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Fritz

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16 May, 25 tweets, 8 min read

Today, much of the focus is on US compounded stocks, cryptocurrencies and COVID-19.

Let's get some perspective (1/x)

Key headlines in 1999:
• Motorola earnings
• Gateway Spanish speaking product
• Mutual funds
• Intel earnings

Key headlines in 2000:
• Compaq introduces hand-held line
• Looking forward to Home Depot earnings
• Bank CEO regulation
• Venture Capital flows still strong, despite crash

Key headlines in 2001:
• NASDAQ ends three-day losing streak
• What's next for Microsoft?
• Commentator: Ignore gold stocks
• Jobless claims continue to rise

Key headlines in 2002:
• Defense stocks are a great offense
• Stocks seen as lagging over 20 years
• Legal challenges for Hershey
• OPEC hesitates amid oil price spike

Key headlines in 2003:
• Stock pick: Washington Mutual for a 30% return
• Traders slam IBM
• Dollar boosts Asian exporting stocks
• Nikkei turns positive on SoftBank

Key headlines in 2004:
• Diebold's a winner
• Safe stocks hiding under the radar
• Japanese stocks open lower
• Fleckenstein: Insurance mess may ignite greater problems

Key headlines in 2005:
• A fund that beats Buffett
• Investors fear stock slip as oil surges
• Is China exporting good deflation?
• Dell's slowing may signal market weakness

Key headlines in 2006:
• Iran keeps crude oil above $70
• More turbulence ahead for Boeing
• Goldman, Lehman had worst Q3 banking drops
• Clorox names Coca-Cola executive as CEO

Key headlines in 2007:
• How far will the credit crunch spread?
• ABN, RBS consortium say to continue takeover talks
• Bear chief moves to assuage investor fears
• Profit from the Blockbuster-Netflix war

Key headlines in 2008:
• Wall St. soars on banks' best day in 16 years
• Inflation soars; home builder sentiment crumbles
• Merrill to sell Bloomberg stake for $4.5bln
• Computer shipment growth said slowing

Key headlines in 2009:
• Why a meltdown could happen again
• The bold new face of GM
• Why it's time to invest in real estate
• 4 problems that could sink America

Key headlines in 2010:
• Will Apple offer free iPhone fix?
• Should you buy gold?
• A meltdown survival plan
• Dow streak still alive, barely

Key headlines in 2011:
• Russia sells oil via pipeline to China
• Hangover or afterparty for stocks?
• Why Japanese stocks look tempting
• UK business leader sees rough start for economy

Key headlines in 2012:
• Better jobs, but worse jobs
• Sealed Air looks tasty
• Icahn goes activist on Motorola
• Transocean's surprising turnaround

Key headlines in 2013:
• How Twitter's pop stacks up
• Tesla and the competition
• Groupon is no bargain
• Macy's ready for happy holidays

Key headlines in 2014:
• The next Chipotle?
• Sunny outlook for solar?
• Home Depot hacking report worries Wall Street
• Why you shouldn't put your money in index funds

Key headlines in 2015:
• US gasoline prices at lowest level since 2008 recession
• A worst-case scenario for stocks? It's ugly
• How low can oil go? Goldman says $20 a barrel is a possibility
• Surging US debt should have you prepping for fiscal crisis

Key headlines in 2016:
• Trump shifts from Wall St. villain to savior
• The oil market could get a lot messier
• Silver prices have slumped into a bear market
• What Fidel Castro’s death means for investors

Key headlines in 2017:
• Here's why oil might crash to $10 a barrel
• Are Analysts Secretly Calling Gilead a Screaming Buy?
• Amazon said to make sportswear push in industry
• Bitcoin prices hit all-time high

Key headlines in 2018:
• Cryptocurrency ether hits lowest point of the year
• China puts off licenses for US companies amid tariff battle
• China trade war could cause bear market
• US 'likely' has taken over as the world's top oil producer

Key headlines in 2019:
• 80% of the stock market is now on autopilot
• Tesla analyst cuts price target
• Trump says no reduction in tariffs
• Stocks rise to close out Dow’s biggest June gain since 1938

Key headlines in 2020:
• Big tech lobbying
• Virus epicenter stocks
• Elon says China rocks
• Coronavirus live updates

Today's headlines:
• $100 million market cap deli
• Dogecoin rallies on Elon Musk tweet
• Facebook data could be halted
• Greece emerging from coronavirus lockdowns

Conclusions?
• News = noise
• All news are backwards-looking
• New, emerging trends are not obvious from today's news headlines
• Your focus has to be driven by something other than news reports: e.g. insider buying trends, buybacks, capital cycles, valuations, etc.

• • •

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More from @Fritz844

Fritz

@Fritz844

23 Apr

Swiss banker wisdom, as retold by Max Gunther (1/x)

1. If you are not worried, you are not risking enough

Humans need adventure, we get satisfaction out of it. Hard to get rich if you try to avoid worry. You're not going to get rich from salary. Play for meaningful stakes. Get over the fear of being hurt. 3-6 stocks are enough.

2: Take profits too soon

Don't be too greedy. Decide what gain you're hoping for and when you reach that point, get out. Long winning streak make the news and get talked about, but they are newsworthy for the very reason that they are rare.

Read 13 tweets

Fritz

@Fritz844

21 Apr

How I imagine Alfred Adler would have described investor psychology (1/x)

1. Investors' goal is to show their superiority
- Any drawdown is felt as a threat to their ego, and so they reinforce their belief in their own superiority by doubling down
- Gains are sold in an effort to maintain their self-image of investors who cleverly buy low and sell high

2. Blaming external events is a way to protect a fragile ego.

If a stock disappoints, you are more likely to blame corporate governance, investor sentiment, the Fed, short-sellers or someone else. Taking full accountability is hard because you'll challenge your identity.

Read 7 tweets

Fritz

@Fritz844

18 Apr

@naval

I really enjoyed the new book on @naval. Here are my favourite quotes from it (1/x):

"You're not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom."

Mostly true, in my experience. Either way, you need to build up assets that belong to you alone, and not your employer.

"You will get rich by giving society what it wants but does not yet know how to get. At scale."

Emphasis on 'at scale'.

Read 15 tweets

Fritz

@Fritz844

18 Apr

Typical reader question:

“I have money in the bank that I don’t know what to do with. I have never invested in stocks before. Where do I begin?”

I'm not a financial advisor but I can relate. You want to compound your capital but also be prudent and not gamble. Here is my advice

Some general advice:
• Diversify broadly. If you don't know what you're doing, just buy everything.
• Avoid leverage. Ruin kills compounding.
• Make contrarian bets. Buy before others do.
• Focus on long-term value. The long-term is easier to predict than the short-term.

1. First invest in freehold property with leverage

Most people who buy property do well because:
• True underlying inflation is probably 3%+
• You can use 5x leverage if not more

That causes the return on your initial housing deposit to reach double-digits. Hard to beat.

Read 8 tweets

Fritz

@Fritz844

13 Apr

"How did you go bankrupt?
Gradually, then suddenly."

- Ernest Hemingway

Warning signs in the early "gradual" phase
• Shipments slow down
• Quality slips a bit
• Inventories build compared to sales
• Payables are extended
• Gross margins erode a bit
• Cash balances are falling

Warning signs in the late "gradual" phase
• Production problems
• Material shortages (mgmt tries to conserve cash)
• AR days go up
• Payables > 60 days
• Cash balances low
• Hard to meet payroll
• Credit facilities in technical default
• Employee morale is failing

Read 7 tweets