Influential Reads – June 2022

Reading Time: 2 minutes

“The best way for investors to learn from mistakes is to let others make them, then read about it.” – Scott Barlow in The Globe and Mail 

A belated Happy Fourth of July…

Here are my most influential reads for the month – in no particular order:

  1. Bill Miller: An Investor’s Evolution (Part I) – “He found that the “source of excess return had little to do with pure accounting factors such as low p/e or low price-to-cash flow; it had to do with changes in the return on capital.””
  2. Time to Stop Believing Deficit Bullshit – “There is a rational middle between Zero deficits on one side and Modern Monetary Theorists on the other. We can fix our infrastructure, extend broadband to everyone throughout the country, even work to moderate climate change — and the economy will be just fine.”
  3. The Cantillon Effect: How the Rich Get Richer – “In other words, the “flow path” of the new money through a system matters.”  SMS here: The flow path of money leaving the system probably matters too.
  4. House Money – “There has been an unfathomable amount of money made in crypto over the last decade. But it’s not the amount of money made that is most shocking. It is the velocity at which it occurred, and the age group that benefited most.”
  5. Where does the wealth go when asset prices go down? – “The short answer is: It didn’t “go” anywhere. It vanished. It stopped existing.”
  6. Selling to yourself: the private equity groups that buy companies they own – “At the heart of the deals is a broader issue that is becoming more significant as stock markets tumble. Companies owned by private equity groups are facing the same pressures as their listed peers, as interest rates rise, supply chains struggle and an economic downturn looms. Critics of the industry believe some of these deals could be a way of hiding from this reality.”
  7. One Experiment Ends and Another Begins – “So this is in no way unforeseen. The prediction in advance was that this behavior would provoke very high inflation. And the MMTers said “pshaw.” They were wrong, and that experiment is over. The next person who mentions MMT, you are entitled to run out of town on a rail.”
  8. Right answer to wrong question – “For the first time in the history of Park City skiing, the planning commission has said “no” to resort upgrades. A ski town saying “no” to more skiing is a turning point. “
  9. The Challenging Middle – “Be wary. This present cycle is so unusual – pandemic lockdown, fiscal stimulus, overdue wage increases, inflation spike, supply chain issues, ongoing global pandemic, and a Fed overreaction (even panic) – that prior cycles do not fit very neatly. “
  10. Fed Starts Experiment of Letting $8.9 Trillion Portfolio Shrink – “After doubling in size through asset purchases in the first two years of the pandemic, the balance sheet will be reduced at a pace that’s almost twice as fast as after the last financial crisis. While the process officially commences on Wednesday, the first US Treasury securities won’t run off until $15 billion mature on June 15.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

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