Nevstar Links 14 February 2025
Welcome back to the Nevstar Links, your guide to some of the best articles on markets and investing available on the internet.
Today is Friday 14th February which is of course Valentine's Day so Happy Valentine's to all those lovers out there. It is also quite an auspicious day in the history of technology. On this day in 1876, Alexander Graham Bell applied for a patent for the telephone; in 1946, a general purpose electronic digital computer was demonstrated for the first time and in 2005, the YouTube domain name was first registered. Three technologies which are ubiquitous to this day.
Onto the links for the week including articles on millionaires, mega-caps, and market truths.
Does "Buy The Dip" Work?
Great piece from our friend Ben Carlson at A Wealth of Common Sense looking at the common strategy of "buying the dips" i.e. automatically looking to buy into a market when it is down by a specific amount. It seems so intuitively sensible and a great way to invoke the maxim of being greedy when others are fearful. But does it actually work?
"Buying is the easy part. Now what? When do you move back into bonds? Timing the market requires both buying and selling - you have to be right twice. The problem is that although corrections are a normal part of a functioning stock market, there are environments where corrections don't occur for a very long time."
The Digital Backbone of Latin America
Fascinating profile from Quartr about Mercado Libre which is the largest company by market cap in Latin America. It's an amazing business combining the capabilities of Amazon, Alibaba and Block all into one company located in a fast growing part of the world.
"While Amazon and eBay were flourishing in the U.S., Latin America posed unique challenges. Internet and credit card penetration was low, logistics infrastructure was very shaky, and trust in online transactions was almost non-existent. But Galperin welcomed the complexities since he understood the potential. If Mercado Libre could solve these problems, it would be tapping into a region with over 600 million people hungry for the convenience and variety that e-commerce and fintech could offer."
What Will The R.O.I be on A.I. Spending?
This is a very timely article which gets to the absolute critical issue facing the current crop of markets leaders. Will the giant mega cap technology companies be able to monetise the extraordinary amounts of capital expenditures they are currently making?
"But what is clear is that AI companies are burning cash without a lot of revenue to show for it. Google, Microsoft, Amazon, Meta, and other big spenders on AI capex are $400-500 billion short in revenues to cover traditional gross margins on data centre spending."
Ten Truths About The Stock Market
Good piece from Sam Ro at the TKer blog outlining the ten essential truths of stock market investing. Some are intuitive, some are interesting and a couple are slightly surprising but all are worth a read.
"While valuation methods may tell you something about long-term returns, most tell you almost nothing about where prices are headed in the next 12 months. Over short periods like this, expensive things can get more expensive and cheap things can get cheaper."
Is $1,000,000 Still A Lot Of Money?
Interesting article from our friend Nick Maggiulli musing on whether $1 million dollars is actually still a lot of money. How much money do you need to have to be considered "wealthy"?
"So, how much wealth would you need to have (as of 2022) to be in the top 5% of U.S. households? $3.8 million. In other words, you would need about $4 million today to feel relatively as wealthy as someone with $1 million did in 1998."
See also: 15 Quotes from Millionaires That You Can Put Into Practice.
Quote of the Week
"Time is at once the most valuable and the most perishable of all our possessions."
John Randolph
That is all for the Nevstar Links this week. Please share this with anyone that you think might be interested in reading it. Stay up to date with the Nevstar Links, subscribe here.
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Have a great weekend.
The Nevstar
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Neville Giles
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