping free slots in their daily schedules, getting quickly to the final product, and composing outlines before writing memos.
Beside geography and gender, we analyzed the responses to our questionnaire by age and seniority. There were five age brackets — with the most respondents in the under-30 bracket and the least in the over-60 bracket. We found that the productivity scores of respondents rose systematically the older they got. This trend seems to reflect the benefits of learning from years of experience how to work smarter. The drivers of these higher productivity scores for respondents in older age brackets were their stronger habits in four areas: developing routines for low-value activities, managing message flow, running effective meetings, and delegating tasks to others.
The story was somewhat similar when it came to seniority. There were five levels of seniority captured in the data, with 5 being the most junior and 1 being the most senior. The number of respondents was highest in the most junior level and lowest at the most senior level. As with age, the productivity scores rose systematically with successively higher levels of seniority. This may suggest that business professionals attain higher levels of seniority in part by cultivating good productivity habits (or vice versa, people become more senior and then have to become more productive). However, the drivers of higher scores for senior level respondents were different than those for older respondents. More senior respondents achieved high productivity from better planning of their schedules, getting a lot done, and stronger communication skills.
Finally, we focused on the tails in each of the four demographic categories. We defined tails to include all respondents whose total score fell outside of two standard deviations from the mean. The left tail comprised those with the lowest scores; the right tail had the highest scores. We didn’t find any geographic or gender patterns on either tail, though we saw a few of the youngest and most junior professionals in the right tail with the highest scores.
The professionals in the right tail with the highest productivity scores were particularly adept at overcoming procrastination, getting to the final product, and focusing on daily accomplishments. Low ratings on these three habits were typically reported by professionals with the lowest productivity scores. In addition, professionals in the right tail were much better at advance planning — reviewing schedules the night before, sending out meeting agendas, and setting success metrics for their teams. Professionals in the left tail had low scores on these aspects of advance planning. They also did not leave open slots in their schedules and did not use outlines before writing memos.
So what should professionals take away from the results of our survey? If you want to become more productive, you should develop an array of specific habits.
First, plan your work based on your top priorities, and then act with a definite objective.
· Revise your daily schedule the night before to emphasize your priorities. Next to each appointment on your calendar, jot down your objectives for it.
· Send out a detailed agenda to all participants in advance of any meeting.
· When embarking on large projects, sketch out preliminary conclusions as soon as possible.
· Before reading any length material, identify your specific purpose for it.
· Before writing anything of length, compose an outline with a logical order to help you stay on track.
Second, develop effective techniques for managing the overload of information and tasks.
· Make daily processes, like getting dressed or eating breakfast, into routines so you don’t spend time thinking about them.
· Leave time in your daily schedule to deal with emergencies and unplanned events.
· Check the screens on your devices once per hour, instead of every few minutes.
· Skip over the majority of your messages by looking at the subject and sender.
· Break large projects into pieces and reward yourself for completing each piece.
· Delegate to others, if feasible, tasks that do not further your top priorities.
Third, understand the needs of your colleagues for short meetings, responsive communications, and clear directions.
· Limit the time for any meeting to 90 minutes at most, but preferably less. End every meeting by delineating the next steps and responsibility for those steps.
· Respond right away to messages from people who are important to you.
· To capture an audience’s attention, speak from a few notes, rather than reading a prepared text.
· Establish clear objectives and success metrics for any team efforts.
· To improve your team’s performance, institute procedures to prevent future mistakes, instead of playing the blame game.
A former President of Fidelity Investments, Robert C. Pozen is a senior lecturer at MIT’s Sloan School of Management in Cambridge, Massachusetts, and a nonresident senior fellow at the Brookings Institution.
Kevin Downey is a student at MIT.
1990’s Tech grew+30%per year
2000’s. Negative-7%per year
2010’s Positive+20%per year
2020’s-?
Daniel Crosby, Ph.D. • 1stChief Behavioral Officer at Brinker Capital2d • 2 days ago
Continue readingLooking back—Schwab Liz Ann Sonders
We use the Dow Jones Industrial Average (Dow) as the proxy for U.S. stocks in the analyses below because of its longer history than the S&P 500, which wasn’t created until the late-1920s. Likely highlighted more by Democrats than Republicans is the fact that, since 1900, the stock market has performed better when Democrats sit in the White House than when its inhabitant was a Republican.
As you can see in the first two bars in the chart below, if an investor had invested $10,000 starting in 1900, but only had it in the Dow when Republicans were president, it would now be worth nearly $99k. On the other hand, that same $10,000 would have grown to nearly $430k if it was invested only when Democrats were president. Seems like an obvious decision to make then? Not so fast. That same $10,000 in 1900 would have grown to more than $4.2 million if the investor had remained in the market the entire time, regardless of which party has presidential power.
Staying Invested vs. Investing in Single Party
Source: Charles Schwab, Bloomberg, as of 10/2/2020. For illustrative purposes only. The above chart shows what a hypothetical portfolio value would be if a hypothetical investor invested $10,000 in a portfolio that tracks the Dow Jones Industrial Average on 1/1/1900 under three different scenarios: a Republican presidential administration; a Democratic presidential administration; or staying invested in the market throughout the entire period noted. Chart does not reflect effects of fees, expenses or taxes.
Election Blues: Looking at Election History for Market Guidanceby Liz Ann Sonders of Charles Schwab, 10/6/20
TAN SOLAR ETF
30 year yield approaching May highs…+32% from lows.
Small cap value is trading at historical low valuation vs. S&P…..Chart showing some life….50 thru 200day to upside … But 200day still sloped downward.
FRED CHARTS
https://fred.stlouisfed.org/series/TDSP
Marketwatch-Ray Dalio
So what’s an investor to do?
Dalio said that China, where “almost everybody” is underweight, has fallen out of favor, but deserves more exposure, beginning with a diversified approach to investments in the region.
“That means to achieve the right kind of balance of assets in China,” he told CNBC. “Our approach is, we call it all-weather approach, it’s a certain balance in which you achieve balance without lowering the expected return. From that, you want to make the tactical moves.”
The Chinese yuan CNHUSD, 0.00%, he explained, could see greater usage outside the country as weaker global economies weigh on the the U.S. dollar DXY, -0.08% and other major reserve currencies. Dalio said that China’s interest rates are attractive, and the development of capital markets in the region has strengthened the yuan.
“You’ll see more of the internalization of the [yuan], and it’s a natural consequence because as the dollar and the major reserve currencies are having the challenges that we are talking about, some element of void will be there,” he said. “But first… get the exposure.”
Think your nest egg is safe sitting in cash? Think again — billionaire investor explains where some of that money should go instead
By
CYB-Yuan ETF
Half a Billion Travelers Show China’s Economy Moving Past Covid
Travelers rise to nearly 80% of 2019 level but spending lags
Biggest holiday week since January will test China’s recovery
Sign up for Next China, a weekly email on where the nation stands now and where it’s going next.
Hotel prices shot up, ride-hailing apps crashed, tickets to the Great Wall sold out: after more than nine long, housebound months, almost half a billion Chinese people are taking a vacation.
With the Covid-19 pandemic largely under control in China, the Golden Week holiday is putting on display the country’s confidence in its economic rebound and its public health measures. Through the first four days of the week-long holiday that started Oct. 1, some 425 million people traveled domestically, according to the Ministry of Culture and Tourism, nearly 80% of last year’s throngs.
The surge of activity stands in stark contrast to the rest of the world — the global tourism industry is expected to lose at least $1.2 trillion in 2020 — and underscores the relative strength of China’s economic recovery. As of September, the OECD forecast a 1.8% expansion this year, putting China alone among the Group of 20 on pace to expand.
That positive outlook assumes the country can avoid another wave of coronavirus and the aggressive lockdowns China’s used to quash it. As millions crisscross the country during the holiday that marks the founding of the People’s Republic of China in 1949, no virus tests or quarantines required, the risks grow. Late last month, China opened its borders to foreign nationals holding valid residence permits.
“There is undoubtedly a risk in allowing mass tourism to resume and, in some ways, this is an early exercise in what the rest of the world will have to go through as global travel restarts next year,” said Nicholas Thomas, associate professor in health security at the City University of Hong Kong.
China hasn’t reported any local virus infections since Aug. 15, though it found two asymptomatic cases in late September, and the government has eased almost all of its peak-Covid travel restrictions. The ban on group tours was lifted in the middle of July, every district in every city has been designated ‘low-risk,’ and coronavirus test results are no longer required for cross-province travel.
Found at Crossing Wall Street https://www.crossingwallstreet.com/
Food is perhaps the best known consumable product, and the economic laws of supply and demand are pointing to an emerging pain point unlike any we have seen in recent history. To combat this looming problem, the agriculture industry is embracing technology, much of which is similar to that housed inside the smartphones we use today, giving rise to the precision agriculture market.
The problem
The current average life expectancy in the U.S. stands at 78.8 years according to a National Center for Health Statistics, which was on par with the 78.6 years in Europe reported as of 2019. By comparison, historical data from the United Nations reveals life expectancy in 1950 was 65 years in more developed regions of the world and 42 in less developed ones. The increase is driven by several factors, including a healthier lifestyle, which in and of itself has been found to add up 6.3 years for males and 7.6 years for women, according to findings from the UK Biobank.
At the same time, the United Nation’s Population Division expects the global population to hit 10.9 billion by the end of the current century compared to 7.8 billion in 2020. Rising disposable incomes among the growing population is fostering greater demand for complex proteins. More people living longer poses a challenge to the nutritious diet aspect of that healthier lifestyle, given that arable land per person is shrinking.
According to the FAO, arable land per person stood at 0.23 hectares (ha), down from 0.38 ha in 1970 and is expected to fall to 0.15 ha per person by 2050. We at Tematica describe that situation as a pain point, and pain points tend to give rise to solutions. In this case, it means we need to make better use of our existing farmlands, and that has prompted farmers to adopt technology to boost yields while helping to manage costs.
This wave of technology-meets-farming has given rise to the precision agriculture market, which is expected to reach $12.9 billion by 2027, according to Grand View Research, up from $9.65 billion in 2019.
What is Precision Agriculture?
According to the International Society of Precision Agriculture, “Precision agriculture is a management strategy that gathers, processes and analyzes temporal, spatial and individual data and combines it with other information to support management decisions according to estimated variability for improved resource use efficiency, productivity, quality, profitability and sustainability of agricultural production.”
In other words, it is about using high-tech tools to generate greater yield with less resources while minimizing any potential harm.
Just how important is this? The World Economic Forum estimates that if just 15% to 25% or farms were to adopt precision agriculture techniques, global crop yield could increase by 10% to 15% by 2030 while at the same time reducing greenhouse gas emissions and water use by 10% and 20% respectively.
That sounds great, but do we really need to do this?
Soil today is eroding up to 100 times more quickly than it forms. Some research indicates that we may have already lost more than one-third of the planet’s arable land. Even more concerning, if the current rates of soil degradation continues, the remaining arable land could become unfarmable in the next 60 years.
How does precision agriculture help?
The market that would become precision agriculture started in the 1990s with the adoption of GPS that allowed farmers to gather data and steer equipment automatically. While it may seem somewhat pedestrian in today’s connected world, GPS tractor guidance helped farmers to improve crop production by reducing overlaps and gaps when planting, fertilizing, and protecting crops. Over the last two decades technological developments including telematics, robotics, automated hardware, agriculture drones, and variable rate technology have expanded precision agriculture to include equipment guidance and automatic steering, yield monitoring, variable rate input application, remote sensing, in-field electronic sensors, section and row control on planters, sprayers and fertilizer applicators, and spatial data management systems.
Much like we have seen technology enable a host of new applications such as video conferencing and streaming video that has altered how we work and play, technology has expanded the capabilities of precision agriculture as well:
Existing as well as up and coming precision agriculture players to watch
Companies participating in the precision agriculture market include agriculture equipment companies such as John Deere (DE), AGCO (AGCO), CNH Industrial (CNHI), and Kubota Corp. (KUBTY) and even drone company Aerovironment (AVAV). There are also the technology enablers that include GPS companies such as Trimble (TRMB) and the applied technology business at Raven Industries (RAVN) as well as the chip and sensor companies that range from NXP Semiconductors (NXPI) to STMicroelectronics (STM) that serve the “smart farming” market.
As a confluence of factors have raised concerns over the long-term future availability of food, venture investors have been pouring capital into agtech startups. In 2019 alone, they invested $2.8 billion into the space across the globe, a fourfold increase over 2015. According to the 2019 AgriFood Tech Investment Review, investment in digital technologies (which combines the independent sectors of imagery, precision agriculture and sensors and farm equipment) made up about 41% of 2019 deal activity.
Some examples of these investments are Farmobile and its DataEngine that ingests and standardizes farming data so that it can be shared and used to create insights; Trace Genomics that provides soil DNA sequencing services to farmers and agronomists; and CiBo Technologies that allows farmers to create “virtual fields” with real-world inputs.
With greater adoption of artificial intelligence, big data, and the internet of things in the coming years we strongly suspect there will be new applications and further advances for precision farming, much like we’ve witnessed with the smartphone and the automobile of today compared to ten years ago.
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
After three decades as a CEO in various organizations there are definitely distinct lessons I’ve learned.
The Thrive Global Community welcomes voices from many spheres. We publish pieces written by outside contributors with a wide range of opinions, which don’t necessarily reflect our own. Community stories are not commissioned by our editorial team, and though they are reviewed for adherence to our guidelines, they are submitted in their final form to our open platform. Learn more or join us as a community member!
By
· Mary Lee Gannon, ACC, CAE at The Ladders
After three decades as a CEO in various organizations there are definitely distinct lessons I’ve learned.
1. When we focus on what we have to give instead of what we get we realize our value.
Why should someone work with, do business with, hire you, or spend time with you? And why now? If you can’t answer these questions your constituents won’t know either. What makes you distinctive? What do your employees need from you to thrive in their roles? What do your customers need that they haven’t even realized yet? This probing leads to a solid value proposition that gives you fulfillment and can be communicated in your messaging.
Don’t wait for a crisis to probe for opportunity. Anticipate the needs of others, how you will uniquely meet those needs and you stand alone.
2. When we are curious and compassionate, we become servant leaders instead of command and control tyrants.
We all know leaders whose direct reports fear them. And we know leaders who are revered. Your leadership starts with an open awareness of yourself and a dedication to improve – improve yourself, improve the work experience for others, improve the products and services you offer, improve the financial stability of your organization. This service mindset requires a mindful acceptance of yourself without judgment followed by a curious mindset.
Ask questions without making assumptions. That creates space for honesty and humility while dismissing the need for perfection. Your team wants to know that you struggle with the same things they do. It is relatable to be human.
3. There is power in having your boss’s back. Find a way to do that or go somewhere you can. Don’t stay and poison yourself and the culture.
Don’t be a victim or a toxin. It strips your executive presence, stagnates your career and is weak. If you are unhappy in your role you have three choices: 1) Find another position and leave. Make sure the problem is not your perspective which you will carry with you to a new role and still be unhappy; 2) Stay where you are, shift your perspective and focus not on office politics but where you can find fulfillment in new responsibilities; 3) Leave and go somewhere more in alignment with your values. It will take you a while to achieve the level where you are now but accept that if this choice fulfills you. Don’t do what complainers do – quit and stay.
4. Good people leave organizations because of bad managers who don’t position them to learn and advance. Mediocre people leave organizations for $1 more an hour, free lunch and a pool table in the break room.
Organizations are acutely aware of onboarding costs for new employees. Retention has become one of the most important focuses for corporate human resources departments. Most major consulting companies and large organizations have created elaborate coaching programs, scheduled feedback systems and shadowing arrangements to retain and position top talent. Benefits packages have become less important than the skill of leadership in recognizing the unique aptitude of each individual and positioning them with professional development opportunities that interest them.
5. ‘A’ people hire ‘A’ people, ask for their insight, and get out of their way. ‘B’ people hire ‘C’ people and micromanage them.
Leaders sometimes get caught in the trap of thinking they must understand everything everyone is doing. Not so. Hire people who have your weaknesses as their strengths. Then allow them to create. Ask questions to understand and challenge their perspective. Never feel threatened by them. If their posturing creates insecurity, coach around that to help them understand the effects of their behavior.
6. Emotional leaders hardly ever advance. Practice a good poker face.
Self-management is essential for a high performing leader. It starts with self-awareness and self-acceptance. Mindful daily practices that keep you in the moment such as meditation, deep breathing, creative projects, help to increase your awareness of your thoughts and your power over them. The goal is to increase the space between when you feel an emotion and act on it so that the choice is not to react but to remain calm, think through the assumption behind the emotion and release it.
7. Narcissistic leaders thrive on keeping their teams in chaos and fear so that nobody notices their ineptness. Stay off their radar screen by making sure they know you have their back, giving them all the glory and presenting your work with confidence so they can trust it. Then work on your exit strategy. Things will not get better.
It is no mystery how narcissistic leaders rise to power. They are charismatic, have certainty and people trust their confidence. Yet they lack integrity, a moral compass, and any semblance of collaboration or compassion. This makes them dangerous. You know you are dealing with a narcissistic leader if you liked them at first but something in your gut tells you that you can’t trust them. You feel as if you must be overly cautious in what you say and do. Over time you find that you are questioning your own relevance around them because they are more of a dictator than a seeker of alignment. Pacify them with complete honesty, good work, relevance, and trust. Then move on.
8. When we can look ourselves in the eye and not expect to be perfect, we give ourselves room to be human and walk in the shoes of others. When we try on a lot of different shoes, we become grateful that they are not all the same size.
Perfectionism kills careers. Done is better than perfect. Humility trumps being right. Humanity is diverse. And diversity adds perspective. Perspective only brings value when we hear it. We can’t hear it if it isn’t in the room. We won’t apply new ideas if we are married to the assumption that change compromises our own security. What we believed yesterday need not be what we carry forward today. The agile leader with grit who can adapt mid cycle opens to opportunity. The stuck leader stagnates and loses ground.
9. Executive presence is the ability to observe yourself from a third-party perspective and admire what you see.
The single biggest reason people don’t advance in their careers is because they feel they are not worthy – they don’t belong. Coincidentally, the single biggest reason people are unhappy is because they feel they are not worthy and don’t belong. So, to counter this achievers often misguidedly spend time and energy on the treadmill to nowhere working harder, reading self-help books, updating their resumes, firing off online applications, taking classes, only to find that nothing changes except now they are exhausted. Seeking fulfillment externally on issues that are internally motivated is not productive. Executive presence and confidence expand when we challenge our internal assumptions against what is actually true about ourselves. Here we begin to align with our values. There is much there to admire when the dust of business settles and the brilliance of clarity appears.
For more executive presence tips here is a link to Mary Lee’s 31 Executive Presence Practices for Leaders in the Corporate World.
Mary Lee Gannon, ACC, CAE has a unique perspective as an award winning certified executive coach, author and 19-year corporate CEO who helps leaders have more effective careers, happier lives and better relationships while it still matters. She is the founder of MaryLeeGannon.com, a coaching and consulting firm that helps leaders position their mindful impact – the same impact that took her from welfare to CEO of organizations worth up to $26 million. Schedule a call or get her free leadership tools at MaryLeeGannon.com
— Published on October 6, 2020
https://thriveglobal.com/stories/nine-lessons-from-the-corner-office/
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Videogame Stocks Have Soared for 20 Years. They’re About to Get Another Boost.By Max A. Cherney
Nasdaq Dorsey Wright www.dorseywright.com
AMLP 2020
LizAnnnotes Given persistent weakness in certain sectors, a growing number of companies are at risk of rebalancing out of S&P 500 due to shrinking market caps …6.3% & 6.2% of Real Estate & Energy members, respectively, may drop out
From Dave Lutz at Jones Trading
https://indexes.nasdaqomx.com/docs/NDX_Fundamentals.pdf
by Tyler Durden
Tue, 10/06/2020 – 13:19
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After three consecutive record-large 3Y Treasury auctions, which also priced at progressively (record) lower yields, moments ago the Treasury sold another record amount of 3Y paper, when it auctioned off $52BN, up $2BN from $50BN a month ago, but in a notable reversal from the recent trend, the yield on today’s auction was 0.193%, which not only tailed the 0.191% When Issued by 0.2bps, but was the first 3Y auction since June that did not price at a new all time low yield, printing 2.3bps higher than the 0.17% in September.
https://www.zerohedge.com/markets/record-large-3y-treasury-auction-tails-yield-rises-all-time-low
Out of 70,000+ positive reported COVID-19 cases on Universities: 3 hospitalizations 0 deaths
https://twitter.com/drsimonegold/status/1313199258393145344/photo/1
LOGISTICSAirline Industry Faces Cargo Shorts Francis ScialabbaIf you’ve been seeing a lot more of those weird-looking planes with big foreheads and no windows at the airport, that’s because demand for airplane cargo space is sky-high.It starts with vaccines According to the International Air Transportation Association (IATA), providing a single dose to the world’s 7.8 billion people would require 8,000 fully filled 747 cargo planes, which…is a problem considering there are fewer than one thousand 747 freighters on the planet, according to the IATA’s head of cargo Glyn Hughes.Plus, vaccines are fragile. They don’t care much about legroom, but the majority of vaccines in development need to be kept at a constant, near-freezing temperature to prevent spoiling. UPS and Lufthansa have been building massive “freezer farms” to prepare, though experts in the pharma industry still expect up to a 20% spoilage rate. Santa might be late, tooThe soon-to-be-released iPhones, Sony’s new PlayStation 5, and Amazon’s Prime Day items are all set to be shipped via cargo planes in the coming holiday shopping period. “We’re planning for the mother of all peaks,” the president of FedEx’s express division told investors in September.Many commercial airlines have retrofitted aircraft to 1) meet cargo demand and 2) keep their businesses afloat during a period of historically low passenger traffic. Still, it was new territory for many legacy carriers. American Airlines was flying nearly 140 all-cargo trips per week early in the pandemic, after flying zero such trips in the past three decades. Bottom line: This isn’t the cargo industry’s first mile-high rodeo—shipping pharma products has been a fast-growing and profitable line of business for carriers over the past 10 years. But the busy holiday season + vaccine distribution + fewer flights will push it to the limit.     |
Morning Brew https://www.morningbrew.com/
Julia Buckley, CNN • Published 5th October 2020
1/7
Flood barrier: The MOSE Experimental Electromechanical Module protects the city of Venice from floods. Pictured October 3, the last mobile gate is about to be lifted at the Malamocco inlet off Venice’s Lido.
ANDREA PATTARO/AFP via Getty Images
Venice, Italy (CNN) — Sebastian Fagarazzi is used to moving his belongings around. As a Venetian who lives on the ground floor, every time the city faces acqua alta — the regular flooding caused by high tides — he must raise everything off the floor, including furniture and appliances, or risk losing it.
But on October 3, with a 135-centimeter (53-inch) high tide forecast — which would normally see around half the city under various levels of water — when the flood sirens went off, he did nothing. “I had faith,” he says.
Saturday was the first acqua alta of the season for Venice. It was also the day when, after decades of delays, controversy and corruption, the city finally trialled its long-awaited flood barriers against the tide.
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A previous trial in July, overseen by Italian Prime Minister Giuseppe Conte, had gone well — but that was in good weather, at low tide. Earlier trials had not managed to raise all 78 gates in the barriers that have been installed in the Venetian lagoon.
Against all the odds, it worked.
At 12.05 p.m., high tide, St Mark’s Square — which starts flooding at just 90 centimeters, and should have been knee-deep — was pretty much dry, with only large puddles welling up around the drains.
The square’s cafes and shops, which often have to close for hours on end, remained open.
And in the northern district of Cannaregio, Sebastian Fagarazzi’s home stayed dry.
“I’d heard the [warning] sirens in the morning but I didn’t raise any of my furniture this time because the barrier lifted on the last test, and I had faith that it would work,” Fagarazzi, co-founder of social initiative Venezia Autentica, says. “This is historic.”
The defense system is called MOSE, the Italian for Moses, a name derived from the more functional Modulo Sperimentale Elettromeccanico, meaning Experimental Electromechanical Module. It consists of 78 flood barriers installed in the seabed at the lagoon’s three main entrance points.
When the high tide arrives, they can rise to form a dam, stopping the Adriatic Sea surging into the lagoon and flooding the city.
Delays and corruption
The new flood barrier in action at the Malamocco inlet off Venice’s Lido.
ANDREA PATTARO/AFP via Getty Images
Venice’s acque alte (“high waters”) are normally seen between October and March, and last a couple of hours, predominantly affecting the two lowest (and most visited) areas of the city: San Marco and the area around the Rialto. The phenomenon is usually caused by a combination of exceptionally high tides, low atmospheric pressure and the presence of a southern sirocco wind.
In recent years, their frequency and severity have been increasing due to climate change. On November 12, 2019, the city was devastated by an acqua alta that reached 187 centimeters, with almost 90% of the city flooding. Businesses have struggled to recover since, with a sharp dip in tourist numbers on top of damage costs. The destruction, followed by the pandemic, has brought locals to their knees.
The MOSE project has been in the works since 1984, but has been so beset by delays and corruption that many Venetians never believed it would work.
Deserted Venice contemplates a future without tourist hordes after Covid-19
“It doesn’t seem true,” says Serena Nalon, at the Bottega del Mondo shop in Cannaregio. Her business — a fair trade co-operative — suffered major damages in last year’s floods.
“I was very skeptical — not least because they’ve spent so much money, without any result until now, so this morning I had minimal expectations,” she says.
“I was worried when I saw the tide predictions, then somewhere between incredulous and happy when it worked. You appreciate things more when you don’t expect it.”
Nearby, Federica Michielan, owner of bar Ae Bricoe, felt the same. “It’s great — it’s finally been resolved,” she says. “At least, I hope it has, because if it breaks, we’ll be under water.”
‘Historic day’
A test in poor weather conditions had been the next step for the MOSE, which is not yet completed. And on Friday, when a full moon and high winds were predicted for the following morning, the city council asked permission to raise the barriers.
The usual flood sirens rang throughout the city at around 8 a.m. Saturday, while the test started half an hour later. By 10.10, the barriers were fully raised — and while the water level rose to 132 centimeters outside the MOSE, inside the lagoon, it remained at 70 centimeters — enough to keep San Marco dry.
“This was a historic day for Venice,” Mayor Luigi Brugnaro, who had watched the raising of the barriers with MOSE special commissioner Elisabetta Spitz, later told journalists.
“There’s a huge satisfaction, having spent decades watching helplessly as the water arrived everywhere in the city, causing vast amounts of damage.
“We have shown, not only with a tide that would have flooded the city but also with a sirocco wind of 19 knots, that it works.”
In the city, Venetians — many of whom had barricaded their property against the incoming water — could hardly believe their luck. At El Fornareto bakery in Cannaregio, locals grinned as they queued for bread in sneakers instead of the gumboots they’d usually be wearing. In the church of San Nicolò dei Mendicoli in the southern Dorsoduro district — which normally floods at 130 centimeters — the priest, don Paolo Bellio even referred to the success in his evening sermon.
“Today we were saved,” he said afterward. “We didn’t have to use the pumps. It was a surprise, but I’m happy it worked — especially as it has been so criticized. This is a day of joy for everyone.”
Calling it a “clear success,” commissioner Spitz underlined on Saturday that this is “only a fundamental step towards protecting the city and the lagoon.” The project — which also involves raising pavements in the lowest areas of the city to 110 centimeters, and permanent defense walls near the flood barriers — is due to be completed December 2021, when it will be handed over to the city.
Until then, it has been agreed that from now on, the barrier will be raised each time the tide hits 130 centimeters, meaning devastating floods such as last year’s should be a thing of the past (at least, in the medium term. Climate change means MOSE will not hold back the water indefinitely). However, once the city takes over, the barriers will go up earlier, at 110 centimeters.
https://www.cnn.com/travel/article/venice-flood-barrier/index.html
By John C. Maxwell | September 29, 2020 | 0
If you desire to be a great leader, then you need to learn to recognize and promote the best ideas no matter where or from whom they’re coming—man or woman, young or old, black, white, upside down or inside out.
Ideas are the lifeblood of an organization. Harvey Firestone, who founded the Firestone Tire and Rubber Company, said, “Capital isn’t so important to business. Experience isn’t so important. You can get both of those. What is important is ideas. If you have ideas, you have the main asset you need, and there isn’t any limit to what you can do with your business and your life.”
The progress and innovations of great organizations don’t come down from on high. Their creative sessions are not dominated by top-down leaders, nor does every meeting become a wrestling match to see who can dominate everyone else in a struggle to take credit. People come together as teams, peers work together, and they make progress because they want the best idea to win.
How does a great leader help create and surface the best ideas from his or her team?
I believe there are a few common ways.
1. Listen to all ideas.
Finding good ideas begins with an open-minded willingness to listen to all ideas. Mathematician and philosopher Alfred North Whitehead said, “Almost all really new ideas have a certain aspect of foolishness when they are first produced.”
During the brainstorming process, shutting down any ideas might prevent you from discovering the good ones. Group thinking (not to be confused with groupthink) can be such a positive: When we share our thinking among a group, we think faster, more innovatively and our thinking has greater value. Great thinking comes when good thoughts are shaped in a collaborative environment.
2. Never settle for just one idea.
Leaders can be so action oriented. They want to go. They want to make something happen. They want to take the hill! The problem comes when they fight their way to the top of the hill, only to find that it was the wrong hill.
One idea is never enough. Many ideas make us stronger. I once heard an analyst say he believed the reason the communist bloc fell at the end of the 20th century is because communism is built on only one idea. If anyone tried to do things a different way, they were knocked down or shipped out. In contrast, democracy is a system based on a multitude of ideas. Because of that freedom, in democratic countries creativity is high, opportunities are unlimited and the potential for growth is astounding.
3. Look in unusual places for ideas.
Good leaders are always searching for the next big thing. They cultivate their attentiveness and practice it as a regular discipline. As they read magazines, watch movies, enjoy leisure activities or engage with their colleagues, they are always on the lookout for ideas or practices they can use to improve their work and their leadership.
4. Don’t let personality overshadow purpose.
When someone you don’t like or respect suggests something, what is your first reaction? I bet it’s to dismiss it. You’ve heard the phrase, “Consider the source.” That’s not a bad thing to do, but if you’re not careful, you may very likely throw out the good with the bad.
Don’t let the personality of someone you work with cause you to lose sight of the greater purpose, which is to add value to the team and advance the organization. Set aside your pride and listen.
5. Protect creative people and their ideas.
Ideas are such fragile things when they first come to light. Advertising executive Charlie Brower says a new idea “can be killed by a sneer or a yawn… stabbed to death by a quip and worried to death by a frown.”
If you desire the best idea to win, then become a champion of creative people and their contributions to your organization. When you discover peers who are creative, promote them, encourage them, and protect them. Pragmatic people often shoot down the ideas of creative people—the very people who need to thrive and keep generating ideas for the benefit of the team.
6. Don’t take rejection of your own idea personally.
When your ideas are not received well by others, stop competing and focus your energy on creating. You will open the way for people around you to take their creativity to the next level.
I know that my ideas aren’t always the best ideas. I often think they are, but when everyone in the room has a different opinion, it pays to listen. The company owner doesn’t need to win—the best idea does.
* * *
Never forget that having a collaborative spirit helps the entire organization. When you think it terms of our idea instead of my idea or her idea, you’re probably on track to helping the team win.
That should be your motivation. Let the best idea win, and you will reap the rewards together.
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Reformed Broker Josh Brown Blog
I’m showing you a chart below that Ari Wald at Oppenheimer just put out, I think it’s a good way of viewing the difference between IPO performance in this era, versus that era. One of my guests from the podcast was Kathleen Smith, whose firm Renaissance Capital is actually the sponsor of the ETF Ari is looking at here:
Here’s Ari’s take (bold is me):
Continue readingThu, Oct 1, 2020
Even after September’s weakness, the S&P 500’s trailing 12-month total return stood at an impressive 14.9%. Given the events of the last 12 months, one could even say that performance is remarkable. What’s even crazier is that the S&P 500’s performance over the last 12 months is more than three times stronger than the 12 month period before that (+4.25%). The chart below compares the S&P 500’s annualized total returns over the last one, two, five, ten, and twenty years and compares that performance to the historical average return of the index over those same time periods.
The S&P 500’s historical average 12-month return is 11.7%, so the current 14.9% gain exceeds that average by more than three full percentage points. Over a two-year window, though, the S&P 500’s annualized return of 9.4% is more than a full percentage point below the historical average. Looking further out, the S&P 500’s trailing five and ten-year annualized return has been much stronger than average, which makes sense given the long bull market we were in. Over a 20 year window, though, the S&P 500 is only just starting to work off some of the declines from the dot-com bust and as a result, the 6.4% annualized gain is four and a half percentage points below the long-term average of 10.9%.
Below we show how the current performance of the S&P 500 in each of the time frames shown compares to all other periods on a percentile basis. The S&P 500’s performance over the last year ranks just below the 56th percentile of all other periods, while the two-year performance ranks just below the 42nd percentile. Even as the five and ten-year periods have seen well above average returns, they still rank in just the mid-60s on a percentile basis. The S&P 500’s ranking over a 20-year time period is a completely different story ranking in single-digits on a percentile basis. Even with the equity market right near record highs, the last two decades have been forgettable for US equities. Click here to view Bespoke’s premium membership options for our best research available.
Chart of the Day
2020 is the year of the bond ETF.
Found at Abnormal Returns Blog. www.abnormalreturns.com
If interest rates rose 1%…30 Year Treasury would drop -21%Historical yields on the 30-year U.S. Treasury have included the following:
Historical 30-Year Treasury Yields.
Source: MacroTrends
https://www.investopedia.com/terms/l/longbond.asp
Good Morning from Germany where dividends matter & artificially dope benchmark index Dax. Without dividends, German stocks’ return since 2000 high would be negative. While Dax has gained 60% since then, Dax Price Index, which like S&P500 does not incl dividends, has dropped 11.1%
We start with housing affordability, which has rarely been higher on lower mortgage rates and growing wages:
https://www.zerohedge.com/commodities/visualizing-us-housing-frenzy-34-charts
The Big Four bank stocks.
JPMorgan Chase [JPM] is down 32% ytd. At $96.27 today, it’s back where it first was in October 2017. Having about doubled since the peak before the Financial Crisis, it’s the least-dirty shirt of the batch.
Bank of America [BAC] is down 33% ytd. At $24.09, shares are down 56% from the peak before the Financial Crisis, and are back where they’d first been in December 1996, well, 24 years ago.
Wells Fargo [WFC] is down 56% ytd. At $23.53, shares are down 61% from December 2017 and are back where they’d first been in October 2000.
Citigroup [C] is down 46% ytd. At $43.11, shares – adjusted for its infamous 1-for-10 reverse stock split in March 2011 – are back where they’d first been in 1993.
My Big Four Bank Index, based on market capitalization, closed today at $685 billion (yup, $60 billion below Facebook’s market cap). That’s down 46% from its peak ($1,258 billion) on January 26, 2018. You see, banks got hit two years before the Pandemic. And the index is now back where it had first been on December 28, 2004, nearly 16 years ago (data from YCharts):
My Big-Four Bank Index already got crushed back to 2004 level.
By Wolf Richter for WOLF STREET.
REBNY: Real Estate Generates More Than 50% of NYC Tax Revenues
New York City’s real estate industry generated $31.9 billion in taxes over the last fiscal year, representing 53% of the city’s tax revenue, according to an analysis by the Real Estate Board of New York, which is holding its 124th Annual Banquet Thursday evening. The industry’s share of revenues is more than twice as large as the next closest contributor: personal income tax, with a 21% share.
The $31.9 billion comes from commercial and rental apartment buildings. It doesn’t include one-and-two family homes, cooperatives and condominiums or schools, hospitals and other publicly-funded structures.
“This report demonstrates the importance of real estate related tax revenue to our thriving city,” said REBNY president James Whelan. “If we want a progressive city, then we need a prosperous city. These findings underscore that policies that limit the amount of tax revenue generated by our industry are counterproductive to improving the lives of New Yorkers they aim to help.”
Bryson DeChambeau hits his tee shot on the 16th hole during the Rocket Mortgage Classic golf tournament at Detroit Golf Club. Brian David Gordon·
Bryson DeChambeau‘s radical transformation of his body and game has been one of the most polarizing issues of the summer. Just how crazy has DeChambeau been off the tee? Consider that over the five PGA Tour events since the three-month coronavirus shutdown, DeChambeau has hit 29 drives at least 350 yards, by far the most of any player. In fact, it’s more than the next two players combined. That is nearly the same number of drives of at least 350 yards as he had all of last season (30).
Most 350-Yard Drives Since PGA Tour Restart
| PLAYER | NUMBER OF DRIVES LONGER THAN 350 YARDS |
| Bryson DeChambeau | 29 |
| Matthew Wolff | 15 |
| Cameron Champ | 12 |
DeChambeau was not always this long off the tee. He’s averaging 323 yards per drive this season, up over 20 yards (+20.5) from 302.5. He is on pace to be the first player since 2005 to increase his driving distance by 20 yards over one season. The next-largest increase belongs to Tiger Woods, who increased his driving distance by 14.2 yards from 2004 to 2005.
Largest Year-Over-Year Increase In Driving Distance Last 15 Years
| YEAR | PLAYER | DISTANCE INCREASE IN YARDS |
| 2019-20 | Bryson DeChambeau | +20.5 |
| 2005 | Tiger Woods | +14.2 |
| 2017-18 | Graeme McDowell | +13.7 |
The massive distance has left DeChambeau just 149.2 yards to the hole on average for his approach shots this season. That is on pace to pass Bubba Watson (149.8 in 2014-15 season) for the shortest distance in a single season since 2005.
Shortest Average Distance To Hole After Tee Shot In Single Season Since 2005
| YEAR | PLAYER | DISTANCE TO HOLE AFTER TEE SHOT |
| 2014-15 | Bubba Watson | 149.8 |
| 2012 | Bubba Watson | 152.2 |
| 2011 | J.B. Holmes | 152.7 |
| 2016-17 | Rory McIlroy | 152.9 |
| * DeChambeau currently at 149.2 this season |
Another way to look at it: DeChambeau’s drives have covered more than 67% of the courses’ yardage this season. That’s (again) on pace to pass Bubba Watson’s mark from back in 2014-15.
Highest Percentage Of Yardage Covered By Tee Shots Single Season Since 2005
| YEAR | PLAYER | PERCENTAGE OF DISTANCE COVERED BY TEE SHOT |
| 2014-15 | Bubba Watson | 67.28 |
| 2016-17 | Rory McIlroy | 67.26 |
| 2012 | Bubba Watson | 67.05 |
| * DeChambeau currently at 67.43 |
As for head-to-head comparisons with Woods, DeChambeau is already on his way to doing something Tiger never did — lead the PGA Tour in driving distance. Woods finished second in driving distance in four different seasons, but he never led the field. However, relative to his peers, Woods’ peak driving distance season (2005) was slightly better when comparing distances to the PGA Tour average. In 2005, Tiger was 27.7 yards longer off the tee than the average player; DeChambeau is currently 27.1 yards longer than the PGA Tour average thus far this season.
The Busyness Paradox, Explained
Here’s how the busyness paradox works: When we’re busy and have that high-octane, panicked feeling that time is scarce — what one participant called the “sustained moment of hecticness” through the work day — our attention and ability to focus narrows. Behavioral researchers call this phenomenon “tunneling.” And, like being in a tunnel, we’re only able to concentrate on the most immediate, and often low value, tasks right in front of us. (Research has found we actually lose about 13 IQ points in this state.) We run around putting out fires all day, racing to meetings, ploughing through emails, and getting to 5 or 6 PM with the sick realization that we haven’t even started our most important work of the day.
So we stay late at the office, or take work home in the evenings or weekends, and effectively steal time for work away from the rest of our lives. “If you’re in this firefighting state of time pressure and tunneling, you’re not making time to meet long-term goals. You’re not dealing with any of the root causes that led to the firefighting in the first place,” said Matthew Darling, ideas42 vice president and project lead. “The tendency is to do the stuff that’s easy to check off. That’s all you have the bandwidth for.” Tunneling and busyness are mutually reinforcing, Darling added. “Focusing on short-term tasks makes you not make strategic plans, which causes you to be busy.”
In theory, workers could just ignore any work they didn’t complete before, say, 5 PM, and call it a day. But it’s hard to break out of the tunnel now: Unlike a century ago, when Americans showed their status in leisure time, busyness has become the new badge of honor. So even as we bemoan workplaces where everyone is busy and no one is productive, busyness has actually become the way to signal dedication to the job and leadership potential. One reason for this is is that, while productivity is relatively easy to measure on a factory floor, or on the farm, we have yet to develop good metrics for measuring the productivity of knowledge workers. So we largely rely on hours worked and face time in the office as markers for effort, and with the advent of technology and the ability to work remotely, being connected and responsive at all hours is the new face time. “Tunneling” is no longer something that happens by accident,” Darling explained. “It’s a condition that workers are forced into by standard management practices.”
So how can behavioral science interventions begin to nudge this powerful busyness bias that keeps us all so stressed out?
One key will be to construct new mental modelsof the ideal worker. Right now, the model is someone who comes in early, eats lunch at their desk, stays late, emails at all hours, is always busy and always available to put work first — a definition that excludes anyone with caregiving responsibilities (which, in the U.S., is primarily women) or the desire for a healthy work-life balance.
So the interventions ideas42 are designing to improve work effectiveness and work-life balance may also wind up nudging the idea that an ideal worker in the 21st century is someone who does great work, is well-rested and healthy, and has a great life outside of work — not someone who’s trapped in the busy tunnel, chasing their tail, thinking small and on the road to burn out. These interventions are designed with the very foundation of behavioral science in mind: that human decision-making is shaped not by individual personality or willpower, but by the environment.
3 Ways to Break Your Employees Out of the Busyness Paradox
Recognize the power of social signals. When we’re at work, all we see are other people working. And when we see late-night emails or texts, we assume that our coworker or boss has been working all day or night without interruption, when perhaps they’d been out walking the dog or having dinner with their families. But that life outside work doesn’t register because we don’t see it. (More, we often don’t want to share our lives outside work with coworkers and bosses in order to preserve the busyness myth that we are always working.)
“You end up miscalibrating,” Darling explained, or thinking that people are working more than they actually are, so you automatically think you have to as well in order to keep up. Researchers point to a classic study of such “norm misperception” and how prevalent and damaging it can be: one nationwide surveyfound that a large share of college students overestimated the amount of alcohol their peers consumed. Over time, the best predictor for how much students wound up drinking was how much they thought their peers were drinking, even though, in reality, their peers weren’t drinking that much.
To correct that “always-on” misperception, researchers at ideas42 are testing the idea of making non-work time more visible. They’re asking managers to be more open about: taking lunch breaks, leaving the office on time, working flexibly, going on vacation, talking about life outside of work or care responsibilities, and more demonstrably encouraging others to do the same — potentially even including life events on shared calendars. Another experiment involves automatic reminders. These reminders would go out at the beginning of every year and would prompt people to schedule their vacations.
Researchers are also working with teams to design email, phone, and texting protocols to cut down or eliminate work communication outside of normal hours, particularly from leaders who set expectations for everyone else. Behavior might be tracked and made transparent so that, through the powerful nudge of social comparison, people and leaders would be held accountable and the new systems more likely to stick.
Build in slack for important work. Humans are terrible at estimating how much time and effort are actually needed to accomplish things. It’s called the planning fallacy, and the busyness paradox only exacerbates that tendency to underestimate and overpromise. So one intervention being tested is for workers to intentionally create slack in their calendars every week — in other words, intentionally schedule a block of slack time to finish up any work that got delayed after an emergency popped up, or to finish a project that took longer than you thought it would. The team at ideas42 came up with the idea based on a study of hospital operating rooms that found leaving one room unused for emergencies, rather than booking to 100% capacity, actually increased the number of surgical cases and revenue while cutting down on staff overwork
Another idea is to create “transition days” at work before and after vacations, where the only expectation of workers would be to wrap up work before leaving, and catch up on what they missed while they were out. That would give workers a better chance of truly unplugging and recharging during vacation, and help people ease back into work after. People won’t feel as compelled to answer emails throughout for fear of falling behind, or dread juggling the awaiting inbox with immediate work demands. “You almost always need a lot more slack than you think you will,” Darling explained, “and it is actually markedly important for doing good work.”
Slack time requires a new mental model — recognizing that, no matter how carefully we plan, work emergencies and unexpected demands will always crop up and projects and tasks will usually require more time than we’ve allocated. So creating blank space isn’t slacking off (pun intended); it’s time that enables you to get your most important work done effectively and keeping it from spilling over into the rest of your life.
Increase transparency into everyone’s workload. Many people participating in our project felt they were always busy — going to meetings, answering emails, collaborating with others — but not necessarily productive. They found it difficult to find chunks of uninterrupted time to concentrate on a big project, much less plan or think or strategize. Some even said they used their paid time off just to have a day of uninterrupted, independent work.
So one intervention ideas42 researchers are experimenting with is an effort to “concretize” work by actually scheduling in time to work on the week’s priorities and making actual workloads transparent to bosses and coworkers. The thinking is that that transparency is likely to create positive friction every time someone wants to call a meeting. With priority work made more transparent, calling a meeting won’t be seen as cost free, but a values trade-off: what is everyone not doing because they’re at this meeting? And is the meeting the better use of everyone’s time?
Another idea involves “meeting hygiene” — can meetings become more efficient with a required agenda, limited time, and concrete action plan? Researchers may also test meeting and email black out days to encourage concentrated work time.
In the end, the hope is that these interventions will help people begin to act their way into a new way of thinking. If they see they can work more effectively andhave a healthier work-life balance, perhaps instead of praising people who brag about being super busy and working all the time, they’ll begin to think: If workers aren’t getting their most important work done, are on the verge of burnout, and have little time for life, what needs to change at this organization?
Brigid Schulte is a journalist, author of the New York Times bestselling Overwhelmed: Work, Love and Play When No One has the Time and director of the Better Life Lab at New America.
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Marketwatch
Chart of the week
U.S. inflation market pricing vs. our estimate, 2015-2025
Forward-looking estimates may not come to pass. Sources: BlackRock Investment Institute and the Federal Reserve with data from Refinitiv Datastream, September 2020. Notes: The chart shows a market measure of what five-year inflation expectations based on the consumer price index (CPI) will be in five years’ time. We show it using the five-year/five-year inflation swap. The line is shifted forward five years. The orange dot shows the BlackRock Investment Institute’s current estimate of average U.S. CPI inflation for the same five-year period of 2025-2030.
We expect annual growth in the U.S. consumer price index (CPI) to average in the range of 2.5% to 3% between 2025 and 2030, as the chart shows. This is broadly consistent with inflation moderately above the Fed’s 2% target (CPI inflation tends to run above the Fed’s preferred gauge based on the personal consumption expenditures, or PCE, price index), and a jump from current market-implied inflation. Rising global production costs are the trigger. The Covid shock is driving up costs in contact-intensive services, and could speed up deglobalization and the remapping of supply chains for greater resilience against a range of potential shocks. Less offshoring could give domestic workers more bargaining power on wages, especially in places where the political pendulum is swinging toward addressing inequality. So-called superstar companies – many in the tech sector – could gain greater ability to pass on higher production costs to customers, having achieved dominant market shares.
https://www.blackrock.com/us/individual/insights
By John Butters | September 25, 2020 FACT SET
For the second quarter, 53 S&P 500 companies issued quarterly EPS guidance, which was the lowest number of S&P 500 companies issuing EPS guidance for a quarter since FactSet began tracking this metric in 2006. Are fewer S&P 500 companies issuing EPS guidance for the third quarter as well?
The answer is yes. To date, 67 S&P 500 companies have issued EPS guidance for Q3 2020, which is 36% below the five-year average of 104. If 67 is the final number for the quarter, it will mark the second lowest number of S&P 500 companies issuing EPS guidance for a quarter over the past 10 years (Q4 2009), trailing only the record-low number of 53 in the previous quarter. However, it will mark a 26% increase over the previous quarter as well.
The low number of S&P 500 companies issuing EPS guidance for the third quarter is due to a substantial decrease in the number of S&P 500 companies issuing negative EPS guidance for the quarter. Of the 67 companies that have issued EPS guidance for Q3 2020, only 22 have issued negative EPS guidance. This number is 69% below the five-year average of 70.5. In fact, if 22 is the final number for the quarter, it will mark the lowest number of S&P 500 companies issuing negative EPS guidance for a quarter since FactSet began tracking this metric in 2006. The current record is 28, which occurred in the previous quarter. At the sector level, eight of the 11 sectors have seen fewer companies issue negative EPS guidance for Q3 2020 relative to their five-year averages (rounded to the nearest whole number), led by the Consumer Discretionary (1.0 vs. 15.5) and Health Care (1.0 vs. 11.2) sectors.
Low Energy” Energy-Bespoke Investment Group
US stocks are looking to close out the week on a positive note with the S&P 500 up over 1%. One sector that hasn’t been participating in the rally, however, is Energy. While it just moved back into positive territory for the day, the sector remains at the back of the pack in terms of sector performance. If these levels hold for the remainder of the trading day, it will be the69th time in the last 200 trading days that Energy has been the worst-performing sector. That works out to more than once every three trading days. Talk about a sector that’s in liquidation mode!
The chart below shows the rolling 200-day total number of days that Energy has been the worst-performing sector in the S&P 500. While the current level of 69 is extremely high, earlier this month the rolling 200-day total was even higher at 71. Over this same period of time, no other sector has even seen close to as many days of ranking at the bottom as Energy. The next closest is Utilities as it has been at the bottom of the pack in terms of performance on 36 of the last 200 trading days. It hasn’t just been the last 200 trading days that have been rough for the Energy sector. Over the last five years, the sector has been the worst-performing sector on just over 23% of all trading days. Is this what it felt like for the horse and buggy companies in the early 1900s or the ice-harvesting companies after the invention of electric refrigeration?
https://www.bespokepremium.com/interactive/posts/think-big-blog/low-energy-energy
From Barry Ritholtz The Big Picture Blog
WSJ-By Corrie Driebusch
–This year, more than 80% of the money raised by initial public offerings falls into three buckets: healthcare, technology and newly popular blank-check companies—shell firms whose only purpose is to acquire a private target and take it public. That is the most concentrated the IPO market has been since 2007, according to Dealogic, when new listings of banks and lending institutions flooded the market before the financial crisis.
More than 235 companies have joined the U.S. public markets this year, on track for the most since 439 companies went public in 2000, according to Dealogic. They’ll soon be joined by giants Airbnb Inc. and Palantir Technologies Inc., which will go public later this year after long tours as private companies.
IPO Market Parties Like It’s 1999
Even in the midst of a recession, investors are pouring money into newly public companies at levels on par with the dot-com era
https://www.wsj.com/articles/ipo-market-parties-like-its-1999-11601052419?mod=itp_wsj&ru=yahoo
Dollar Positioning (updated). Despite the Dollar’s sharp rally this week, Futures traders SOLD another $2.5 Billion – now the biggest Short Dollar position in 9 years. If this USD rally continues, a lot of traders look headed for an expensive lesson in risk management.
9:00 AM · Sep 26, 2020·TweetDeck
Wall Street’s New Suburban Subdivision Is Full of Renters-Bloomberg
Institutional money is pouring into single-family rentals
Demand for housing, affordability issues fuel industry
Wall Street won big buying up homes during the foreclosure crisis and renting them out. Now, it’s headed back to the suburbs in hopes of scoring again.
With the pandemic driving demand for larger living spaces, institutional investors are pouring money into single-family rentals. In addition to buying houses on the open market, they’re bankrolling subdivisions — inventing a new kind of suburban living that’s easier to afford, but where the financial benefits of homeownership go to Wall Street firms.
Blackstone Group Inc., Brookfield Asset Management Inc. and JPMorgan Chase & Co.’s asset-management arm have each made fresh bets on the industry since Covid-19 cases started surging, targeting a type of property big investors ignored until 10 years ago.
The investments come as publicly traded single-family landlords outperformed apartment owners, and social-distancing efforts make traditional commercial real estate, including hotels and retail properties, less appealing.
“It’s been a combination of the sector coming of age as well as the performance during the pandemic,” said Dana Hamilton, head of real estate at Pretium, whose Progress Residential manages roughly 40,000 rental homes. “Single-family rentals have been an island of strength during the storm.”
Same Homes
For decades, Americans have flocked to the suburbs in search of more space, better schools and a respite from the grind of city life. Those qualities have become more relevant in the era of Covid-19 and unrest in U.S. cities that has President Donald Trump promising to defend the suburban lifestyle.
Read more: Air Conditioners Break Faster in Work-at-Home Era
Whether landlords are shopping for existing homes or building them from the ground up, they want the same things that families have always favored. That means spare bedrooms, big garages and good neighborhoods.
Still, the new wave of investment shows how the single-family rental industry could change the U.S. housing market, providing affordable homes whose residents don’t benefit as values rise.
“It’s not a replacement if you’re trying to build wealth, but it gives you more options if you’re trying to figure out where to live, or you’re trying to build credit,” said Cheryl Young, an economist at Zillow.
On a September morning, several work crews were busy at one of American Homes 4 Rent’s new communities in Lake Stevens, Washington, about 35 miles (56 kilometers) northeast of Seattle. Rent is about $2,700 a month for a four-bedroom home with a fenced-in backyard in the 27-house development, which snakes down a street that ends in a roundabout backing up to a wooded area and an elementary school.
There’s little to distinguish the neighborhood from several others nearby developed by traditional homebuilders, and tenants are moving in just about as fast as the houses can be finished.
Rising Prices
American Homes, founded in 2012 by the self-storage billionaire B. Wayne Hughes, spent its early years building property-management systems to operate homes acquired in the aftermath of the foreclosure crisis.
After rising home prices made it harder for the company to score bargains, it decided to start building rental houses for itself. These days, it’s opening new communities at a pace of roughly one per week, chief executive officer David Singelyn said in an interview. The company’s share have gained 51% since the market hit a bottom on March 23.
Christopher Bernard, 34, signed a lease on a new American Homes property in Eagle Mountain, Utah, about 40 miles south of Salt Lake City, after he and his wife couldn’t close on a newly built home in the area. The rental house has nicer finishes, and costs less per month than what they would have paid on a mortgage.
“Someone who owns their house isn’t any different from someone who’s renting,” said Bernard, who teaches at a nearby university. “I’m proud because I can let my child run around on the lawn.”
Read more: Invitation Homes Eyes Next 80,000 Houses as Suburbs Boom
American Homes, which raised $625 million through a joint-venture with JPMorgan’s asset-management arm, isn’t the only company betting on purpose-built rentals. Amherst Group, another early industry player, hired a former construction executive as chief operating officer this summer with an eye to buying land and building its own homes. A former Colony Capital Inc. executive is raising $1.2 billion in equity and debt to build 5,000 rental homes.
Read more: Ex-Colony Executive Seeks $1.2 Billion for Single-Family Rentals
It won’t be easy for institutional landlords to remake the suburbs. Competition for construction workers, building materials and land could hold back rental developers, while low mortgage rates are helping boost home prices, making it harder to buy properties to convert for tenants.
Popular Bet
Mom-and-pop landlords still own the vast majority of single-family rentals, with large investors controlling roughly 2% of all rental homes, according to John Burns Real Estate Consulting.
Still, the industry has become a popular way for Wall Street to capitalize on the surging demand for housing, particularly as millennials look for more space and struggle to find homes they can afford to buy.
“If you take a step back, there’s not enough homes, and not enough affordable housing,” said Drew Flahive, who leads Amherst’s single-family rental business. “Our main focus with this business is creating supply that’s in such high demand.”
(Updates with American Homes 4 Rent share gain.)
Author of The Obstacle is The Way — Portfolio/Penguin Random House
16 articles Following
Some people aren’t strict enough with themselves. But some of us are too strict.
The work from home situation in the pandemic has highlighted this difference in many of us. While many folks have struggled to get by financially, those lucky enough to keep working seem to fall into two camps. Some are spending all day in their pajamas, others are working longer hours than before. We feel obligated to answer every email, to accept every phone call, to show up for every Zoom call. Plus untold additional family and personal obligations.
No wonder that, according to a recent study done by EPIC Provisions, 60-70% of work from homers are feeling burned out. As it happens, this is an issue that dates way way back.
Musonius Rufus, like a lot of the Stoics, was a strict man. He was strict with himself. He was strict with his students. He believed in hard work, he did not ease up, just because other people did or because he had been successful.
A friend would describe one evening, when in Athens, when they were enjoying the Saturnalia—quite pleasantly, in fact: “We did not, however, let our minds go lax,” he wrote, “for, Musonius says, ‘to let one’s mind go lax is, in effect, to lose it.’”
Unfortunately, this is a common belief, not just among the Stoics. People think they are too important, the stakes of their work are too high, that there is not a minute to lose. So they never relax. They never shut off their minds. They never check out, or let go. And far too often they end up losing it.
EPIC’s survey found that those who are feeling burnout associate it with feeling the need to respond immediately, be on all the time and stuck to their computer. Taking a mental break and eating healthy snacks helps both personally and professionally.
I certainly relate to that.
“The mind must be given relaxation,” Seneca said, “it will rise improved and sharper after a good break. Just as rich fields must not be forced…so constant work on the anvil will fracture the force of the mind.”
All muscles need rest. The brain is no exception. Fields must be alternated. Computers must occasionally be shut down or rebooted. To not do this is to risk injury, poor yields, or damage. We are not in this life for the short term. We are trying to build sustainable, enduring success.
I’ve been excited the last week to work with EPIC on a campaign to encourage people to take more breaks. It’s important stuff. If you don’t take a break…you might end up being the one breaking.
Me? I like to get up early, tackle my important projects and then around 10 or 11, I get up from my desk and take a break. It’s too early for lunch and too late for breakfast, so I’ll grab a snack. I’ll read a book. Or go for a walk or call a friend. Sometimes I just stare out the window. I do the same in the afternoon, usually in the pool with my kids. But the point is: I let the mind go lax.
On purpose. So I don’t lose it.
Do yourself a favor and give yourself permission to do the same.
#TakeAnEPICBreak this week! so you can continue to be your best self.
#sponsored
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Barrons
Inker’s thesis played out in markets just a few days later. On Sept. 4, as the tech-stock selloff got under way, the Nasdaq Composite sold off by as much as 5.1% to close with a 1.3% loss. And Treasury bond prices, which move opposite to yields, also sank. The 30-year Treasury yield rose 0.12 percentage point to 1.46%, in one of the largest single-day increases since the height of the pandemic panic. The 10-year yield jumped, as well, climbing 0.09 of a percentage point.
Treasuries Lose Some Haven Luster. Here Are Some Alternatives for Safety.-By Alexandra Scaggs
10 Year Treasury Yield….Will it go lower if stocks continue sell off?
SPLV Well Below Highs….Did not protect against Covid volatility….Traded above 20x P/E
Bloomberg notes the Shares of the biggest U.S. technology companies were well on their way to mirroring the Internet-driven 1990s bull market before they faltered last week – Wild overlay
From Dave Lutz at Jones Trading
Continue readingSoftBank Group shares dropped over 7% on Monday after The Wall Street Journal reported the Japanese investment group bought $4 billion worth of options tied to around $50 billion worth of individual tech stocks.“There is a palatable maleficence level lingering about SoftBank’s large derivative position amid the recent tech selloff,” said Stephen Innes, chief global market strategist at AxiCorp. “And while there is not a great deal going on due to fast money risk neutrality after last week’s ‘wipeout,’ the supposed heft of ‘one man’s call position’ is still not sitting well with many bulls at the moment.”
Bloomberg
The Financial Times, Wall Street Journal and Zero Hedge reported that SoftBank was making massive bets on technology stocks using equity derivatives. The FT labeled SoftBank the “Nasdaq whale” that “stoked the fevered rally in big tech stocks,” though it didn’t include details of any trading.
The reports touched off concerns that billionaire founder Masayoshi Son is embarking on a risky endeavor in unfamiliar territory, which could lead to losses like those SoftBank suffered after its enormous bet on office-sharing startup WeWork. The stock decline came despite an FT report that SoftBank now has gains of about $4 billion from the derivative bets.
“SoftBank was riding the Nasdaq wave like a mutual fund,” said Mitsushige Akino, senior executive officer at Ichiyoshi Asset Management Co. “The market is falling now and investors have zero visibility, so they are selling SoftBank stocks.”
“In a world where volumes are distorted by the frantic trading of algos, any real order flows may have surprisingly large impact on prices,” Peter Tchir, head of macro strategy at Academy Securities, wrote in a note Tuesday. “By trading options, they leverage their position.”
SoftBank Stock Tumbles With Son’s Foray Into Options TradingBy Pavel Alpeyevand Takahiko Hyuga https://www.bloomberg.com/news/articles/2020-09-06/softbank-s-4-billion-trading-gains-on-u-s-stock-option-bet-ft?sref=GGda9y2L
The Daily Shot
Equities: Let’s begin with the options market where the speculative fervor is on full display. Speculative demand for call options (mostly deep out-of-the-money contracts) has been staggering (2 charts).
Short-term call options are notoriously difficult to hedge, and dealers who sold them rapidly become short the market as shares rise (and the probability that these options will get exercised increases). Dealers are forced to buy stocks to cover their exposure (delta-hedging), pushing the market higher. That, in turn, makes the dealers short again, creating a melt-up.
Source: @sentimentrader
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @markets Read full article
https://dailyshotbrief.com/the-daily-shot-brief-september-3rd-2020-2/
View photos
(Bloomberg) — As the U.S. stock market continues to rally to record highs, the attention of many investors is turning toward November’s elections as a source of risk.
However, hedging against that potential volatility doesn’t come cheap. In fact, it’s currently the most-expensive event risk on record based on a common way to bet on volatility known as a “butterfly trade.”
Futures tied to the Cboe Volatility Index expiring in late October closed on Tuesday at 33.5, compared with a spot VIX that closed at 26.1. Those October contracts, which are currently the second-month futures and reflect expected volatility in the month after they expire on Oct. 21, are also higher than the first-month futures expiring in September and the third month expiring in November.
One “butterfly” trade would be to buy one unit each of the first- and third-month contracts while selling two units of the second. Currently, that trade prices with a reading of -6.9, the difference in costs between the butterfly’s “wings” in September and November and the “belly” in October. That pricing reflects the premium that investors are giving to own volatility over the election. Trading of VIX futures started in 2004.
“In the history of the VIX futures contracts, we’ve never had an event risk command this sort of premium into forward-dated vol at a specific tenor,” Bloomberg macro strategist Cameron Crise wrote in a blog post. “That obviously suggests that markets anticipate some pretty incredible fireworks.” He excluded a higher premium on March 18 of this year since front-month futures expired that day, when the S&P 500 fell 5.2%.
The spread between October and November VIX futures is also wide at about -1.7 instead of about 0.2, which history suggests it should be based on the level of the spot VIX, according to Crise.
“If it starts trading above where it ‘ought’ to be, particularly given the risk premium lavished on the election, that could be a sign that punters are worried about 2000-style uncertainty,” Crise wrote, referring to the presidential contest between George W. Bush and Al Gore, which ultimately was decided by the U.S. Supreme Court. “You don’t need a particularly vivid imagination to think that that could get pretty ugly this time around.”
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https://finance.yahoo.com/news/u-election-priced-worst-event-210637365.html
Long-term Treasuries tend to be less correlated with U.S. stocks than short-term Treasuries
https://www.advisorperspectives.com/commentaries/2020/09/02/why-own-bonds-when-yields-are-so-low
Resource Equities as a Value Opportunity and Inflation Hedge
Resource-based equities14 provide an interesting mix between a significant opportunity within Value equities today (thus lowering overall duration) and a hedge against future inflation. From a Value perspective, Resource equities, particularly Energy and Metals stocks, appear to be trading at the cheapest levels they have ever been relative to the S&P 500 (see Exhibit 5).
EXHIBIT 5: VALUATIONS ARE AT HISTORIC LOWS
As of 6/30/2020 | Source: S&P, MSCI, Moody’s, GMO
Valuation metric is a combination of P/E (Normalized Historical Earnings), Price to Book Value, and Dividend Yield.
Metal producers are also an interesting subset because they are in a secular growth mode as the world transitions to more clean energy. This cannot be done without metals such as copper, lithium, nickel, vanadium, etc.15
Resource stocks have also been a very useful tool in inflationary times. Exhibit 6 shows the return of Energy and Metals stocks during the more significant (CPI greater than 5% for a year or more) bouts of inflation we have seen in the U.S.
EXHIBIT 6: DURING INFLATIONARY PERIODS, RESOURCE EQUITIES HAVE PROTECTED PURCHASING POWER BETTER THAN THE BROAD EQUITY MARKET
Source: S&P, CRSP, Global Financial Data, MSCI, GMO
Annualized data. Inflationary periods have been identified as periods where inflation, as measured by CPI, was greater than 5% per annum for a period longer than one year.
During these inflationary periods, Energy and Metals stocks kept up with or beat inflation in six of the eight periods and outperformed the broad market in all eight periods.
2Q 2020 GMO Quarterly Letter
by Ben Inker, Matt Kadnar of GMO, 8/31/20
https://www.advisorperspectives.com/commentaries/2020/08/31/2q-2020-gmo-quarterly-letter
What we do know is that Big Tech was expensive, with the S&P 500 Information Technology index trading at 27.5 times forward earnings; extended, with the Nasdaq 100 trading more than 30% above its 200-day moving average; and way too popular. Citigroup’s Panic/Euphoria model was nearly three times the level that signifies euphoria, and the percentage of bulls in the Investors Intelligence Survey was more the 40 percentage points higher than bears.
Tech Stocks Finally Got Crushed. Why the Stock Market Is on Shaky Ground.By Ben Levisohn https://www.barrons.com/articles/the-stock-markets-august-gains-turned-to-september-pain-what-happens-next-51599266176?mod=past_editions
WSJ–Container volumes at the ports of Los Angeles and Long Beach rose by 24% and 21%, respectively, in July from June. Business at both ports had fallen by more than 6% in the first half of the year from the comparable period of 2019.
“The biggest pressure is on the West Coast, being the fastest way to get goods from Asia and get them onto the U.S. shop shelves,” said Nils Haupt, a spokesman for German shipping line Hapag-Lloyd AG . “All available capacity has now been deployed as retailers scramble to restock and this is driving the strong freight rates.”
Container Volumes Shipped to the U.S. Surge After Coronavirus Downturn–By Costas Paris
Josh Boak
AP Economics Writer
Washington – Despite a decade-plus of economic growth, Americans have slowed the pace at which they’re forming new companies, a trend that risks further widening the gap between the most affluent and everyone else.
The longest expansion on record, which began in mid-2009, has failed to restore entrepreneurship to its pre-recession level, according to a Census Bureau report based on tax filings.
Between 2007 and the first half of 2019, applications to form businesses that would likely hire workers fell 16%. Though the pace of applications picked up somewhat after 2012, it dipped again this year despite President Donald Trump’s assertion that his tax cuts and deregulatory drive would benefit smaller companies and their workers. Applications are down 2.6% so far this year compared with the same period last year.
Business formation has long been one of the primary ways in which Americans have built wealth. When fewer new companies are established, fewer Americans tend to prosper over time.
In addition, smaller companies account for roughly 85% of all hiring, making them an entry point for most workers into the workforce. Even with the unemployment rate at a near-record-low of 3.7%, a decline in the creation of new companies means there are fewer companies competing for workers, a trend that generally slows pay growth. The pace of pay growth has stalled for the past five months even as hiring has remained healthy.
“What you see is reduced social and economic mobility,” said Steve Strongin, head of global investment research at Goldman Sachs. “It means that most of the growth is occurring in the corporate sphere, which keeps wage growth down and improves profits.”
Smaller companies and startups were generally cautious about expanding as they emerged from the Great Recession, in many cases choosing not to hire. The 2008 financial crisis delivered a warning to many would-be entrepreneurs that scaling back their ambitions might help them survive another recession.
“People became a lot more risk-averse after the Great Recession because so many people were hurt,” said Nicholas Johnson who founded Su Casa, a chain of four furniture stores based in Baltimore that employs 30 workers.
Johnson, 45, started Su Casa about 20 years ago. Emerging from the recession, he kept his staffing levels low to reduce his costs. Still, that meant having to pay well above the minimum wage to attract and retain workers who were specialized in home decor.
“I am super-concerned about an upcoming recession because we got so lean that I can’t get lean again,” Johnson said. “There is no more fat to trim.”
Goldman Sachs on Thursday is releasing a survey of business owners who took part in its “10,000 Small Businesses” program, which has provided management training to several thousand small companies since 2010. The survey concluded that entrepreneurs typically struggle to find qualified workers and to navigate complex regulations. Both factors tend to slow the formation of new companies.
Among the business owners who were surveyed, nearly eight in 10 said they favor a higher local minimum wage well above the federal baseline of $7.25 an hour. Focus groups conducted as part of Goldman’s survey indicate that smaller companies believe wages have failed to keep pace with the costs of living and the retention of employees.
Just 20% of the surveyed business owners said they felt that Trump’s 2017 tax cut would increase their companies’ growth, according to the online survey of 2,285 alumni of the Goldman program.
Social and demographic forces are also thought to be limiting opportunities for entrepreneurs and smaller companies. America is aging, many young adults are weighed down by student debt and larger retailers have used their scale to offer lower prices than smaller companies can afford to do so.
Roughly two-thirds of the decline in startups between the late 1970s and 2007 resulted from a slowdown in the growth of the U.S. workforce, according to research by Fatih Karahan of the Federal Reserve Bank of New York, Benjamin Pugsley of the University of Notre Dame and Aysegul Sahin of the University of Texas-Austin.
But the recovery from the Great Recession, which was induced by the housing bust, also reordered the economy in ways that complicated the creation of smaller businesses. Several sectors of the economy enjoyed no rebound at all in company formations compared with the number of business closures.
The economy now includes 116,459 fewer construction companies than it did in 2007, a roughly 15% decline, according to the Census Bureau. There are 54,045 fewer retailers that employ fewer than 20 people, a consequence in part of a shift to online shopping and the rise of national chain stores. More than 26,000 small manufacturers have shuttered.
The spillover effects have had damaging consequences in many cases. Downtowns in the industrial Midwest have empty storefronts. Home construction has been relatively weak, causing prices to accelerate. This has limited affordability and made it harder for people to join the middle class through home ownership.
Construction jobs often pay solidly middle wages. And home ownership is down 8 percentage points for people under 35 when compared to previous generations.
“If you’re thinking about the American Dream, trying to get into the middle class, homebuilding represents both of those objectives,” said Robert Dietz, chief economist at the National Association of Home Builders. “The unmet potential for homebuilding has been one of the frustrations” of this recovery.
John Dearie, founder of the Center for American Entrepreneurship, who holds roundtables around the country with small business owners, said he hears frequently about problems for younger companies caused by a shortage of skilled workers, immigration policies that thwart access to talent and difficulties in obtaining bank loans.
The number of tech startups – from software to computer systems design companies – has grown about 20% since 2007. But that sector represents just 2% of the roughly 6 million companies in the United States.
Dearie said he worries that the United States is losing its competitive edge because the obstacles for would-be startups are slowing the formation of innovative businesses.
He ran off a list of innovations that were derived from entrepreneurs: The cotton gin, the steam engine, railroads, the telegraph and telephone, electrification, the automobile, the airplane, air conditioning and refrigeration, the computer, internet applications and wireless communication.
“Declining startup rates,” Dearie said, “amount to nothing less than a national emergency.”
New Yorkers Flee for Florida and Texas as Mobility SurgesBy Steve Matthews and Alexandre Tanzi https://www.bloomberg.com/news/articles/2020-08-31/new-yorkers-flee-for-florida-and-texas-as-mobility-surges?sref=GGda9y2L
Some less obvious, lower-risk suggestions
Source: No author listed, NeedPix, Public Domain
A number of my clients are tempted to start a business, often because they’ve been laid off because of COVID and are having a tough time landing a decent job.
I tell them that the idea is the least important part; success is mainly about execution. Nevertheless, many of them remain eager to hear some ideas. Here’s a buffet of the kinds of things I often suggest.
Don’t innovate; replicate. The leading edge too often bleeds, guinea pigs often die. It’s less risky to take an successful business concept and execute well. My favorite example is Noah Alper, who founded Noah’s Bagels. There already were a number bagel shops in the area but Noah came up with a better recipe and opened a store in a neighborhood with lots of bagel lovers. Little by little, he expanded to 38 stores whereupon he was bought out for $100 million.
So, think of stores that are doing well, visit (subject to COVID restrictions) and see what you can learn. Could you do it better, less expensively, or in a different location, or online?
Passion may not be required. Some people need to be passionate about the product or service, but other people realize that as long as the product is worthy, they’ll derive plenty of satisfaction just from seeing those sales and satisfied customers. To broaden your options, you might want to consider a wide range of ethical businesses, not just those selling products you’re passionate about.
Use inside knowledge. In your line of work, have you observed pain points, something that’s frustrating, especially to people in power? If not, might you query your friends? That resulted in a client learning that a railroad that operated on both sides of a major river spent a fortune on cab fares transporting employees from one side of the river to the other. The client offered to run a shuttle service, saving the company lots of money while making my client a good living. Another example: A client worked in the wine industry, where he learned that wineries find shipping a pain, so he opened a business that ships for a number of wineries in the Napa Valley.
Source an undervalued product? I’ll change irrelevant specifics to avoid breaching client confidentiality, but a client, whom I’ll say is an electrical engineer, contacted manufacturers of I’ll say commercial lab equipment, bought, as-is, returned or obsolete. He repaired them and sold them to countries in which such equipment would be welcomed.
Serve less competitive markets. The just-mentioned client used that principle: He sold in locales where the latest-and-greatest would be too expensive. Another example: I had a client who bought used brand-name jeans for a couple bucks a piece by driving around to lots of Salvation Army and Goodwill stores. When he accumulated a shipping container full, he sent it to a developing nation where a local sold them for $8 a piece to eager customers.
Conversely, I had a client who, once a year, flew to central Europe where he placed ads in local newspapers for used vintage or antique violins. They’re in greater supply there than in the US and so could sell them at a tidy profit. When he had a shipping container full, he had it shipped to his home, where he stores the violins for sale—Picture a garage full of fiddle
Choose a dull-normal product. Few people graduate from a prestigious college wanting to start a business in mobile home park maintenance, used truck part brokerage, or a commercial printing machine service. Yet, according to the book, The Millionaire Next Door, which summarized interviews of 750 millionaires, the most common route to wealth was owning such a “dull-normal” business. I had a client who decide to own a hot dog cart, and sold his franks on a busy downtown street. After learning the business hands-on, he hired someone to run that cart, expanded to six carts, and retired before he was 40.
Go further up the supply chain. Say you’re passionate about beer. The obvious and thus too crowded choices are to start a craft brewery or brewpub. A less risky option is to start a beer business that’s further up the supply chain, for example, purveying spices for beer making. (One concoction is called Grains of Paradise.) Of course, that may not be as sexy as welcoming people to your brewpub but getting in further up the supply chain may be a safer route to good income while still enabling you to be part of the beer community.
Search for new laws and policies, As you read the local or national news, keep your antennae out for business opportunities. For example, North Carolina mandated that henceforth, all students must take earth science. Well, a burned-out science teacher read that, whipped up a workshop for teachers and pitched every school district in the state: “I’ve developed a workshop that will prepare your teachers to teach earth science.” She was busy immediately.
The takeaway
I want to reiterate that what I’ve done in this post is the easy part: suggesting ideas. Thomas Edison was not wrong: Success is 5% inspiration, 95% perspiration. I’d add, “smart perspiration.”
I read this aloud on YouTube.
https://www.psychologytoday.com/us/blog/how-do-life/202009/finding-business-idea
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
https://dailyshotbrief.com/the-daily-shot-brief-august-31st-2020-2-2/
Two Giant Growth Funds Suffer Biggest Selling Stampede on Record
Two Giant Growth Funds Suffer Biggest Selling Stampede on Record
(Bloomberg) — After this year’s surge in high-growth stocks, two big exchange-traded funds tracking those companies are losing steam.
Both the $65 billion Vanguard Growth ETF (VUG) and the $10 billion iShares Core S&P U.S. Growth ETF (IUSG) posted their largest outflows on record last month, according to data compiled by Bloomberg. Funds focused on growth lost more than $2.4 billion in August, the most since 2016. Meanwhile, value ETFs attracted $1.9 billion — their best month since March.
High-growth companies such as megacap technology names with solid balance sheets have been among this year’s hottest trades. But their historic rally has fueled some skepticism about further gains amid concern that they may be too expensive relative to so-called value stocks.
“There’s hesitation that the significant outperformance led by a handful of megacap names like Amazon.com and Apple can continue to climb much higher,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research.
Yet signs of a slow economic recovery from the pandemic-induced recession and a spike in global coronavirus cases may still make a compelling case for growth shares. Those companies beat expectations by a stronger margin and more frequently than their value counterparts in the second-quarter earnings season.
Despite the monthly outflows for the sector, the performance ratio of the iShares Russell 1000 Growth ETF (IWF) hit new highs relative to its value counterpart (IWD), according to a recent report from Bloomberg Intelligence.
To Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence, there’s reason to believe that investors could still be favoring growth, but through more targeted approaches.
“For sure, growth ETFs will be heavy on tech, but there is also a lot of other stuff, and I just think people only want tech,” said Psarofagis.
Technology ETFs lured $2.1 billion in August, while thematic sector products received $3.2 billion — their best month since 2018. The $143 billion Invesco QQQ Trust Series 1 (QQQ), which tracks the Nasdaq 100 Index, added $2.1 billion last month. Meanwhile, the Ark Innovation ETF (ARKK), whose biggest holding is Tesla Inc., recently had its largest inflow on record.
For more articles like this, please visit us at bloomberg.com
Summary List Placement
From Nick Lampone Dalzell Trading https://www.linkedin.com/in/nicholas-lampone-9277986/
Posted August 31, 2020 byJoshua M Brown
The legendary floor trader Art Cashin weighs in on the Tesla and Apple stock splits, which became effective today, in an emailed note. Excerpting a piece of it below…
Let’s begin with stock splits. I watched as several self-styled pundits on the financial media were beside themselves trying to explain how stocks were actually gaining ground after split. There were all the standard logical rationalizations. You have not increased the company’s worth by the action of splitting up as people buy yet the capitalization goes up, etc., etc. I give you five singles for a five-dollar bill, yet we haven’t really changed the value in any form.
The real point I can’t believe all of them have missed has to do with shorting the stock, particularly stocks like Tesla, Amazon and Apple where there are large short positions due to skeptics. When someone sells a stock that he doesn’t own (short), he then has to borrow it from someone who owns it so he can make delivery. He promises then to re-deliver an identical type of stock from whom he borrowed. When the stock splits, it complicates life for short sellers and often they have to go into various negotiations that are the equivalent of a short squeeze to buy back the stock, rechanging it for stock that will be due after the split is effective.
So, it was perfectly natural to watch Apple split and then have people begin to buy it and Tesla split and people begin to buy it and, while as I say, the self-styled experts amazed me I guess by their apparent lack of experience. So anyway, I wanted to make the point that stock splits can have a serious upward push on stocks, particularly heavily shorted. I guess that’s what comes with over 60 years’ experience on the Street.
This is a piece of the story that I myself had not considered. As I type, Tesla, now having split, is up another (another!) ten percent on the day while the just-split Apple tacks on another five percent in market value. I don’t how you can calculate the exact amount of these audacious moves in price are directly related to short-seller buy-ins and other related mechanics, but it’s probably a bigger factor than many (myself included) have considered.
Art is the best. Love that guy.
Photo comes from my own collection – Barry and Art did a fireside chat at a conference we threw back in 2013. Our camera phones weren’t so great back then.
For disclosure information please visit: https://ritholtzwealth.com/blog-disclosures/
10 Year Yield Rolls Back Over
30 Year Yields
Commodity Demand around electric cars growing at 25x
Source: @financialtimes Read full article
https://dailyshotbrief.com/the-daily-shot-brief-september-1st-2020/
Guest post by Steve Coughran:
my two decades of business experience, I have encountered many different flavors of leadership. Some leaders are strong-willed and autocratic, some are open-minded and democratic, some employ laissez-faire, employee-centric leadership styles, and most fall somewhere in the middle. While leadership style varies, in my experience, leaders across the board provide employees with a sincere depiction of the Why, an explicit description of the What, and freedom on the How.
Many of you reading are likely familiar with Simon Sinek’s Start with Why. His premise suggests that great leaders motivate with the “Why”, a deep-rooted purpose, before defining the “What”, the product or service, or the “How”, the process. Expanding on Sinek’s thoughts, I believe that not only do great leaders deprioritize the “how,” but the most influential bosses leave the “how” to their employees to figure out.
Have you ever been in a work situation where your boss or manager is explaining in specific detail how to do your job? It’s frustrating when managers live in the weeds. Poor leaders provide specificity around how to complete a task but fail to share the big picture, the why, behind the request. No one likes to be micromanaged. Unfortunately, many leaders result to meddling with the process in attempts to maintain a false sense of power. Micromanagers focus explicitly on the how, which often results in short-term success at the expense of the long-term strategy, overall scalability, and employee satisfaction.
Great leaders give little input on the how. Of course, this approach first requires leaders to equip employees with the tools and skills to solve for the how. They must invest heavily in training to ensure employees are prepared to think through the processes.
Training alone, however, isn’t enough to produce the desired results. After reinforcing the why and enabling employees, they get specific about the what. Great leaders share explicit expectations. When I first launched a high-end design build firm, I learned the hard way the importance of clearly communicating expectations. I was feeling on top of the world as my company flourished; customers were lining up for projects, and I had a diverse and talented staff to uphold my brand. To maintain this status, I was also working like a dog, putting in eighty-hour workweeks to keep up with demand. I jumped at my first opportunity to take a two-week vacation, leaving the company reins in the hands of one of my top managers. We were working on a high-end project, but I trusted my employees. I gave little instruction—my manager knew the business as well as I did—and was off to relax on a beach in Mexico and forget about work for a while.
I returned frustrated with the lack of progress. While I was away, the high-end project suffered from operational issues that led to cost overruns and schedule delays resulting in an upset client and some delayed payments. While I was upset with my team, I too was responsible for the situation. What did I count on my managers and employees to do while I was away? More importantly, how would I ensure they held up their end of the bargain? I failed to create an accountability structure. Through this experience, I learned a critical lesson: strong leaders follow up.
Great leaders build accountability structures that clearly define the desired results. Results are laid out specifically and comprehensively, often incorporating qualitative and quantitative data. By leaving little room for confusion, leaders establish fair expectations, which provide a foundation for equitable evaluation and constructive feedback. They create a “return and report” culture where employees are sent off with an understanding of the overarching strategy and the goals of the assignment. They present their findings after independently problem solving.
Giving employees freedom shows that you trust them (which according to research is critical for workplace engagement and productivity). Additionally, by encouraging employees to think, leaders boost their team’s development. Seeing how the employee problem solves allows his or her manager to clearly examine their comprehension of the task, the big picture, and detect any gaps in understanding or skills. They can then address these knowledge gaps with training and coaching, bringing the employees’ development full circle.
As we all continue along the journey to become the best leaders we can be, keep in mind Simon Sinek’s words of wisdom, “There is a difference between giving direction and giving directions.” Emphasize your purpose, explain your product or service, and leave the rest to your well-equipped team.
About the author: Author, CFO of an international billion-dollar company, and management consultant, Steve Coughran has over two decades of experience driving business excellence. His newest book is Outsizing: Strategies to Grow your Business, Profits, and Potential. For more information visit www.SteveCoughran.com.
https://www.greatleadershipbydan.com/2019/10/great-leaders-focus-on-why-and-whatnot.html
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
From Dave Lutz at Jones Trading
Sandy Miller, general partner at Institutional Venture Partners, notes that the number of public companies has fallen in half over the last 20 years, as M&A has outstripped new issues. “There’s a real hunger for new names,” he says.
Coming Attractions:
A few of the tech companies that filed for IPOs this past week.
| Company | Latest Fiscal Year Sales | Description |
| Corsair Gaming | $1.1 billion | Video game accessories |
| Palantir | 743 million | Data analytics |
| Bentley Systems | 608 million | Construction engineering SW |
| Unity Software | 542 million | Video game developer tools |
| Snowflake | 265 million | Cloud data management |
| Sumo Logic | 155 million | Data analytics |
| Asana | 143 million | Work management software |
| JFrog | 105 million | Software release management |
Source: company reports
The supply is deep. Venture-backed unicorns—pre-IPO companies with valuations above $1 billion—are piling up like kindling. According to CB Insights, there are 490 unicorns. By contrast, there are just shy of 2,000 companies trading on the Nasdaq or the New York Stock Exchange with valuations above $1 billion. In other words, if all the unicorns magically listed at once, the number of large cap U.S.-listed companies would increase by 25%. Most but not all unicorns are tech businesses, so consider this: Over the past three years, there have been a total of 100 tech IPOs. The current supply of unicorns is equal to 14 years of tech stock debuts.
https://www.cbinsights.com/research/best-venture-capital-unicorn-spotters-2/
SPACs are just getting started
The “blank check” acquisition funds known as special purpose acquisition companies, or SPACs, have raised more than $30 billionso far this year, versus $13 billion in all of last year. Can they keep it up? DealBook spoke with some of the most plugged-in SPAC bankers and lawyers on Wall Street, and they cited three factors driving the boom
1. Valuations are soaring for popular SPAC targets
“The pipeline is heavily weighted to technology and growth companies,” said Niron Stabinsky, who leads SPAC deals at Credit Suisse. He said that he speaks to big venture firms “weekly” about their portfolios. Many have taken notice of recent success stories, like Virgin Galactic’s merger with a SPAC led by the former Facebook executive Chamath Palihapitiya. SPAC offerings will be “incredibly active post Labor Day,” said Paul Tropp, the co-head of Ropes & Gray’s capital markets group. That’s part of a “significant uptick” in listings expected to hit the market before election-related uncertainty sets in: Yesterday, the tech firms Asana, JFrog, Snowflake and Unity all filed to go public.
2. SPACs aren’t just an alternative to traditional I.P.O.s
“SPACs have become a new way of doing an M.&A. deal,” said Jeff Mortara, the head of equity capital markets origination at UBS. A merger with a SPAC allows the target company’s investors to retain a stake while gaining liquidity, and deal negotiations can be done directly, secretly and quickly. SPACs typically have two years from their I.P.O. date to complete a merger.
3. The flood of money to SPACs means better terms for targets
“Everything is negotiable,” the venture capitalist Bill Gurley wrote in a detailed case for SPACs on his blog this weekend. As competition between SPACs intensifies, “sponsors are continuing to negotiate deals that look better for the companies they buy,” he said in the essay, which quickly became the talk of Wall Street and Silicon Valley.
Why? Some SPAC sponsors are open to a smaller “promote” — the stake the sponsor gets essentially free after a merger. (Traditionally, a sponsor takes 20 percent.) SPACs also award warrants to the vehicle’s investors, which give them the right to buy larger stakes in the merged company at a discount; these are becoming less dilutive as sponsors shift their terms to be more favorable to the target company. In the life-sciences industry, where SPACs have “nearly replaced late-stage financing and I.P.O.s,” warrants have come down to zero in some deals, said Christian Nagler, a partner in the capital markets practice at the law firm Kirkland & Ellis.
The standard-bearer of a new approach for SPACs is the $4 billion fund sponsored by Bill Ackman’s Pershing Square, the largest to date. The fund’s warrants are structured in a way that encourages investors to stay invested longer in the merged company, and Pershing will take its “promote” only if the company it buys meets certain performance goals. Sponsors without Mr. Ackman’s reputation may find those terms hard to imitate, but some are adopting similar elements all the same, experts say.
What’s next? Mr. Gurley predicted that SPAC fund-raising this year could be four times higher than the previous record, set in 2019, implying another $20 billion or so to come. The buoyant markets are attracting figures not known for deal making to the space, like the former Congressman Paul Ryan and the baseball executive Billy Beane, which sows doubts among some about the durability of the boom. Just SPAC mergers involving electric car companies and auto technology firms — “deals on wheels,” as one analyst put it to The Times’s Neal E. Boudette and Kate Kelly — are already worth more than $10 billion.
____________________________
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.
Katherine Greifeld
Investors Dump ‘Dead Weight’ Cash-Like ETFs at Record Pace
(Bloomberg) — Investors are abandoning cash holdings at a record clip as momentum continues to build behind 2020’s risk rally.
Roughly $5.4 billion has exited from the $20 billion iShares Short Treasury Bond exchange-traded fund — the biggest ultra-short duration ETF — over 14 consecutive weeks of outflows. That was the longest streak on record for the product, whose ticker is SHV. Meanwhile, investors have pulled $2.4 billion from the $14 billion SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) over 10 weeks, according to Bloomberg Intelligence data.
Investors accumulated record amounts of cash earlier this year amid concern over the impacts of the coronavirus pandemic on the global economy, with assets in money-market mutual funds soaring to a record $4.8 trillion in late May. Now, that cash is coming off the sidelines as stocks surge and corporate bonds look increasingly appealing. Additionally, the Federal Reserve’s commitment to keep interest rates at near-zero levels for the foreseeable future is further curbing appetite for short-duration Treasury ETFs.
“It’s recognition that ‘ZIRP’ will be around for a long time, combined with a rising risk appetite,” said Kathy Jones, Charles Schwab Corp.’s chief fixed-income strategist, referring to the concept of a zero interest-rate policy. “Short-term Treasury ETFs are looking less attractive than alternatives. Equities are benefiting. We also see interest in foreign equities and high-yield and emerging-market bonds.”
The S&P 500 has surged more than 55% from March’s bottom, notching a fifth straight month of gains in August. The Fed’s credit market backstop has boosted both investment-grade and junk bonds, with the largest high-yield debt ETF climbing nearly 24% since late March. The emerging-market outlook is also considerably brighter amid the dollar’s continued weakness and the Fed’s new average-inflation targeting regime.
The exodus from ultra-short duration ETFs is also likely due to investors trying to eliminate the “cash drag” in their portfolios by reinvesting in higher-yielding assets, according to Dan Suzuki at Richard Bernstein Advisors.
“Because they’re not generating any yield, they are acting as huge dead weight in many people’s portfolios,” said Suzuki, the firm’s deputy chief investment officer. “Investors are probably chasing higher returns, which means moving up the risk spectrum.”
(Updates prices in 5th paragraph.)
For more articles like this, please visit us at bloomberg.com
https://finance.yahoo.com/news/relentless-risk-rally-spurs-record-155206736.html
Warren Buffett marked his 90th birthday on Sunday by revealing a $6 billion investment in five of Japan’s largest trading companies.
The famed investor’s Berkshire Hathaway conglomerate has built passive stakes of just over 5% in each of Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo over the past 12 months, it said in a press release. Its National Indemnity subsidiary made the investments and will officially notify Japanese regulators of the positions when trading begins on Monday.
“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” Buffett said in the press release.
“The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships,” he continued. “I hope that in the future there may be opportunities of mutual benefit.”
Shares in Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo all rose between 4% and 10% on Monday.
Buffett’s company highlighted its longstanding positions in Coca-Cola, American Express, and Moody’s in the statement, underscoring its intention to maintain the Japanese investments for the long term.
Berkshire has the option to boost its stakes as high as 9.9% in any of the five companies. Buffett pledged to seek approval from the relevant board of directors to raise it beyond that point.
Investing in Japanese companies is a departure from the norm for Berkshire, as it has historically favored American businesses such as Apple and Bank of America. However, it has made a few foreign bets on companies such as Brazilian payments group StoneCo.
QQQ +179% vs. EFA +8%
The US tech sector is now worth more than the entire European stock market, Bank of America says
Henny Ray Abrams/AP Photo
US tech stocks surpassed the entire European stock market in market value after surging through the summer on outsize investor interest, Bank of America said in a note to clients.
The sector has notched several extraordinary superlatives through the coronavirus pandemic. Tech names fueled the US market’s rapid leap out of bearish territory and now host historically high investor crowding. Most recently, the group drove the S&P 500 to a record high, while the US remains deep in an economic slump and economists fear a double-dip recession.
Tech stocks’ market cap totaled $9.1 trillion as of Thursday, Bank of America said. That, for the first time, dwarfed the total value of all European stocks — including those listed in the UK and Switzerland — which stood at $8.9 trillion.
To emphasize the speed at which tech stocks have grown, the bank noted that Europe’s market cap in 2007 was roughly four times the size of the sector.
Much of that value is concentrated in the top five tech giants: Apple, Microsoft, Alphabet, Amazon, and Facebook. Together the companies make up nearly 24% of the S&P 500 and are worth roughly $7.5 trillion. Apple alone is valued at over $2 trillion.
Investors largely shifted capital into tech giants at the start of the pandemic, betting that the mega-caps’ cash piles and insulation from widespread lockdowns would outperform the market. Some strategists have deemed the names overcrowded, and others say they fear that antitrust measures could erode the companies’ success. But that hasn’t stopped the sector from continuing its run-up through the summer.
Of the five giants, Amazon has surged the most through the year. The stock is up roughly 85% in 2020, thriving on a surge of online retail activity as Americans stayed at home.
Alphabet’s Class A shares are up the least year-to-date compared with its mega-cap peers. Still, the shares have gained roughly 22% in 2020 and more than 7% over just the past month.
A weak dollar is impacting an uneven global market recovery
Dion Rabouin, author of Markets
After sinking on Friday, the dollar is teetering near its lowest in more than two years, and threatening to decline even further after Fed chair Jerome Powell confirmed plans to let inflation run hot in the future, likely meaning 0% U.S. interest rates for quite some time.
Why it matters: For the U.S. currency to fall in value, other currencies must rise and that can be especially harmful to export-oriented economies like the eurozone and Japan, whose central banks may be forced to take action in the coming months.
What it means: A strong currency makes a country’s exports more expensive and therefore less attractive, denting a needed source of income, especially as the world tries to recover from the coronavirus pandemic.
The big picture: The U.S. has done a far worse job handling the coronavirus pandemic than most of Europe and Japan, but that has led to a weaker currency and a much stronger bounce in stock prices. The benchmark S&P 500 has gained 8.6% this year, with the Nasdaq up 30%.
Where it stands: The euro has risen to $1.19 and is trading just below the two-year high it touched earlier in August, threatening to break back toward its early 2018 levels around $1.25, while the dollar has fallen to 105.30 yen, eyeing 100 yen per dollar.
Worth noting: Commodities, which are largely priced in dollars, also look poised to further benefit from the greenback’s slide. Gold and silver have had breakout years, each up more than 30% for the year, and other commodities are picking up — copper has risen 12% since July 1, and cocoa is up 23.6%.
In the US, about 75% of the restaurants that took reservations before the pandemic are now taking reservations again, up from zero in April, according to data from OpenTable which provides online reservation services for 60,000 restaurants. Back on July 1, already 65% of the restaurants were taking reservations again, but then new outbreaks spreading across the country, particularly in the South, triggered some retrenching (chart via OpenTable):
The State of the American Restaurant, City by City–by Wolf Richter • Aug 29, 2020 • 108 Comments https://wolfstreet.com/2020/08/29/the-state-of-the-american-restaurants-city-by-city/
Thanks to Joe D at Philly Inquirer for Passing Along.
https://www.statista.com/statistics/241494/median-age-of-the-us-population/
Psychological factors affect the spread of misinformation during crises.
In the continued war on misinformation, LinkedIn and Facebook just removed millions of posts containing misinformation about the coronavirus. And it is believed that is but a fraction of the posts. When John Oliver tackled the flood of misinformation surrounding the COVID-19 pandemic, he mentioned the “proportionality bias” — that big events beg big explanations — to explain why misinformation, particularly conspiracy theories, have had a heyday with the current crisis. However, the science suggests that it is more than just the proportionality effect at play making this crisis exceptionally fertile grounds for seeds of misinformation.
Negativity Bias. For starters, our evolutionary heritage leads us generally to pay more attention to negative information than to positive information. This negativity bias was important to the survival of our species, as attending to the tiger prowling the encampment was more imperative than celebrating the latest birth. We see this reflected in our news which disproportionately features headlines about the latest travesty while feel-good stories are relegated to the back pages. And recent research has shown that this attention to negative news is evident at the physiological (and neurological) level across samples in 17 different countries.
Ultimately, this means that if something bad is happening, it’s got our attention. A once-a-century pandemic killing hundreds of thousands certainly qualifies. Thus, already, we are on the outlook for information. Further, evidence suggests that negative information is viewed as more credible than positive information. So not only are we paying attention but we are also primed to believe it.
Social Risk Amplification. This negativity bias gets a boost when information is shared. In a recent interview, it was said that the spread of misinformation is like a “screwed up game of telephone.” In fact, using these “diffusion chain experiments” is a common choice in experimental studies examining the transmission of information. In a 2015 study researchers had strings of 10 participants pass along information about the risks and benefits of a controversial drug (i.e., triclosan). Overall, all messages became shorter and increasingly inaccurate. However, by the end of the “diffusion chain” information about the benefits had been relatively lost whereas information about the risks continued to spread. Further, individual biases about risks led to the amplification of risks down the chain. A follow-up 2020 study showed that this amplification effect is even stronger when people are feeling stressed and unfortunately, new research shows that Americans are even more stressed about the coronavirus than other nations.
American Stress Levels Compared
Source: Reginald D. Williams II et al., Do Americans Face Greater Mental Health and Economic Consequences from COVID-19? Comparing the U.S. with Other High-Income Countries (Commonwealth Fund, August 2020).
Dread Risks. As if that weren’t enough to provide a megaphone for misinformation during stressful times, social risk amplification is even more likely when people are experiencing what are called dread risks, i.e., life-altering, disastrous, random, events that present a threat to mortality. In a 2018 study, researchers using an 8-person diffusion chain experiment paradigm randomly assigned groups to transmit low- or high-dread risk messages. As the message passed from person to person the high-dread chains became more and more negative in their transmission of the message relative to the low-dread chains, and those messages became more and more distorted. We saw a real-life example of this with the transmission of information about the Ebola outbreak in 2015 via Twitter and Facebook where the diffusion chains are no longer just 8 or 10 people long but spread across millions of users each with their own megaphones of various wattage.
Frustration with the Scientific Method. To further complicate matters, the current pandemic features a novel coronavirus. Meaning there wasn’t a wealth of accurate information from science at the outset of the outbreak because how could there be? It was new. Scientists are racing to find answers. Science, however, is constrained by the scientific method which is much slower than the pace at which fearful stressed citizens want information. It takes considerable time, customarily, to build a scientific consensus. Thus, in this race for information, science often lags behind misinformation because the Twitter user recommending alcohol to combat COVID-19 is not similarly constrained.
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This scientific method can further be frustrating to individuals when the process of replication and peer review kicks in and leads to the modification or retraction of findings. These updates are more likely to occur when there is a race for answers and thus usually meticulous methods are viewed as less important than expediency. When recommendations are altered based on new evidence, this is a sign that science is working. However, when sources who are supposed to “have the facts” change course, it can result in a tainted truth effect damaging trust in those sources. Meanwhile, our Facebook friends are not held to the same standard.
Fear and Shallow Processing. Consequently, the wrong information, if repeated and said with certainty, can be more persuasive than the latest science, especially when we don’t take the time to process messages (e.g., read beyond the headline). Shallow processing is even more likely on the internet, where information flies by at the speed of a scroll and among people who are afraid such that they are looking for any type of action to protect themselves.
Due to this perfect storm of contributing factors we are seeing the spread of misinformation take on pandemic proportions (now available in 25 languages). Scientists often feel like they are combating two viruses. As citizens wishing to avoid infection, we need to practice good information hygiene in addition to good personal hygiene—starting with recognizing some of the signs that something you encounter might be misinformation, just as you would be on high alert when you hear someone cough or sneeze. Further, engage in basic fact-checking. Be the investigator, find the source of the information, and weigh the evidence supporting their claims. If you don’t have the time to do the investigation, do not share. You could save a life by stopping the spread of misinformation.
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Opinion: Hedge fund fees — whether or not you make money — are truly shocking
Hedge funds keep two-thirds of profits; investors get the rest
The professors analyzed a comprehensive hedge fund database containing nearly 6,000 funds over the 22 years from 1995 through 2016. Over that period these hedge funds collectively produced total gross profits of $316.8 billion. Of this total, fund managers kept $202 billion ($88.7 billion in management fees and $113.3 billion in performance incentive fees). The remainder—$113.3 billion, or 35.8% of total gross profits — went to investors. (See the chart below.)
The source of this skewed profit sharing is the asymmetry of hedge funds’ performance incentive fees. While the hedge fund industry receives a portion of investors’ gains, it does not to the same extent share in their losses.
It’s easy to overlook this asymmetry because it becomes evident only when focusing on the industry as a whole. At the individual fund level, incentive fees are only levied on performance that exceeds prior performance — exceeds previous high-water marks, in other words.
To illustrate how this performance incentive fee arrangement looks in practice, imagine the following two otherwise identical scenarios (setting aside management fees):
• You invest in a single hedge fund that in the first year gains 20%, gives up all that gain in the second year (a loss of 16.67%), and then gains 30% in the third year. You’d pay a performance incentive of 4% in the first year (20% of the 20% gain), nothing in the second year, and only 2% in the third year (2% of the amount by which that year’s gain exceeds that fund’s previous high-water mark). Glossing over several details, your total performance incentive fee for all three years would be 6% of assets under management.
• In the second scenario, imagine that you instead invest in three separate hedge funds with the same gains: The first gains 20%, the second loses 16.67%, and the third gains 30%. Because the losing hedge fund’s losses can’t be used to offset the other two funds’ gains, you will pay a performance incentive fee of 10% — four percentage points higher.
An extreme example of this occurred in 2008, during the Great Financial Crisis. Cumulatively that year, the professors report, the hedge funds in their database lost $147.1 billion before fees. Yet investors in those funds collectively paid $4.4 billion in performance incentive fees.
Options bets that the stock market will continue to soar have exploded to dot-com bubble levels
Even as the stock market trades in record-setting territory despite the economy being in the throes of a viral pandemic, Wall Street bets for further gains are around their highest levels since the dot-com bubble, according to research from Bespoke Investment Group.
Options bets that the S&P 500 SPX, +0.16% will extend its run-up in months to come have roughly doubled, far exceeding trading in securities that would be used to bet that a decline in stock values was imminent.
Call options give holders the right but not the obligation to buy a certain number of shares (100 per option contract) at a certain price (strike price) by a certain date (expiration date).
Calls are viewed as bullish bets on an asset, as opposed to put options, and Bespoke indicates that appetite for calls, particularly among individual investors, has boomed.
“Retail enthusiasm for the market via commission-free trading apps plus the huge volatility earlier this year have led to a massive boom in options volumes,” the analysts at BIG wrote. “Most of the increase in trading activity in these derivatives has gone to calls,” they wrote (see chart below).
BESPOKE INVESTMENT GROUP
From Dave Lutz at Jones Trading
David Rosenberg: Why it’s time to buy energy stocks now that Exxon Mobil has been booted out of the Dow – “It’s a classic contrary signpost for the downtrodden oil and gas equity sector” – as we re-enter a period of ‘ZIRP’ (zero interest rate policy) from the U.S. Federal Reserve — with no intentions of raising rates, or thinking about thinking about raising rates (as Fed chairman Jerome Powell put it) — investors are yet again forced to identify where they can get an income stream. In the period following the Great Financial Crisis, the answer has been in the stock market with the dividend yield exceeding the yield on the 10-year Treasury note on multiple occasions.
From Dave Lutz at Jones Trading
One of the Strongest Aug Ever in Stock Market…On Back of Worst Quarterly Global GDP in History
The Worst Quarter in Modern History
We have 2Q GDP from almost every major country around the world now officially in the books. Bank of America Merrill Lynch says it’s “the worst quarter in modern history” and there’s no reason not to agree with that assessment.
Here’s my Chart o’ the Day:
GDP is down a GDP-weighted average of 8.1% yoy, easily the worst quarter in modern history…The US is right in the middle of the pack—down 9.5% yoy—but this is because the US has offset its ineffective COVID containment strategy with massive fiscal and monetary stimulus.
Source:
“Its official: the worst quarter ever”
Bank of America Merrill Lynch – August 18th, 2020
From Josh Brown Blog
https://thereformedbroker.com/2020/08/20/the-worst-quarter-in-modern-history/
PUBLISHED FRI, AUG 28 20206:19 AM EDT
Bob Pisani@BOBPISANI CNBC
A child wearing a face mask sits on the Charging Bull statue, also known as the Wall Street Bull, following the outbreak of the coronavirus disease (COVID-19) in New York, August 19, 2020.
Carlo Allegri | Reuters
It’s been a great August, up 6% for the S&P 500, the best August since 1986.
But then again, it was a great July. And a great June. May was pretty good, too, and April was downright eye-popping.
The Summer Rally (S&P 500 Monthly Returns)
· April: up 12.7%
· May: up 4.5%
· June: up 1.8%
· July: up 5.5%
· August (so far): up 6.6%
Five straight up months. What’s going on?
“August is going to come out looking like capital markets are endorsing a US cyclical recovery,” Nicholas Colas from DataTrek told clients in a recent note.
Colas freely admits that August’s outside return has a big asterisk: Apple’s 18% run-up.
“This meaningfully skews everything from Tech sector returns to Growth/Value performance spreads and even the S&P 500′s August return,” he said, noting that without Apple, the S&P would only be up 4.1% on the month, not 6.8%.
Still, it sure looks like the market is endorsing an economic rebound. The small-cap Russell 2000 is also up about 6% for the month. High-yield corporate funds are outperforming all other bond market classes. If the trading community was worried about an imminent economic downturn, neither of those two sectors would be leading.
The market has held up on a combination of optimism on a treatment/vaccine, along with massive Fed stimulus.
There’s still optimism on the vaccine front, but now that the Fed has announced its program to keep rates lower for longer and tolerate higher inflation levels ahead of its much-anticipated September 16th meeting, many are arguing the rally based on a Fed “put” (a floor below the market) has gone about as far as it can go.
“The Fed easy money story now priced into the market,” Alec Young, Chief Investment Officer at Tactical Alpha LLC, told me. “It’s buy the rumor, sell the news.”
But even Young admits that may only suffice to pause, but not derail the rally. He also argues the market needs a pause in the relentless digital/work from home story: “It is not healthy to have the index dominated by a few technology stocks,” he said.
None of this means the market will drop, and there are still plenty of bulls who insist the market is going higher.
Jim Paulsen at Leuthold is one of them: he has been bullish and remains bullish, though he freely admits the market could see a 10% correction.
He also freely admits that tech stocks are extended, but insists the fundamentals for tech are rock solid and nothing like 2000. Extended, he insists, does not mean they are waiting for a crash.
And he strongly disagrees with the popular notion that Wall Street has become disconnected from Main Street.
“It’s not just about the Fed put. People think there is no legitimacy to the rally, and they’re wrong. Look at retail sales, or the ISM, or housing, or auto sales. Look at the improvement in unemployment claims. They’re all bouncing,” he said.
As for the narrow rally centered on tech, Paulsen believes the broader market is about to play catch-up.
How much? He said he would not be surprised if S&P corporate profits were $200 in 2021. The current consensus is $165.
Profits 25% higher than consensus for 2021? That would go a long way toward justifying the rally.
“We’ve had a 12% reduction in GDP, an all-time record,” he told me. “But we may have an 18% improvement in GDP in the next 12 months, and that also would be an all-time high. That is going to bring in the broader market along with it. You are going to have a major league shift in profitability into those cyclical names. When you thrust all those companies into a depression, and then you force them to get the most efficient they have ever been in their existence, and after all that, you give them a wartime boom? Profitability is going to be maximized.”
Leuthold has told his clients to stay long: “I am going to own new-era tech, but I am going to own less of it going forward, and I am going to own more of the broader market–cyclicals, international, and small caps.”
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Found at Nasdaq Dorsey Wright www.dorseywright.com
By Al Root
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Daniel Slim/AFP via Getty Images
Ultraviolet light is getting its moment in the sun. Companies are adopting the technology to take out the coronavirus and make travel and work safer, and shares of some businesses active in the area are getting a lift.
For starters, Boeing (ticker: BA) announced Monday it is testing UV disinfecting technology inside a 787 jet. The goal is to make aviation “safer and more sustainable,” according to the company’s news release.
“It’s literally a UV wand designed to clean the flight deck,” Kevin Callahan, associate technical fellow at Boeing Commercial Airplanes, explained to Barron’s. On the flight deck, where pilots control the plane, harsh cleaning chemicals aren’t a great idea given the electronics in the area.
Boeing’s wand is designed to clean the cockpit in about 15 minutes. “This [wand] is an industrial strength version of what people see in stores,” Callahan said. Investors—and U.S. consumers—might be familiar with the blue light wands sold at places such as CVS Health (CVS) stores as tools for smartphones or the like.
· iams-Sonoma Profit Doubled. The Stock Fell Anyway.UV light kills up to 99.9% of seasonal coronaviruses present in airborne droplets, according to a study by Columbia University. (For consumers looking for UV wands, the wavelength of light studied by Columbia is 222 nanometers long. It’s something to look for on UV wand packaging.)
The effectiveness of UV light makes some intuitive sense. UV light gives people sunburn, and in extreme cases, cancer. It can disrupt viruses’ DNA, rendering them effectively dead.
Carrier (CARR) is also expanding its air-quality game. Tuesday, the HVAC—short for heating, ventilation, and air conditioning—company said is selling 1,500 Carrier OptiClean air machines to California schools.
OptiClean are free-standing units that can be plugged into electrical outlets. “The ease-of-use and portability allows them to quickly and efficiently be deployed in a number of spatial configurations as the needs arise,” said Tyler Girtman, a regional manager at the building-solutions company Climatec, said in the Carrier news release.
Climatec worked with the schools buying the units on ways to ensure the health of students and staff as the academic year begins.
Top 5 uses for a UV lamp and ultraviolet light
The ultraviolet light is very useful. It has many applications in the commercial, industrial and healthcare sectors. Ultraviolet light is a kind of electromagnetic radiation. Its wavelength is close to that of X-rays and light.The LED technology is improving and so the UV LED lights are becoming more available in the market. The UV light has higher energy compared to the visible light and so it is more useful. Here we are going to discuss the various uses of UV lamps.
Tanning and skin treatment
UV light is used for tanning. It can be used to imitate the impact of sunlight on the skin. For indoor tanning, use of UV light is very common. In fact, many people prefer indoor tanning to sun tanning. The rays of the sun are not uniform, so it may cause sunburn at times. You also need to be under the sun for a longer period of time to get the tan. The indoor tanning, on the other hand, requires only about 20 minutes. Another disadvantage of sun tanning is that the sun contains both UVA and UVB beams. The UVA beams are responsible for the tanning, but the UVB beams are harmful as it might affect your DNA. The UV lamps used in salons for indoor tanning doesn’t contain any UVB beams. So, it is safer. Ultraviolet light is effective in treating smallpox lesions. UV phototherapy is effective in treating vitiligo and psoriasis. It can also prevent the growth of certain type of skin cancer.
Fluorescent inspection
UV lamps can be used to inspect various materials and surfaces. Materials react in different ways when they are exposed to the UV light. Some substances absorb the UV light’s energy and change it into visible light. It is called fluorescence. For example, the ink of a highlighter pen has fluorescent dye. So, the dye glows in the dark. UV lamps can provide efficient lighting in homes and offices. These lights are used to decorate nightclubs.The UV beams emit a black light. This black light is useful in many ways. It can be used to inspect splits, breaks, and various defects. You can view certain things using the UV light that are not visible to the naked eye. So, it is also used as an analytic tool. This light is used by the detectives and other companies for inspection of documents, forged bank notes, etc.
Disinfection and germ control
The ultraviolet light can inactivate the small creatures in the water. So, it is used for disinfecting drinking water. This process is absolutely chemical free and can effectively destroy bacteria that have a wavelength of 240 to 280 nanometers. The light destroys the bacteria’s capacity to reproduce. So, no more bacteria grows in the water. UV light is widely used in water treatment facilities. This method of treating water is a lot more efficient than boiling water. The UV light can also get rid of chlorine and chloramine from water. Another use of the UV lamp is that it used in killing germs that are found in equipment, utensils, worktops, etc. This technique of germ control is used in the commercial businesses as well. It helps to avoid cross contamination or food poisoning. The UV light can also be used to increase the shelf life of vegetables and fruits.
Air Cleaning and bug eradication
Mold growth inside the house can affect the indoor air quality. If you can install UV air purification unit in your air conditioner duct then the quality of air can be improved. The UV-C light, which is in the 280 to 100 nm range, is used for air purification. This UV light can kill mold, mildew, germs, viruses, and bacteria that float in the air. You can use an air purifier that has the UV-C light technology. In this type of air filter, air passes through a HEPA filter. Then it passes through a small chamber and gets exposed to the UV-C light. Sometimes, the air goes through another filter before getting inside the room. You should use 36-watt bulbs for this purpose. UV lamps are used for killing bugs in the house as well. It is used in the modern bug zappers and has proved to be very effective in killing bugs. The UV-A light, in the range 380 to 315 nm, attracts many bugs and insects like houseflies, wasps, mosquitoes, etc. Unlike the humans, these insects can actually see the ultraviolet light. When the bug zapper is on, the insects get attracted to UV light and go towards the mesh. They become electrocuted once they come into contact with the electric grids and gets vaporized. The bug zapper is a very popular means of killing bugs and insects today.
Indoor Gardening
UV lights are used in the production of polyphenols. It is a very beneficial plant and is said to prevent cancer. It can also make you look young. It can help in raisin production as well. It can also help in the production of medical cannabis. In fact, the UV light helps in improving the medicinal properties of cannabis.
The UV light is found in the sunlight. It has a shorter wavelength than the natural light. Due to research and innovation, the UV lamp can now be used in a number of different ways that are beneficial to people. It can help users in our daily lives. It has many commercial and industrial applications as well. It is used for treating water, purifying air, tanning, treating skin diseases, indoor gardening, eradicating bugs, identifying things, etc. In future, the scientists will be able to come up with more uses of UV lamps.
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By John Maxwell | July 30, 2020 | 11
Photo by Waldemar Brandt on Unsplash
Earlier this week, a name from the past made headlines.
Eastman Kodak saw their stock price surge by 1,200% after it was announced that they would receive a $765 million loan under the Defense Production Act. The loan to Kodak is the first from the new U.S. International Development Finance Corporation, a government agency that’s been assigned the task of rebuilding America’s medical supply stockpile.
As a result of this first step, the company once known for producing the chemicals necessary for developing film will now be known for producing the chemicals necessary for developing needed medical drugs that are in short supply (including drugs for treating Covid-19).
I share this story with you because Kodak has been a go-to story within the business community for years. If you needed an example of a company that missed its window for innovation and growth, Kodak was one of the first to come to mind.
And now, thanks to this new investment, Kodak has a second life.
Kodak isn’t the only investment opportunity worth talking about during this Covid season. It’s going to sound familiar to anyone who’s listened to me over the past few months, but this is a perfect time for you to reassess and reinvest in yourself to ensure your future growth.
Just as Kodak will get new life from their cash infusion, you can get new life by investing in yourself during this time.
If you’re not sure where to start, let me give you three places you should invest:
Your Mind
It should come as no surprise that a lot of people have spent their time settled in front of a screen during this Covid season. TV watching is up, streaming hours are up, and there’s a good chance the screen time monitoring apps on most phones are exhausted from calculating the number of hours people are staring at their pocket screens.
While I’m not opposed to taking a mental break to watch something entertaining every now and then, staring at a screen all day isn’t ideal for your mind.
Last week, I wrote about the tools in your leadership toolbox, and most of the tools I wrote about were tools that build your mind; tools that help you improve and innovate your thinking. Spending time with a good book, a smart podcast, or even an online video course will help you sharpen your mind more than binge-watching “Friends” again ever will.
If you’re going to consume content, focus on content that makes you smarter.
Your Heart
There’s a piece of wisdom from the Bible that says, “Keep vigilant watch over your heart; that’s where life starts.” It’s easy for a heart to be discouraged during times like these; most of the news we see, hear, and read does little to offer us hope for the future. Social media is full of personal attacks and disagreement. And even the closest of families are experiencing struggles after months of being together at home with little outside social contact.
That’s why you need to invest in your heart. Take breaks to spend time alone with your thoughts so you can examine them. If they’re overly negative, you need to change them because negative thinking will turn your heart in a negative direction. I spend time in prayer and reading my Bible as a way of investing in my heart, but you need to find a practice that works for you. Maybe you can start a gratitude journal, or spend time daily repeating your personal values to yourself as a reminder of what you stand for.
Regardless of the practice, make time for feeding your heart because that’s the essence of who you really are.
Your Relationships
I’ve already mentioned the strain that Covid has put on some family dynamics, so it shouldn’t surprise you that the last place you should invest is in your relationships. True, you may not see as many people as you’re accustomed to seeing, but that doesn’t mean you can’t invest in those relationships.
Set aside time to handwrite notes to people you’ve not seen in a while and let them know that you’re thinking about them. Use your phone to send a co-worker a text of encouragement—or better yet, actually call someone and talk to them! Set up a Zoom call with your grandkids or your softball team just to see what they’re up to.
Here’s what I know: while it may take until 2021 for things like work, the economy, and community life to return to a state of normal, relationships can’t wait that long. The people you know and love need your investment today, and it’s well worth your time and energy.
You’ll have to invest in those relationships once things get back to normal anyway; might as well get a jump start on the process so you can move further faster when the opportunity is right.
The past few months have been difficult, and the months ahead may prove to be just as challenging, if not more so. Investing wisely in your mind, heart and relationships will ensure a smoother journey for you and the people you care about.
Your brilliant future begins today—lead the way for others by investing well in the areas that matter most.
https://www.johnmaxwell.com/blog/three-smart-investments-for-today/
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
Bespoke notes The biggest shifts in sector weights with the Dow Changes will be in Health Care and Industrials (to the upside) and Technology and Energy (to the downside) – Roughly $31.5 billion of assets are benchmarked to the Dow, with $28.2 billion of passively managed funds linked. (The figures are $11.2 trillion and $4.6 trillion for the S&P 500.)
From Dave Lutz at Jones Trading.
Which Asset Is Most Sensitive to Vaccines?
The biggest underperformers under the pandemic — airlines — will likely come back with a bang should vaccines be cleared for broad use and virus counts decrease. At the same time, some of this year’s biggest gainers would slump, especially gold. Gold tumbled and value stocks gained after Russia’s vaccine news, imagine how much stronger the moves would be if an inoculation received full approval from a western nation or two. – BBG
From Chris Preston River and Mercantile
Posted August 20, 2020 by Michael Batnick
Yesterday, the S&P 500 made a new all-time high. However, of the 500 members in the index, just 6% were concurrently making 52-week highs.
This is a remarkable data point, but it doesn’t necessarily tell the whole story. What if the other 94% were just 2% from a 52-week high? They’re not, but if they were, this data point would obscure that fact.
This data point also doesn’t reveal that the median stock is 63% above its 52 week low. Most stocks might not be near a 52-week high, but they’re also very from their 52-week lows.
So how exactly are stocks doing? On an absolute basis, the median S&P 500 stock is down 3.1% year-to-date, while 56% of them are above their 200-day moving average. Hardly terrible, but not great either.
On a relative basis, it’s pretty gnarly out there. 64% of the S&P 500 is under performing the index in 2020. The median level of underperformance -22%. The 64% is actually in line with historical numbers, but the magnitude (-22%) sounds high. I don’t have that data, but would love to see it if anybody does.
The only thing you really need to know to determine how a stock has performed in 2020 is by looking at its market cap. Granted, there might be a little double counting going on because I’m measuring from today, not from Jan 1, but I’m nearly certain that the numbers wouldn’t change much at all.
It’s normal to worry about the market when fewer and fewer stocks are leading the charge, but this is not a new worry, we’ve been talking about this for years
I know this is the type of thing that doesn’t matter until it matters, but we should also consider an alternate outcome. What if a handful of the other 94% of stocks catch up? I’m not predicting that, but it’s an outcome that we have to at least be open minded to.
It’s always important to look beyond individual data points, because facts don’t always tell the whole story.
https://theirrelevantinvestor.com/2020/08/20/the-other-94/
Scott Murdoch, Patturaja Murugaboopathy
(Reuters) – Companies raised the most funds in global equity and debt markets for the month of August in a decade as homebound bankers spend their summer fixing deals off the back of trillions of dollars of stimulus worldwide to fight the coronavirus pandemic.
Companies have raised $65.5 billion through initial public offerings (IPOs) and high-yield bond issuances globally so far in August, the highest for that month in at least 10 years, according to Refinitiv data. They raised $98.6 billion in July and $126.5 billion in June, which was the highest in 20 years.
Graphic: Monthly global IPO proceeds here
Found at Crossing Wall Street blog http://www.crossingwallstreet.com/
We Have Crossed the Line Debt Hawks Warned Us About for Decades—
The debt of the United States now exceeds the size of its gross domestic product. That was considered a doomsday scenario that would wreck the economy. So far, that hasn’t happened
“At this stage, I think, nobody is very worried about debt,” said Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics and a former chief economist for the International Monetary Fund. “It’s clear that we can probably go where we are going, which is debt ratios above 100 percent in many countries. And that’s not the end of the world.”
That nonchalant attitude toward what were once thought to be major breaking points reflects an evolution in the way investors, economists and central bankers think about government debt.
At the end of last year, the United States was about $17 trillion in debt — roughly 80 percent of the gross domestic product. In January, government analysts predicted that debt would approach 100 percent of the G.D.P. around 2030. But by the end of June, the debt stood at $20.53 trillion, or roughly 106 percent of G.D.P., which shrank amid widespread stay-at-home orders. (These numbers don’t count trillions more the government owes itself in bonds held by the Social Security and Medicare trust funds.)
That more than 25 percentage-point surge would represent the largest annual leap in American indebtedness since Alexander Hamilton founded the nation’s credit in the 1790s, outpacing even the debt growth at the peak of World War II, according to data from the Congressional Budget Office.
So it’s no surprise that the tech-heavy S&P 500 has been outperforming the S&P 500 Dividend Aristocrats for many years. But if you look back 15 years, the story changes:
Over 15 years, the S&P 500 Dividend Aristocrats Index has beaten the performance of the full S&P 500 Index.
FACTSET
These ‘Dividend Aristocrat’ stocks have been raising their dividends for decades, and there have been no dividend cuts during the pandemic By Philip van Doorn
Christopher Palmeri
Disney Leads Old Media Giants in Making Money From Streaming
(Bloomberg) — Online video is becoming a serious business for some of America’s oldest and largest media companies, with Walt Disney Co. leading the pack.
Disney will generate an estimated $11.2 billion in direct-to-consumer revenue this year, according to a report released Monday by Macquarie Research. That would account for 19% of its total sales — a level rivals in traditional media haven’t matched.
Macquarie credits Disney+, which quickly snapped up more than 60 million subscribers, and Hulu, a business that the company gained majority control of last year.
Fox Corp. and Comcast Corp. are the new-media laggards in the old-media group. Fox sold the bulk of its entertainment assets to Disney last year, and Comcast is just getting started in streaming: Its ad-supported Peacock service debuted nationally last month.
The big surprise, however, may be Lions Gate Entertainment Corp., which will get 18% of revenue from streaming this year, according to Macquarie. Lions Gate said recently that it had over 11 million online customers for its Starz service globally.
Analysts expect Netflix Inc. to generate almost $25 billion in revenue this year, virtually all of it from streaming.
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https://finance.yahoo.com/news/disney-leads-old-media-giants-191812649.html
CHART OF THE DAY: Households Were Not Prepared For An Income Shock Keith McCullough @keithmcculloughhttps://app.hedgeye.com/insights/88256-chart-of-the-day-households-were-not-prepared-for-an-income-shock?type=macro%2Cmarket-insights
Erica Pandey, author of @Work
Illustration: Annelise Capossela/Axios
As the pandemic has persisted, Silicon Valley tech giants have extended their telework timelines — and some have even said that employees can stay home forever. But now those same firms are simultaneously betting on the future of the office.
Why it matters: Remote work has been successful at many firms, but the vast majority still have strong office cultures. The pandemic won’t drastically alter that.
What’s happening: Office leasing activity in the second quarter of 2020 was down 44% year-over-year, CBRE reports. But it appears to be bouncing back, led by the tech titans.
The tech giants’ bets on the importance of the office appear to be shared by other big firms.
But, but, but: While the pandemic won’t kill offices, its effects on where and how we work will linger.
The bottom line: “We’re changing why we need an office: It’s the social interaction,” Whelan says. “That doesn’t need to happen five days a week. But it still needs to happen.”
Too many people succumb to the mistaken belief that being likable comes from natural traits that belong only to a lucky few. Dr. Travis Bradberry shows you how being likable is under your control.
BY TRAVIS BRADBERRY, AUTHOR, EMOTIONAL INTELLIGENCE 2.0@TALENTSMARTEQ
Getty Images
Too many people succumb to the mistaken belief that being likable comes from natural, unteachable traits that belong only to a lucky few–the good looking, the fiercely social, and the incredibly talented. It’s easy to fall prey to this misconception. In reality, being likable is under your control, and it’s a matter of emotional intelligence (EQ).
In a study conducted at UCLA, subjects rated over 500 descriptions of people based on their perceived significance to likability. The top-rated descriptors had nothing to do with being gregarious, intelligent, or attractive (innate characteristics). Instead, the top descriptors were sincerity, transparency, and capable of understanding (another person).
These adjectives, and others like them, describe people who are skilled in the social side of emotional intelligence. TalentSmart research data from more than a million people shows that people who possess these skills aren’t just highly likable; they outperform those who don’t by a large margin.
Likability is so powerful that it can completely alter your performance. A University of Massachusetts study found that managers were willing to accept an auditor’s argument with no supporting evidence if he or she was likable, and Jack Zenger found that just one in 2,000 unlikable leaders are considered effective.
I did some digging to uncover the key behaviors that hold people back when it comes to likability. Make certain these behaviors don’t catch you by surprise.
1. Humble-bragging. We all know those people who like to brag about themselves behind the mask of self-deprecation. For example, the gal who makes fun of herself for being a nerd when she really wants to draw attention to the fact that she’s smart, or the guy who makes fun of himself for having a strict diet when he really wants you to know how healthy and fit he is. While many people think that self-deprecation masks their bragging, everyone sees right through it. This makes the bragging all the more frustrating, because it isn’t just bragging; it’s also an attempt to deceive.
2. Being too serious. People gravitate toward those who are passionate. That said, it’s easy for passionate people to come across as too serious or uninterested, because they tend to get absorbed in their work. Likable people balance their passion for their work with their ability to have fun. At work they are serious, yet friendly. They still get things done because they are socially effective in short amounts of time and they capitalize on valuable social moments. They focus on having meaningful interactions with their co-workers, remembering what people said to them yesterday or last week, which shows people that they are just as important to them as their work is.
3. Not asking enough questions. The biggest mistake people make in conversation is being so focused on what they’re going to say next or how what the other person is saying is going to affect them that they fail to hear what’s being said. The words come through loud and clear, but the meaning is lost. A simple way to avoid this is to ask a lot of questions. People like to know you’re listening, and something as simple as a clarification question shows that not only are you listening, but you also care about what they’re saying. You’ll be surprised how much respect and appreciation you gain just by asking questions.
4. Emotional hijackings. My company provides 360° feedback assessments, and we come across far too many instances of people throwing things, screaming, making people cry, and other telltale signs of an emotional hijacking. An emotional hijacking demonstrates low emotional intelligence. As soon as you show that level of instability, people will question whether or not you’re trustworthy and capable of keeping it together when it counts.
Exploding at anyone, regardless of how much they might “deserve it,” turns a huge amount of negative attention your way. You’ll be labeled as unstable, unapproachable, and intimidating. Controlling your emotions keeps you in the driver’s seat. When you’re able to control your emotions around someone who wrongs you, they end up looking bad instead of you.
5. Whipping out your phone. Nothing turns someone off to you like a mid-conversation text message or even a quick glance at your phone. When you commit to a conversation, focus all of your energy on the conversation. You’ll find that conversations are more enjoyable and effective when you immerse yourself in them.
6. Name-dropping. It’s great to know important and interesting people, but using every conversation as an opportunity to name drop is pretentious and silly. Just like humble-bragging, people see right through it. Instead of making you look interesting, it makes people feel as though you’re insecure and overly concerned with having them like you. It also cheapens what you have to offer. When you connect everything you know with who you know (instead of what you know or what you think), conversations lose their color.
People are averse to those who are desperate for attention. Simply being friendly and considerate is all you need to win people over. When you speak in a friendly, confident, and concise manner, people are much more attentive and persuadable than if you try to show them that you’re important. People catch on to your attitude quickly and are more attracted to the right attitude than who you know.
7. Gossiping. People make themselves look terrible when they get carried away with gossiping. Wallowing in talk of other people’s misdeeds or misfortunes may end up hurting their feelings if the gossip ever finds its way to them, but gossiping is guaranteed to make you look negative and spiteful every time.
8. Having a closed mind. If you want to be likable, you must be open-minded, which makes you approachable and interesting to others. No one wants to have a conversation with someone who has already formed an opinion and is unwilling to listen. Having an open mind is crucial in the workplace, where approachability means access to new ideas and help. To eliminate preconceived notions and judgment, you need to see the world through other people’s eyes. This doesn’t require that you believe what they believe or condone their behavior; it simply means that you quit passing judgment long enough to truly understand what makes them tick.
9. Sharing too much, too early. While getting to know people requires a healthy amount of sharing, sharing too much about yourself right off the bat comes across wrong. Be careful to avoid sharing personal problems and confessions too quickly. Likable people let the other person guide them as to when it’s the right time for them to open up. Over-sharing comes across as self-obsessed and insensitive to the balance of the conversation. Think of it this way: If you’re getting into the nitty-gritty of your life without learning about the other person first, you’re sending the message that you see them as nothing more than a sounding board for your problems.
10. Sharing too much on social media. Studies have shown that people who over-share on social media do so because they crave acceptance, but the Pew Research Center has revealed that this over-sharing works against them by making people dislike them. Sharing on social media can be an important mode of expression, but it needs to be done thoughtfully and with some self-control. Letting everyone know what you ate for breakfast, lunch, and dinner, along with how many times you walked your dog today, will do much more harm than good when it comes to likability.
Bringing It All Together
When you build your awareness of how your actions are received by other people, you pave the way to becoming more likable.
What other things make people less likable? Please share your thoughts in the comments section, as I learn just as much from you as you do from me.
Shopify Founder: These Are the 2 Books That Made Me Into a Billionaire
Tobias Lütke credits these two books with transforming him from an awkward programmer into a successful leader.
BY JESSICA STILLMAN, CONTRIBUTOR, INC.COM@ENTRYLEVELREBEL
Tobias Lutke, CEO and co-founder of Shopify. Getty Images
Some billionaire business success stories got where they are on personal charm, salesmanship, and communication chops. Others were quiet, reserved “nerds” who just managed to build a product so awesome it took off like a rocket ship, forcing them to figure out the people side of business on the fly.
Shopify co-founder Tobias Lütke is solidly in the second camp. A programmer by trade, Lütke had no intention of having anything to do with the business side of Shopify, the Canadian startup he co-founded and which has since become an e-commerce juggernaut. But then, as he explained on Tim Ferriss’s podcast, circumstance intervened and he found himself needing to grow into a leader capable of scaling his startup, and fast.
He decided to source some reading that would arm him with the skills he needed. As he shares with Ferriss (hat tip to this excellent post by Alan Trapulionis), that process of soliciting recommendations ended up yielding two titles. Lütke credits them with teaching him the skills to build a billion-dollar business (as well as a multibillion-dollar net worth).
1. Influence by Robert Cialdini
“Influence was just the most mind-bending book you can imagine, because it essentially taught you all the ways humans are flawed and influenceable, and how, yes, computers are predictable, but once you make things for people you need to go into storytelling,” says Lütke.
“Which was news to me, frankly. I spent my teens with computers. Not with people,” he adds to laughs from Ferriss.
An international bestseller when it was first published in 1984, Influence remains a foundational work on the science of persuasion, so Lütke is far from the only brilliant-but-awkward young striver Cialdini has helped. If you’re looking for a quick summary of the book’s basic ideas, Trapulionis’s post has a useful rundown.
2. High Output Management by Andrew Grove
“One of the best books ever,” raves Lütke of this second classic by the former CEO of Intel, describing High Output Management as “a how-to manual that deconstructs the world of business into first principles. It’s like, here’s what matters. Here’s how to think about it.” By laying out building a business like an engineering exercise, Grove’s book made the whole challenge far less daunting, Lütke claims.
He’s not the only nerdy young entrepreneur riding a startup rocket ship to benefit from the legendary title. Mark Zuckerberg also claims the “book played a big role in shaping my management style.”
If you, too, are intimidated by the less technical aspects of building a business, it might be worth picking up these books. Who knows? They might even help you create a billion-dollar company too.
AUG 24, 2020
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
https://www.inc.com/jessica-stillman/shopify-tobias-lutke-andrew-grove.html?cid=sf01003
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
From Nasdaq Dorsey Wright www.dorseywright.com
https://twitter.com/CiovaccoCapital
Sarah Ponczek and Katherine Greifeld
Dow Industrials Kicks Out Exxon in Biggest Shake-Up Since 2013
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(Bloomberg) — Exxon Mobil Corp, Pfizer Inc. and Raytheon Technologies Corp. were kicked out of the Dow Jones Industrial Average as part of the stock benchmark’s biggest reshuffling in seven years, actions that will boost the influence of technology companies that have dominated the 2020 stock market.
Salesforce.com, Amgen Inc. and Honeywell International will enter the 124-year old equity gauge a week from today, its overseers said. The moves were prompted when Apple Inc.’s stock split effectively reduced the sway of computer and softward stocks in the price-weighted average.
While any change to the Dow is notable, the ejection of Exxon Mobil — the world’s biggest company as recently as 2011 — marks a particularly stunning fall from grace, reflecting the decline of commodity companies in the American economy. Worth $525 billion in 2007 and more than $450 billion as recently 2014, the stock had fallen in four of six years before 2020 and is down another 40% since January.
“Those changes are a sign of the times – out with energy and in with cloud,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
The latest reshuffling is more testament to the ascent of technology companies, a trend amplified by this year’s Covid 19 lockdowns. While the Dow average is still 4.2% off its February record, the tech-heavy Nasdaq 100 is almost 20% above the pre-pandemic all-time high.
https://finance.yahoo.com/news/dow-industrials-kicks-exxon-biggest-220032220.html
Lastly, only 4-0ut-of-5 working-age households have retirement savings of less than one times their annual income. This does not bode well for the sustainability of living standards in the “golden years.”
The 4% Rule Is Dead. What Should Retirees Do Now? https://www.zerohedge.com/personal-finance/4-rule-dead-what-should-retirees-do-now
‘The Big Short 2.0’: How Hedge Funds Profited Off the Pain of Malls–As the pandemic accelerated the demise of some brick-and-mortar retailers, a group of investors profited handsomely from their travails.
The CMBX 6 index is intended to track a basket of bond products, each of which contains bundles of individual mortgages to commercial borrowers, more than 2,000 in total. Those products are then sliced into brackets, known as tranches, and assigned credit ratings ranging from AAA to BB, according to their perceived level of risk.
The CMBX 6, which tracks the performance of mortgages issued in 2012, has been a target for short-sellers because of its relatively strong exposure to malls. According to an analysis by Trepp, 40 percent of the property loans tracked by the CMBX 6 are in the retail sector, giving it the highest exposure to retailers of any CMBX index. (The balance of the mortgages are in the lodging, residential, office and industrial sectors.) Of the retail mortgages the CMBX 6 tracks, 39 are in American malls, many of which have 10-year mortgages coming due in 2022.
Deer Park Road’s Mr. Burg, who specializes in complicated bond investments and said his firm had done well by betting heavily on risky home borrowers in the aftermath of the 2008 financial crisis, adopted the mall short before the virus hit. His research suggested similarities between the lax way that home loans were signed in the run-up to the last crisis and the underwriting of many retail mortgages. He also thought there were too many malls.
By the middle of May, the portion of the CMBX 6 with a BBB– rating, which had begun the year trading strongly but was especially popular with short-sellers, had fallen more than 30 points. It has recovered only a few points since then.
“It’s an absolute perfect storm, unfortunately, for the commercial real estate market,” Mr. Burg said. “We see very little that the Fed or government can possibly do to prop this up when there’s so much excess supply.”
Scott Burg of the Deer Park Road fund compared the underwriting of many retail mortgages to the way home loans were approved before the 2008 financial crisis.Credit…Caleb Santiago Alvarado for The New York Times
To short any CMBX index — there are 13, each tied to a different origination year for commercial mortgages — investors pay various fees, including an annual amount to hold what is essentially an insurance policy that pays out if the mortgages the index tracks default. Those fees might be $300,000 to $500,000 a year for every $10 million of insurance the investor wants to hold.
Before making their bets, some investors who shorted the CMBX indexes engaged in labor-intensive research. Mr. Mudrick and his analysts walked all 39 malls in the CMBX 6 index, from the Northridge Fashion Center in Los Angeles to the Town Center at Cobb in Kennesaw, Ga. Wearing casual clothes, his group paced the perimeters and food courts, snapping photographs and taking notes.
John Burns
https://www.linkedin.com/in/johnburns7/
People are flocking to Idaho during the pandemic. I spent 4 days in its capital city last fall, and a walk through downtown made it clear why it’s so popular.
Boise is having a moment. Katie Warren/Business Insider
· -While some states have seen population losses during the pandemic, people are flocking to Idaho.
· -194% more people moved into Idaho than left the state since March, according to data from moving marketplace HireAHelper.
· -Its capital, Boise, was becoming a hot destination even before the pandemic: Its population grew by 18.2% from 2010 to 2018, and Forbes named it the fastest-growing city in the US in 2018.
· –Microbreweries, luxury condos, and Brooklyn-esque coffee shops have been popping up in the Pacific Northwest city of 229,000 people.
· -In November 2019, I spent four days in Boise’s thriving downtown area, which is full of locally owned bars and restaurants, microbreweries and cider houses, and new luxury apartments.
Everybody wants to live in Idaho right now.
While states like New York and California have seen mass exoduses during the pandemic, others have seen a more people moving in than out. In Idaho, 194% more people moved in than left the state since March, according to data from moving marketplace HireAHelper.
Well before the pandemic, its capital city was experiencing a major growth spurt. Forbes named Boise the fastest-growing city in the US in 2018. Its population grew by 18.2% from 2010 to 2018, and by more than 3% from 2017 to 2018.
Most out-of-state transplants have been coming from California, primarily from the Los Angeles metro area. Almost 80,000 people moved to Idaho in 2018, and more than 21,000 of them were from California, according to US Census data.
According to locals, people are finally figuring out how great of a place Boise is to live. In 2019, Boise was named the best place to live for millennials, as well as the best US city to buy a house.
Last November, I spent four days in Boise exploring the city and talking to business owners and residents. As someone who lives in Brooklyn and works in Manhattan, I was curious to get a feel for Boise’s downtown and see what kind of lifestyle it offers for big-city transplants. After four days, I can, for starters, say this: Boise does not disappoint.
Keep reading for a look at its vibrant downtown area, which is bustling with breweries, farm-to-table restaurants, coffee shops, and new luxury apartments.
Boise, the capital of Idaho, is one of the fastest-growing cities in the US.
Katie Warren/Business Insider
Boise saw an 18.2% population jump from 2010 to 2018 and was the fastest-growing city in the country from 2017 to 2018, according to Forbes.
Roughly 25% of out-of-state transplants in Boise came from California, followed by Washington, Utah, Oregon, and Texas, according to the Boise Valley Economic Partnership’s marketing manager.
While many welcome Boise’s growth, some say the influx of new residents is pricing out longtime locals. The average home price in Boise jumped almost 12% from 2017 to 2018, and average rent has increased by roughly 7% in the past year. But wages haven’t kept up, leaving many residents struggling to afford their living costs.
Some also say the growth has brought with it big-city-like traffic.
https://www.businessinsider.com/boise-idaho-downtown-breweries-coffee-shops-restaurants-2019-11
A MarketWatch analysis indicates that many colleges are going forward with planned tuition increases this year
In this photo provided by Jason Koski, Bryan Maley, right, a graduate student in the Master of Public Health program at Cornell University, interviews a student on campus about mask-wearing experiences as part of a public health survey, Friday, July 30, 2020, in Ithaca, N.Y. (Photo: Jason Koski/Cornell University via AP)
Christian Baran has been thinking about the value his college tuition is supposed to be buying since the spring.
Baran, 21, was a sophomore at Cornell University when the school, like most others, rushed students home and into online classrooms in March as the reality of the pandemic began to set in. Baran thought his family might get some sort of tuition refund, given that the experience was so different from what he thought his tuition was buying.
“But we didn’t get anything,” Baran said. Like almost every college in the country, Cornell didn’t give back any tuition money, but the school did provide rebates for housing and dining contracts.
Now, as the start of the fall semester at the school approaches, the school is moving forward with a planned tuition increase of 3.6% that was approved in January before the pandemic. Cornell, which is planning to bring students back to Ithaca and offer some in-person classes, is expecting to increase the amount of financial aid it awards, and will be drawing more than typical from its endowment in fiscal year 2021 to generate an additional $15 million.
Still, it’s not enough for Baran. “It seems ridiculous to keep paying the same amount for what seems to be an inferior hybridized education,” he said. And that’s a best-case scenario, assuming the school doesn’t end up shifting completely to remote instruction, as some have already done.
So instead of paying Cornell tuition, Baran decided to enroll in community college for the fall semester and hopefully return to Cornell in the spring. “I don’t think that it’s worth it,” he said.
Cornell is one of at least 39 U.S. institutions whose endowments are in the top 100, that is going ahead with a planned tuition increase for undergraduates this upcoming academic year, according to a MarketWatch analysis. We found that 35 others are planning to keep tuition the same as last year and five are discounting tuition from previously announced levels. (Of the other institutions in the top 100 endowments, four are based in Canada, four are institutions serving only graduate students and several did not provide the requested information by press time. We will update when we hear back).
Colleges’ tuition policies for the fall
Some schools are cutting tuition, while others are moving forward with planned increases. See the full list here:
https://www.pinterest.com/pin/422281201654500/
Disclosure
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
Material compiled by Lansing Street Advisors is based on publicly available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data.
Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only.
(Alpha Architects) https://alphaarchitect.com/
QMOM +26% vs. MTUM +15.5% vs. SPY +5%
Concentrated MO MO 50 Holdings
https://etfdb.com/etf/QMOM/#holdings
Markets were paying close attention to minutes from the Fed’s recent meeting due later in the day for any hints on what the Fed could announce in September – Some investors speculated the Fed will adopt an average inflation target, which would seek to push inflation above 2% for some time.
The $20 trillion U.S. Treasury market is giving the Federal Reserve a thumbs-up for its efforts to revive inflation after the coronavirus pandemic threatened to inflict a damaging bout of deflation on the U.S. economy – The best measure of that is inflation-adjusted interest rates on 10-year Treasury bonds, which have plunged well below zero as nominal yields held fairly steady. Other signs of success include rising expectations for future prices among U.S. households
Dave Lutz at Jones Trading
Liz Ann Sonders-Schwabhttps://twitter.com/LizAnnSonders
Utilities Still Well Below Highs
https://twitter.com/awealthofcs/status/1296100869998616582/photo/1
Larry Swedroe
As you can see in the following table, the recent rally in gold has it trading at historically high levels in real terms.
How important is the real price of gold in terms of future returns? In their 2015 study “ The Golden Dilemma,” Claude Erb and Campbell Harvey found that “the real price of gold was a more important driver of future nominal and real gold returns than the realized rate of inflation.” With that in mind, is now a good time to buy gold? Erb, Harvey, and Tadas Viskanta, authors of the August 2020 paper “ Gold, the Golden Constant, COVID-19, ‘Massive Passives’ and Déjà Vu,” analyzed the historical evidence to help investors determine the answer to that question.
Now Might Not Be A Good Time To Buy Gold https://seekingalpha.com/article/4369361-now-might-not-be-good-time-to-buy-gold
By Rebecca Elliott-WSJ
Jim OShaughnessy
Mortgage delinquencies spiked in the second quarter. As the unemployment crisis deepens, will the surge continue? Data from the invaluable
@SoberLook, https://thedailyshot.com/2020/08/18/the-ongoing-shift-to-suburbia-in-search-of-home-office-and-classroom/
https://twitter.com/adam_tooze/status/1295757939018358784/photo/1
Natalie Campisi, Forbes Staff
Refinancing is set to get more expensive this fall. A new fee, known as the “adverse market refinance fee” (Fannie Mae) or the “market condition credit fee” (Freddie Mac), will be assessed to most refinance mortgage loans sold to Fannie Mae and Freddie Mac starting Sept. 1. The fee is a flat 0.5% or 50 basis points of the total loan amount, adding hundreds or even thousands of dollars to the cost of a refinance.
The new fee comes at a time when mortgage rates are falling to record-breaking lows and refinance activity is on the rise. Mortgage refinance activity last week was up by 9% from the prior week and was 47% higher than the same time last year, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Aug. 7, 2020.
The reason for the fee is to offset higher risk due to a shaky economy, both Fannie Mae and Freddie Mac said in bulletins issued Wednesday night. Most refinances, including cash-out refinances, would be subject to the fee.
“As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee in Price,” according to a statement by Freddie Mac.
New Fee Runs Counter to Fed’s Efforts to Keep Costs Down
For a borrower refinancing a $350,000 mortgage, the fee would tack on an additional $1,750. For someone with twice that mortgage, the fee would add $3,500 on a $700,000 refinance.
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For some, this fee is counterproductive to efforts the Federal Reserve has made since the start of the pandemic to encourage lending activity while making loans affordable by keeping mortgage interest rates low.
“The housing market has been able to withstand many of the most severe effects of the COVID-19 pandemic,” MBA President Bob Broeksmit said in a statement. “The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the (government-sponsored enterprises) and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency (mortgage-backed securities) per month to help reduce financing costs for mortgage borrowers to support the broader economy, this action raises those costs and undermines the Federal Reserve’s policy.”
Fee Also Applies to Most Specialty Loan Refinance Programs
Both Fannie Mae and Freddie Mac have loan programs designed to help a wide variety of borrowers in need. These programs have caps on the total amount of fees that can be assessed, however, the new adverse market refinance fee would apply to all of these programs, regardless of the cap:
· Fannie Mae’s HomeReady refinance program is designed for borrowers facing financial challenges, and its high loan-to-value (LTV) refinance program offers a chance for borrowers making on-time payments to refinance their mortgages even if their LTV exceeds the maximum for standard cash-out refinances.
· Freddie Mac’s Home Possible mortgage refinance program is for low-income homeowners, and its Enhanced Relief Refinance mortgage program was created for borrowers who can’t refinance because of a drop in property values.
The only loans that are exempt from the new fee are home loans that qualify for single-closing interim construction financing and permanent financing, which is one mortgage for borrowers who are building new homes. This end-to-end loan covers buying the land, through the construction phase into the permanent home loan.
What You Should Do If You Want to Refinance
Despite the new fee, some borrowers will still be able to save money on their monthly mortgage payments, as well as the total interest paid on their loans, by refinancing. Mortgage rates are currently tracking below 3%, which puts nearly 18 million people in line to save money by refinancing, according to Black Knight, a mortgage technology, data and analytics provider.
Along with the new fee announced on Wednesday, there are closing costs that should be factored into your decision. Typically, these costs are about 2% to 3% of your total loan amount. Closing costs usually include title and insurance fees, appraisals, application fees and, in some areas, attorney fees.
Other things to consider before you refinance is whether you plan on moving. If you’re going to sell your home within a few years, you likely won’t save enough money refinancing to make up for the amount you spend in closing fees.
Finally, make sure your credit score is high enough to snag the interest rate you need to save money. Although many lenders are advertising sub-3% rates on 30- and 15-year mortgage refinances, usually only borrowers with above average credit scores (in the 700 and above range) will qualify.
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Jan 282019by Andre de WaalPrint This Article
If you’re looking to run a high-performance organization, you need to be able to be able to recognize the signs of bad management. If low-performing managers are not dealt with, an organization will never be able to become excellent. Here are ten habits to look out for that no organization should put up with:
Bad managers clean up the mess of their predecessors – even when there is no mess.
When appointed in a new position, the bad manager claims that the predecessor has made such a big mess of the department that it will take at least one year, if not more, to get everything in order, and of course the bad manager cannot possibly work yet on achieving the departmental targets this year…maybe next year too.
Bad managers are always busy, busy, busy
They are involved in many, many projects; in fact, they’re so busy that there isn’t enough time to work on regular tasks! And because these projects are vital for the success of the organization (or so they say), bad managers cannot possibly be expected to work on their departmental targets. They will get to that when their other projects are finished…which they never are.
Bad managers know how to play the goals game
They know that departmental goals should be loose, with lots of slack, which means the targets will be very easy to achieve. Bad managers will never get optimal results from their departments; but that doesn’t matter to them, bad managers would rather have low performance than run the risk of punishment for falling short of ambitious targets.
Bad managers only manage from a distance
Bad managers love to use performance indicators because these make it possible to practice hands-off management. This in turn makes it easy for bad managers to avoid the day to day department activities altogether. And of course, if anything goes wrong, they can dodge accountability: they weren’t there, after all!
Bad managers always blame somebody else
Bad managers have a host of excuses at their disposal when they don’t achieve departmental targets. They blame the management reports because these do not accurately reflect performance; their own reports show that they did achieve the targets.
Bad managers blame the outside world: the economy was going down, it has rained too much, it hasn’t rained enough, whatever – but that is the reason everything was going against the department and therefore it was just impossible to achieve the targets! Next year, they say, will be better. They blame the weakest colleague, it was his or her fault the department floundered. So the organization first needs to hire someone new before they can be expected to work on achieving their targets.
Bad managers make lengthy, impressive plans
When writing up the latest game plan, bad managers know that expansive, wordy, and complex plans always impress top management because it gives the impression that they are on top of their game and have thought of everything.
They also know that you can bury all kinds of assumptions and preconditions in these verbose plans, which function as safeguards when top management starts complaining that goals have not been achieved (“Well, you knew that could happen, we put it on page 237, section 3, line 5 …”).
An additional advantage is that employees will not read nor understand these, so it will take a lot of time before the department can actually start working on realizing the plan, if ever.
Bad managers only communicate in one way
Bad managers are all capable of holding an open forum for employees to voice concerns, questions, and suggestions. This sounds like the mark of a good manager, right? However, the bad manager only feigns interest in employee feedback, and won’t actually act on what he or she hears. Instead, bad managers stick to their own plans. If people complain, the bad manager will use open forums against the participants, claiming that any incompetency is the fault of everyone.
Bad managers only have eyes for the shareholder
Bad managers know who butters their bread: the shareholder. Therefore, bad managers work diligently on satisfying these shareholders, even it this works to the detriment of the organization’s long-term interests.
Bad managers are real Machiavellians
They have Machiavelli’s book, The Prince from 1513 on their bedside table and turn to it often for advice on how to practice effective “divide and conquer” strategies: manipulating colleagues, employees and bosses. As a result, the targeted members in the organization become preoccupied with guarding their backs instead of focusing on growing the department.
Bad managers have an exit strategy
When the organization is on the verge of holding a bad manager accountable for his or her (in)actions, the bad manager moves on to another organization. In fact, the bad manager had plotted his or her exit strategy for a long time, and always has a fall-back organization where he could flee.
It goes without saying that these ten habits don’t exist in HPOs! But as most organizations are not HPO yet, it is good for you to be able to recognize the signs of bad management. This way you can deal with these ‘bad managers’ quickly…which is, after all, also a characteristic of a HPO manag
https://www.management-issues.com/opinion/6398/ten-habits-of-bad-management/
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On Inflation adjusted basis rates have been in forever trend downward.
The monetary standard has no influence on the trend-To get a better feel for the the shape of interest rates over time, below is another chart from Schmelzing’s paper.
Watch the trendline in the Dollar – Coming into a KEY support area.
Continue readingGoing through my summer reading pile the other day, I came across a great article by Ryan Holiday, called “12 Questions That Will Change Your Life.” Holiday, author of the best-selling book Ego is the Enemy, wrote 12 Questions for a general audience, but I’ve found they can be applied to investing, wealth accumulation and wealth preservation, too. You don’t have to read these provocative questions in order, but do yourself a favor and give each one some thought:
Q1. Who do you spend your time with? According to motivational speaker and business guru, Jim Rohn, we are the average of the five people we spend the most time with.
It’s been proven time and time again that people are the product of their environment. If you spend your time around people who constantly complain about money, who degrade rich people, who see money as the root of all evil or who will do anything to avoid a conversation about finances, then you’ll have a lower probability of growing your wealth than if you spend your time surrounded by people who have a healthy relationship with money.
That doesn’t mean you have to champion the “Greed is Good” philosophy made famous by Michael Douglas in the 1987 classic “Wall Street.” But, think about your closest friends and colleagues. Do they seem to have a positive relationship with money? Do they inspire you to grow your net worth and pursue financial freedom by way of example? On the other hand, if your closest friends and colleagues are willing to accept an unhappy financial lifestyle, they will most likely endure an unfulfilling family and work life.
Q2. What does your ideal day look like? One of the biggest benefits of financial freedom is that you can live your life on your terms—not on someone else’s terms. But if you don’t know what your ideal day looks like (both a workday and a weekend day), then how do you expect to experience it on a regular basis? It’s important to take inventory of your financial life. One of the best ways to do that is to spend a few hours a week increasing your financial literacy. It’s not about learning how to be a better stock picker. It’s about learning how to boost your career skills or starting a side business that can substantially boost your income.
Before diving in, it’s important to know how you learn best. Do you learn best by reading, by listening or by watching? Whichever channels works best for you, spend an hour a day on it building your career skills and financial literacy. Surely it’s worth devoting 60 minutes a day to something that will lower your stress and increase your pursuit of self-actualization.
READ: Barron’s, Wall Street Journal and Topley’s Top 10 blog.
LISTEN TO: Behind the Markets (Wharton Business Radio) and Barry Ritholtz’s Masters in Business podcast (Bloomberg)
Q3. To Be Or To Do? Legendary Air Force colonel, John Boyd, used to ask trainees: “To be or to do? Which way will you go?” Boyd wanted to know if the new recruits would be focused on the pursuit of success or choose to focus on a higher purpose?
The goal of financial freedom is not to acquire big houses, fast cars or expensive bling. It’s about acquiring the freedom of time so you can enjoy life and pursue a higher purpose. Finding a higher purpose takes time and contemplation. If you are just scrambling to pay bills all the time, you are not in a position to be thinking about your higher purpose in life. The stress hormone cortisol is public health enemy No. 1 and research shows that a sizeable percentage of Americans suffer from financial anxiety (see Question 12). Real tangible accomplishments happen only when your thinking is sharp and free of stress and distractions.
Q4. If I Am Not For Me, Who Is? If I Am Only For Me, Who Am I? The alternative translation of that last part is “If I am only for me, what am I?” The answer is “the worst.” It doesn’t make you a bad person to want to be remembered, or climb to the top of your profession, or focus intensely on providing well for yourself and your family. But, if this is ALL you want from life, then that’s a problem. Many successful people have strong gos and are driven by self-interest, pride, dignity and ambition–but they temper those traits with a sense of humility and selflessness.
Warren Buffett, no stranger to success, said that “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
I love Buffet’s quote and recently wrote a paper based on it (Investing Is a Psychology Game, Not an IQ Game). If you’re not careful, ego can be your greatest enemy in both investing and in life. Temper your investing life with a sense of humility and simplicity. This will give you the time and money for selflessness. Improving your personal financial life give you the time and money to change the world in a way that is most meaningful to you.
Q5. What Am I Missing By Choosing To Worry or Be Afraid? In his book, The Gift of Fear, Gavin de Becker suggests that when you worry, you should ask yourself: “What am I choosing NOT to see right now?” What important things am I missing because I choose worry over introspection, alertness or wisdom?”
Obstacles in our financial lives make us emotional. The inability to keep our emotions in check is what often destroys net worth and can lead to fractured personal relationships and stunted careers.
Don’t let the stock market’s fickle gyrations fool you into making bad decisions. Don’t let Wall Street pundits and the financial media scare you with attention grabbing headlines.
When it comes to investing, things are never calm for long. Over the past 70 years, the S&P 500 Index has experienced twelve separate corrections of at least 20 percent. That’s an enormous amount of wealth wiped out in a relatively short time. But despite those frightening reversals, the index has gained a stunning 15,000 percent over that seven-decade time frame. Those who stayed invested and who didn’t try to get in and out of the markets have been handsomely rewarded for their discipline.
Meanwhile the average U.S. investor is barely keeping up with inflation (Sources: Richard Bernstein Advisors LLC, Bloomberg, MSCI, etc.). Why is it so hard for individual investors to keep up with inflation, let alone the unmanaged market index? Because many make emotional decisions at the wrong time—again and again!
The Greek word “apatheia” refers to the equanimity one gains when you are free of irrational fear and extreme emotion. Apatheia is one of the keys to successful investing and paves the way to a state of flow in your personal financial life. A fulfilling life revolves around doing meaningful work and having meaningful relationships. A stressful personal financial situation can destroy your ability to enjoy your work and relationships.
Q6. Am I Doing My Job? The last thing that legendary college basketball coach, John Wooden, said to his players in the locker room before every game was: “Men, I’ve done my job; the rest is up to you.”
You may not be part of an elite basketball program or Fortune 100 company, but ask yourself if you are really doing your job each and every day? Remember, you can be extremely busy—working to the point of exhaustion–and still not be doing your job. You cannot be the best at your job when you are scrambling to pay the bills, fighting with your spouse over money matters, or envying a co-worker you think is more financially successful than you are. To operate at your highest level for career advancement, you must be in a state of mental flow. This flow state can only be reached when distractions are kept at a minimum. A healthy financial plan will limit distractions from many areas of your life—not just the money ones.
Q7. What Is the Most Important Thing? If you don’t know what the most important thing in life to you is, then how do you know if you’re putting it first? If you have personal financial stress, you will never have time or mental energy to focus on what’s most important to you because you will be constantly distracted by the negative weight of your money burdens. However, once you put your financial house in order, you will develop the quiet confidence to succeed in all aspect of your life. Seneca, the ancient Roman philosopher called that quiet confidence “euthymia”– the belief that you’re on the right path and that you won’t be led astray by people who are hopelessly lost.
Q8. Who Is this for? It doesn’t matter if you’re making something, selling something or trying to reach people, you have to know who your audience is. Great speakers, great politicians and highly creative people tend to have a good sense of who their target audience is. So can you.
Creativity is the key to self-improvement and career growth. In order to be creative you need to generate a LOT of ideas. They won’t all be winners, but you need a clear mind and long periods of uninterrupted thinking time to come up with a diversified portfolio of potential ideas so you can consistently develop good ones. Clearing your mind of financial worries and other distractions is the key to getting into your flow state—a mindset in which you do your best thinking and achieve real breakthroughs.
Q9. Does this Actually Matter? Given the shortness of life, does this thing I’m thinking about, worrying about, fighting about, throwing myself into even matter? Sadly the answer is usually no.
As Coach Wooden always told his players: “Learn as if you were to live forever; live as if you were to die tomorrow.”
If nothing else, don’t get stressed about short-term market volatility and the media hysteria around it. All that matters is your long term financial plan and preserving wealth for yourself, your family, your heirs and the causes you support. As get older, I realize more and more that money is simply a tool for making the most of our brief time on earth. Making money for the sake of making money’s will just keep you on the hamster wheel forever.
“You could leave life right now,” the second century Roman emperor, Marcus Aurelius reminded himself, “Let that determine what you do and say and think.”
Q10. Will This Be “Alive Time” or “Dead Time?” At the end of the day there are only two types of time: Dead Time and Alive Time. Dead Time is when we are just waiting and Alive Time is when we are learning and active.
Resist the temptation to get distracted by Wall Street pundits. Don’t let them sway you into chasing the next hot stock or sector. Don’t let them talk you into getting in (or out of) the markets at EXACTLY the wrong time (see danger of market timing in Question 5).
Case in point: During a recent eight-day span, research found that the big three cable news networks had over 600 stock market pundits on the air—that’s about 75 different “talking heads” tugging at your ego and emotions every day. Behavioral finance research proves how hard it is to predict markets accurately, but still we are exposed to thousands of gurus a month through conventional and social media. Use your Alive Time to become a smarter investor, to get better at your profession, to become a better parent, to read and to exercise regularly. Don’t allow your Alive Time to become Dead Time by trying to predict the unpredictable (think weather, stock market, natural disasters or traffic accidents, etc.).
Q11. Is this Who I Want To Be? Our minds have a unique ability to make the distinction between what we do and who we are. The problem is you can’t be a good person if your actions are consistently bad. People make bad decisions when they’re under fiscal duress, often falling into what we call “the triangle of corruption:
Need + Justification + Opportunity.
Unfortunately, sociopaths aside, the triangle is where people get themselves into trouble. By keeping your financial house in order, you can prevent the triangle from swallowing you up. You are what you do. Regardless of what you happen to be doing, always ask yourself, “Is this reflective of the person I want to be?”
Q12. Man’s Search for Meaning. Viktor Frankl, a renowned Austrian neurologist and Holocaust survivor, said life demands that we always answer the question, “What Is the Meaning of Life?” He said we answer that existential question with our actions and decisions.
After examining 65 studies on debt and mental health, researchers from the University of South Hampton concluded that people in debt are three times as likely as those who are debt-free to have a mental health problems. Those problems can range from drug and alcohol dependence, to depression, anxiety disorders and psychotic disorders. That’s a scary statistic considering that more than one-third of Americans have delinquent debt according to the Urban Institute.
Conclusion
Surround yourself with people who have a positive outlook on life and a healthy relationship with money. Control what you can control and let everything else go. Finally, if you are to find the meaning of life in your actions and decisions, then debt and financial worries are clearly things to avoid at all costs.
