What I read this week…

What I read last week

Financial Markets

Everyone should be aware of how his or her own personality affects investment behavior. When you identify your key personality traits, you can tailor the investment process to maximize the probability of achieving your goals. 

Manage your personality in investing!

All investment strategies more or less rely on some kind of forecasting the development of asset prices. In my opinion, it is essential to understand when to forecast and how to assess the degree of certainty of your prediction. I try to make as few forecasts as possible and increase the degree of certainty by extending the time horizon under consideration.

When and how to forecast!

The breadth of alternative investments is ever-increasing and institutional investors are looking both for current income and yield. An increasing number of asset managers are investing in the business of royalties which promises a stable cash flow profile.

Music royalties as an alternative investment!

Howard Marks of Oaktree Capital is one of my favorite authors regarding investment topics. In his newest article, he joins the long-discussed topic of value vs. growth investing. I agree with him that one should not only pay attention to the mere definition, but use a more agnostic approach. 

What is of value?

 

Business & Strategy

Over the past years, due to government incentives, there has been an ever-increasing number of electric cars sold. In the meantime, however, the resources needed for construction are becoming scarce. A variety of companies are pushing for ways to recycle old car batteries but it will be a while before the technologies are commercially viable.

Recycling of old electric car batteries gains momentum!

Reading & Writing

Morgan Housel shares his views on reading and writing. Although this is a quite short article, you can take away some important insights from it.

Read more, write more!

What I read this week…

What I read last week

Financial Markets

The year 2020 was an extraordinary one, especially for financial markets. If you walked away from the stock market and just looked at the year-end returns, you would think it was just an ordinary year. Under the surface, there was plenty of fascinating stuff going on.

The year 2020 in returns

The importance of network effects in business and finance can’t be overstated. I’m increasingly drawn to this concept of interaction and its influence on market participants.

Just how important are network effects in finance?

I read a lot of research throughout the week and I’m constantly looking for new resources. There are plenty of good websites that keep track of worthwhile investment whitepapers.

 A collection of whitepapers published in December 2020

The market environment which unfolded over the past decades is basically uncharted territory for asset allocators. Textbook theories do not necessarily apply here and the implications for portfolio construction are not straightforward. Due to historically low bond yields, institutions tilted their portfolios heavily in favor of equity investments and influenced overall market dynamics.

Uncharted market territory

Implications for asset allocation (Podcast)

Business & Strategy

Much has been written about the impact behavioral design can have on people. The importance of default settings, be it regarding savings decisions or user data transparency is well described in the following article by Ben Thompson.

Maybe we should rethink our own “default” behavior?

Should we aim for new defaults?

Over the last decades, the cost of solar energy production has decreased significantly. As a result, companies are now building an increasing number of solar power plants, where the low cost of solar panels allows significant oversizing.

In the future, the surplus energy could be used for the production of hydrogen or stored in batteries.

Optimizing grid capacity

What I read this week…

What I read last week...

Finance & Markets

 

Morgan Housel is one of my favourite writers. In his post he wrote about an ubiquitious phenomenon. Bad things happen very fast, good things need a lot of time to unfold. This can be observed in the financial markets on a daily basis. Signifikant stock market returns sometimes need decades to materialise, while stock market crashes can happen in a blink of an eye.

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Technological developments have reshaped almost every aspect of our lifes during the past decades. During the COVID crisis many people started inveting through online brokerages which offer near zero commission trading. From my point of view it is very important to aknowledged the konsequences for wealth managers and in particular stock markets.

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Forecasting equity market returns seems like a fruitless endeavor. Nevertheless it is important to assess potential equity returns especially in constrast to other investable assets.

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Anybody who is involved in the financial markets knows the potential havok it can wreck on your emotions. To distinguish good from bad decisions just looking at the results you achieved won’t achieve much. You need to develop a thorough process which can be reviewed.

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Business & Strategy

 

The mega IPO of Ant Financial got pulled by the chinese government two days before initial trading. The reasons are not just idiological in nature.

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What I read this week…

What I read last week...

Finance & Markets

 

Aswath Damodaran wrote about different sources of equity returns. In general, I agree with the notion that to earn any kind of return in the market, you have to accept the pain that goes with it.

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Too often, people confuse trading with investing. Keeping the long term perspective matters most.

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As of late, there have been numerous articles on the valuation of global equity markets. It is critical to put valuation metrics into context and decipher their calculation.

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Howard marks published a piece on the current uncertainty. It is outright brilliant, don’t miss it!!!

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Business & Strategy

 

Ben Thompson wrote about the “anti-amazon-alliance”, which has formed over the last years. Alternative e-commerce providers like Shopify or Instagram are gaining traction in the marketplace. 

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