Nevstar Links 04 October 2024
Welcome back to the Nevstar Links, your guide to some of the best articles on markets and investing available on the internet.
Today is the 4th October and it was on this day in history that a new age was inaugurated - the space age! On this day in 1957, the Soviet Union launched Sputnik 1 into space, the world's first artificial satellite. Weighing in at a hefty 83 kgs, the small metal globe with four prongs orbited the earth every 96 minutes triggering shock and awe around the world. The growth in the number of satellites since then is astonishing as there is now an estimated 11,330 individual satellites orbiting the earth - check out this mesmerising time lapse video showing the growth of objects in low earth orbit. Looks a bit crowded up there.
Onto the links for this week which has articles on economics, assets and insiders.
Shall We Repeal The Laws of Economics
Once again, the redoubtable Howards Marks has delivered a compelling commentary which this quarter focuses on some of the nonsense economic ideas spouted by politicians seeking election. Here he posts a sensible and pragmatic rebuttal to the ideas of price gouging and tariffs which are being promoted as economic solutions for those seeking the office of the Presidency.
"The free-market system doesn't necessarily produce 'fair' outcomes in all circumstances, but economic systems designed to do so generally don't provide the incentives needed to encourage economic productivity for the collective good. That's what accounts for their record of failure."
Annual Asset Class Returns
Fantastic interactive chart which is well worth checking out. Shows the asset class returns for various (U.S. centric) asset classes for the calendar years 2009 - 2023 and the year to date. Shows very clearly the concept of reversion to mean, the benefits of diversification and what you should expect from a diversified portfolio.
Hint : it's never the best performer but also never the worst.
"The chart shows annual returns for eight asset classes against a diversified portfolio. Diversification works to smooth out those big swings in the short-term. While you'll never get the biggest gains of any year, you avoid the huge losses."
Silver Isn't A Store of Value
Excellent piece from Fisher Investments looking at the second most widely held precious metal - silver. Both silver and gold have been strong performers in global markets this year but one of these metals is not like the other.
"Among the things you may have noticed: It lost over -50% of its value from roughly the time of Bear Stearns' bankruptcy that March through late November, the aftermath of Lehman Brothers' implosion and the US government's dismantling of Wall Street as we knew it. During this chunk of the global financial crisis, it bled worse than global stocks. No store of value there."
Should Insider Trading Be Legal?
Insider trading is banned in virtually all stock markets around the world. But do the laws really protect individual shareholders? This article makes a cogent case that share markets would be a lot more efficient without insider trading legislation.
"According to a 1992 study, on both insider trading days and those leading up to the eventual announcement of information, pre-announcement price drift occurs. Were the market to remain static, investors would face greater risks as security prices would not reflect the true value informed by insider knowledge."
From Intern to CEO
Finally we have a great profile piece about Elliott Hill who was recently announced as the new CEO of Nike Inc. Hill is returning to Nike after "retiring" in 2020 following 32 years with the company during which time he worked his way up from an intern at showroom in Memphis to being President of the Consumer division. It will be interesting to see whether he is able to turn around the fortunes of one of the premier brands in the world.
"Since the pandemic's onset, Nike, like other consumer companies, has grappled with lockdowns, remote work, shipping disruptions, and fluctuating demand. Meanwhile, the global running trend has surged during these turbulent years, but Nike has struggled to keep pace."
Quote of the Week
"We knew we could fail; we just didn't think we would."
Phil Knight
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Have a great weekend.
The Nevstar
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