Topley’s Top 10 – December 13, 2023

1. Small Cap Value Stocks Cheaper than Internet Bubble

Marketwatch BY Mark Hulbert

The accompanying chart plots this ratio, courtesy of data provided by Rob Arnott, founder of Research Affiliates. You will notice that, from its low at the top of that bubble in 2000 to its high in 2006, the ratio nearly doubled—from 0.37 to 0.73. Over that period, the average small-cap value stock produced a 22.2% annualized gain (before transaction costs), according to data from Arnott, versus a 0.1% annualized gain for the average value stock. That’s equivalent to an annualized margin of more than 22 percentage points, which is extraordinary.

2. Large Stocks vs. Small Stocks Outperformance Record Levels.

@Charlie Bilello Large vs. Small: The S&P 500 is outperforming the Russell 2000 by 13.7% in 2023. In the last 30 years, large cap outperformance has only been higher two times: 1998 (31.1% spread) and 2021 (13.9% spread).

3. High Dividend Stocks are also at Record Low Valuations Versus S&P

Capital Group.

4. Oil Down 7 Weeks in a Row…Energy ETF Chart Update.

XLE energy ETF failed twice at new highs…closes below 200 day at July lows

5. Natural Gas Bounce Fails

Natural Gas fails below 200-Day

6. VIX Stock Market Volatility Index New Lows to 2020 Levels

VIX back to pre-2021 crash levels.

7. Chapter 11 Bankruptcies Above Pre-Covid Levels.

Credit: This chart shows the number of US Chapter 11 bankruptcy filings.

Source: Variant Perception

8. Canada Going WWII Veterans Route to Solve Housing Shortage

Bloomberg Canada Revives Wartime Home Strategy to Address Housing Crisis

  • Thousands of simple ‘Victory Houses’ built starting in ‘40s
  • New program to add dense homes such as multiplexes, mid-rises

Victory Houses in the Topham Park neighborhood of Toronto, Ontario, Canada.Photographer: Galit Rodan/Bloomberg

By Laura Dhillon Kane

Prime Minister Justin Trudeau’s government is cracking open the history books for its latest attempt to address a severe housing shortage in Canada.

The government is moving forward with a catalog of pre-approved home designs to reduce the cost and time it takes to build housing. The idea dates back to the 1940s when thousands of soldiers returned from the Second World War and needed a place to live.

“We are living in a housing crisis, but it’s not the first time Canada’s been here,” said Housing Minister Sean Fraser at a news conference on Tuesday.

The new program will differ from the wartime strategy in some key ways, however. Between the 1940s and 1960s, a catalog of simple designs allowed for as many as a million wood-frame detached homes — known as “Victory Houses” or “Strawberry Box” homes — to be built across the country.

Fraser said his government is seeking designs that add density, such as multiplexes, mid-rises, seniors’ homes, student housing, garden suites and lane-way homes. The catalog will feature multiple designs in each category to give communities flexibility, he added.

9. Strategic Goal Setting

Sum Up-Eric Barker Blog

This is how to be strategic and achieve your goals:

  • What Strategy Isn’t: Fluff, not facing the challenge, mistaking goals for strategy and bad strategic objectives are all signs of a bad strategy. You’re basically crossing your fingers and hoping the universe is in a really giving mood.
  • What Strategy Is: “Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.” Yes, this phrase sounds like something a LinkedIn influencer would say while trying to sell you a webinar. But it makes sense and it works.
  • Diagnosis: Be honest about what obstacles you’re facing. Without that, strategy is just business improv. And nobody – I repeat, nobody – wants to see accountants and middle managers doing improv.
  • Guiding Policy: How can you apply your strengths to the weaknesses of the obstacle and create leverage to overcome them? You need to focus. Trying to do too many things, avoiding tough choices and thinking you’re going to please everybody might be why you cry in the shower.
  • Coherent Action: If your strategy is all goals and no action, it’s not a strategy; it’s a daydream with bullet points.

So how do you get started? You need to know what you want to achieve. This can be a problem for a lot of people. But it’s not that hard – in fact, it’s quite easy. Quick story:

It’s 1890 and multi-millionaire Andrew Carnegie is holding court at a cocktail party. People are hanging on his every word. Frederick Taylor approaches. He was famous as an expert on helping people organize their work.  Carnegie looked at him and said, “Young man, if you can tell me something about management that is worth hearing, I will send you a check for ten thousand dollars.” Ten grand then was about $300,000 today. It was probably more of a status challenge than a real offer. Everyone turned to look at Taylor…

“Mr. Carnegie,” Taylor said, “I would advise you to make a list of the ten most important things you can do. And then, start doing number one.”
A week later, Taylor received a check for ten grand.

Sounds ridiculous, right? This is the most basic advice in the world. Every corny self-help book recommends this. Why in the world would Carnegie – an amazing businessman by any measure — see this as valuable?  The list wasn’t that valuable. But actually making the list was incredibly valuable. We talked about the importance of tough choices. And making a list forces you to decide what’s important and what’s possible. Taylor’s list got Carnegie to reflect on what mattered most to him – and to consider ways of getting there.

Business fads come and go. Self-help tricks come and go. We love shiny new things. But what’s important is making choices that don’t make future-you want to time travel back and slap some sense into present-you.  So make a list. Consider what’s important to you. Think about the obstacles. Discover where the obstacles are weak and where you are strong to create points of leverage. And then…

Rock, meet forehead.

10. 5 Signs You’re Hiring People With Growth


Former Apple executive Guy Kawasaki recently interviewed an author he credits for “fundamentally changing my life.” The author is Stanford psychology professor Carol Dweck, who wrote the influential book Mindset: The New Psychology of Success.

Dweck popularized the concept of the growth mindset, which describes people who believe their skills and abilities can be developed. On the other hand, those with a fixed mindset believe they’re born with a certain amount of skill or intelligence, and that’s it.

Dweck says that mindsets fluctuate–a person can have a growth mindset most of the time, but shift to a fixed mindset when faced with setbacks. For founders to build successful teams, they must learn to identify those people who exhibit a growth mindset most of the time, because those hires will lift the entire team’s success.  

After two decades of working with top CEOs and entrepreneurs who credit the growth mindset for getting them to the top, I’ve learned to recognize five signs that reflect a person who is always learning and always growing.

1. They’re learn-it-alls. 

Microsoft CEO Satya Nadella credits Dweck’s book for helping him shift his mindset from fixed to growth. The change in his approach led Nadella to make major transformations at Microsoft. It also changed the way he hires.

Nadella looks for learn-it-alls and not know-it-alls.   How can he tell? By hiring people who are not afraid to fail.

Job candidates with a growth mindset are the first to acknowledge mistakes they’ve made because they view failures as opportunities to learn and improve. They don’t wait for the question, “Tell me about your greatest weakness?” or “Tell me about a time you failed?”Instead, they bring it up themselves because they know setbacks are setups for success.

2. They seek out mentors. 

“People with more of a growth mindset take on mentors and seek them out to enhance the likelihood that they can use their growth mindset successfully,” says Dweck.

I recently had dinner with a founder who built a business from the ground up and sold it for $100 million. The founder also brought along his mentor, a former CEO who had acted as this founder’s informal advisor for 20 years.

What I found remarkable is that–despite the founder’s success–he was still asking his mentor questions at the dinner table. That’s the growth mindset in action–always learning, always seeking feedback.

3. They admit to mistakes and learn from them.

Ray Dalio is a billionaire who founded Bridgewater Associates, the world’s largest hedge fund. Dalio famously owns up to financial mistakes he’s made over the years.For example, he bet a depression would take down the U.S. economy in 1982.  He was wrong; stocks went on a bull run, and Dalio’s firm lost money.

But Dalio turned the mistake into a learning opportunity and openly discusses how the event changed his mindset, how he makes financial decisions, and the qualities he looks for in new hires.  Dalio’s mistakes made him a more successful investor, and today he’s a strong advocate for turning mistakes into opportunities to grow and improve.

4. They’re insatiably curious.

Dax Shepard hosts the immensely successful podcast Armchair Expert, consistently ranked as one of the most popular podcasts on Spotify.

Shepard is a voracious reader who invites his favorite authors on the show. When Tim Ferriss asked Shepard which book he would gift others, Shepard immediately launched into a discussion of Ron Chernow’s book Titan, a biography of John D. Rockefeller.The question that Ferriss asked is a good indicator of a growth mindset. If you’re a founder, ask potential hires for their book recommendations. You’ll quickly find out if they’re insatiably curious, a key sign of a growth mindset.

5. They surround themselves with smarter people.

Warren Buffett is one of the most intelligent investors on the planet. Yet, he often credits his success to hiring people who are smarter than he is.By smarter, Buffet is not referring to a person’s IQ. He simply acknowledges that some people know a lot more about a particular topic than he does.Very few people can set aside their egos and admit that someone knows more than they do. But that’s why so few people truly exhibit the qualities of a lifelong learner.  Once you identify growth mindset people, hire them, hold them close, and keep them around.