“Our obsession with being informed makes it hard to think long-term. We spend hours consuming news because we want to be informed. The problem is, the news doesn’t make us informed – quite the opposite. The more news we consume, the more misinformed we become.” – FS Blog

My reading goal of 30 books in 2023 has been achieved – in a large part due to the Slough House series from Mick Herron.

From time to time, I post some excel tools for folks to take advantage of.  In most cases, I am just making those available to save people some time.  But tips are always welcome.

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

1. Can’t Escape the (Capital) Cycle – “Marathon Asset Management did not invent the framework, they just clearly articulated it in their letters and used it to navigate markets. “
2.  The Tide Is Going Out – “While this will likely still take time to unfold in the private markets, it appears to already be well underway in the public markets with the average small-cap stock in the Russell 2000 down more than 33% from its 52-week high.”
3. Can Economists Predict Recessions? – “Short answer: Maybe a quarter ahead (but not always). Beyond that short time frame, it’s simply too variable.”
4. 6 Reasons Why a US Recession Is Likely — and Coming Soon – “… typically the US consumer keeps buying right up until the brink.”  SMS: This has been my view for awhile – the U.S. consumer will spend until stopped.
5. What goes down must come up – “But more likely we are in a new regime, with more volatility at the very least.”
6. Further Thoughts on Sea Change – “No one cites my candidate: the 2,000-basis-point decline in interest rates between 1980 and 2020. “
7. Housing Market: 1981 Vs. 2009 – “Have people forgotten how bad the real estate market crashed in the early 1980s? Apparently so.”
8. Weekend Thoughts – Inflation Hedges, Bonds & The “This is Fine” Economy – “The main reason I take it personally is because the Fed has broken a whole bunch of stuff and I don’t see how anyone can frame it any other way. “
9. Something “Big & Stupid” Is Coming…– “So there are two ways to deal with excessive debt: fiscal discipline and inflation.”
10. The Power of Morning Pages – “There really isn’t much to lose by sitting down and writing for twenty to thirty minutes every morning.”

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.

Updated stats:

Reminder: I learned way back in 2000 not to give investment advice, especially to people I know well.  So please do not take anything in any of these posts as financial or investment advice.

© 2023 Something For The Effort LLC – All Rights Reserved

“One of the most important parts of developing an identity that can thrive, persist, and endure change is to diversify your sense of self. You can think of identity like a house. You want the house to have multiple rooms. Perhaps there is a “parent” room; an “athlete” room; an “employee,” “entrepreneur,” or “executive” room; a “community member” room, and so on. It’s okay to spend a lot of time in just one room, but you’ve got to ensure you keep the others in good enough shape. This way, when you experience a massive change or disorder event in one area of your life, in one room of your identity, you can step into other areas to gain your footing and stability. Like a diversified portfolio in investing, diversifying your sense of self makes you more rugged and flexible in the face of change.” — Brad Stulberg in Master of Change

Welcome to Q4! September was a month, for reasons that I won’t go into.  I guess I should have just T-Billed and Chilled.

Actually, I’ve been doing that for quite some time.  See this post.  All the recent publicity around that makes me a touch nervous.  I have gotten so used to being wrong, that apparently being within the consensus makes me uncomfortable.

There’s probably some sort of lesson in there somewhere.  One day, I might figure it out.

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

1. Of boiling frogs and underperforming investments – “There are so many areas in life where we know we can reduce losses and avoid harm by taking preventive action, yet we wait and wait until it is too late.”
2. New 20+ year record high mortgage rates begin to impact home sales; bifurcation in new vs. existing home prices continues – “As per usual, interest rates lead sales…Further, sales lead prices.”
3. Should You T-Bill and Chill? – “You have a significant amount of reinvestment risk.”
4. Why TIPS Look Attractive – “Given recent events, as well as the ever-rising level of national debt, it seems prudent to treat future inflation prospects from a neutral perspective rather than being distinctly optimistic.”
5. Ray Dalio All Weather Portfolio Review, ETFs, & Leverage – “Utilities provided the lowest volatility, smallest drawdown, highest return, and highest risk-adjusted return:”
6. Fewer Losers, or More Winners? – “Neither maximizing winners nor minimizing losers is necessarily enough. It’s all in the balance. “
7. The Bond Bear Market & Asset Allocation – “The bond returns have been higher most of the time but it’s not a huge difference.”
8. Asset Class Correlations Convict Central Bank Activism – “While central bank largesse may undergird returns (at least most of the time), it does so while increasing portfolio risk by increasing asset class correlations. There is no free lunch, indeed, even when it looks like there is.”
9. Our future is Japan – ” In Japan, the central bank has been manipulating the bond market through its interest rate targeting policy for years. This has kept long-term bond yields close to zero and helped the government sustain debt levels well in excess of 200% of GDP.”
10. Have Bonds Finally Reached Escape Velocity? – “In short, bonds with a duration under 5 have likely already reached escape velocity. T-notes in the 5-10 year duration range are close to escape velocity, but not quite there yet. And long bonds are still far from escape velocity. “

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.

Updated stats:

Reminder: I learned way back in 2000 not to give investment advice, especially to people I know well.  So please do not take anything in any of these posts as financial or investment advice.

“If you simply do what everyone else has already done, you will be rewarded with the same mediocre results everyone else has already gotten. The only model for success is to avoid most of the world’s models for success.” – Mark Manson

We were mostly in place back in Utah for August, after being on the move from essentially mid-May through July.  However, not too much notable to report.  Lots of riding mixed with a bit of Coursera studying (Contract Law 1 by Yale).  Online learning has to be a major component of the future of our education system – to expand access to larger portion of the population and reduce the costs and other impediments to education.  The admissions practices of elite private universities and student loan forgiveness are a distraction.

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

1. Common Probability Errors to Avoid – “If you’re trying to gain a rapid understanding of a new area, one of the most important things you can do is to identify common mistakes people make, then avoid them. “
2. The Intel Split – “Intel’s factories, denied monopoly access to cutting edge x86 chips, will now have to compete with TSMC to earn not just 3rd-party business, but business from Intel’s own design team.”
3. On the business, strategy, and impact of technology – “Smartphones, though, provided a reason to build up the software layer from scratch, with efficiency, not performance, as the paramount goal.”
4. Blackstone ❤️ private credit – “the simple fact is that institutional investors like the smoothness of private markets.”
5.  The Tide of Price over Volume – “There are very few chances to find the elasticity of demand. And – for the time being – there are ample excuses to figure it out.”
6. Bear market investors think different – “And it is this lack of overoptimism why investors who have learned their trade in a bear market have slightly better performance on average than investors who have learned their trade in a bull market, as I have discussed here.”
7. A giant wealth transfer is why the economy isn’t responding to Fed – “it is virtually certain that central governments’ fiscal deficits will be large, and it is highly probable that they will grow at an increasing rate as the increasing debt service costs plus increasing other budget costs compound upward, and, as they increase, governments will need to sell more debt, so there will be a self-reinforcing debt spiral that will lead to market-imposed debt limits while central banks will be forced to print more money and buy more debt as they experience losses and deteriorating balance sheets”
8. John Eastman Comes Clean: Hell Yes We Were Trying to Overthrow the Government – “The Declaration of Independence has no legal force under American law.”
9. Guest Contribution: “The End of Zero Interest Rates” – “US short-term rates had been near-zero for nine years [2009-15 and 2020-21] out of the preceding 13 years, since the Global Financial Crisis of 2008. “
10. Have Bonds Finally Reached Escape Velocity? – “In short, bonds with a duration under 5 have likely already reached escape velocity. T-notes in the 5-10 year duration range are close to escape velocity, but not quite there yet. And long bonds are still far from escape velocity.”

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.

Updated stats:

“Luck doesn’t just happen, it’s created. You can do things to increase the odds of serendipity. Meeting more people makes you lucky. Learning more skills makes you lucky. Being willing to fail makes you lucky. Offering to help others more often makes you lucky.” – Mark Manson

We are ensconced back in Utah as of a few days ago.  Amongst our travels included eight days in Colombia.  It is humbling and exhausting to not speak the language.  Regardless, our trip was amazing.  Some notes on that are forthcoming.

Finally finished Against the Gods: The Remarkable Story of Risk.  I had started reading a hard copy and then went traveling around and the book didn’t make the packing list.  What a good book?  Why did it take me this long to find this? I need to review and write up my notes.

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

1. Is Cash the Best Insurance Asset? – “In other words, when cash yields a high real return it becomes the ultimate insurance instrument because it gives you a risk free inflation beating return in the short-term. And that is the ultimate form of financial certainty.”
2. Against Cassandras: Inflation – “In essence, what we have seen in the decade between 2010 and 2020 is what you expect to see in a low interest rate environment with global financial markets and no capital restrictions. You create high-flying financial assets and persistently high valuations that look nothing like the valuations we were used to in the past.”
3. Musings on Markets: Market Resilience or Investors In Denial? A Mid-year Assessment for 2023! – “The Fed has raised the Fed Funds rate multiple times this year, but those rate increases have clearly done nothing to slow the economy down and inflation has stabilized, not because of the Fed but in spite of it.” SMS here: A must read; so many insights in this piece.
4. Identifying Investing’s Anti-Patterns – ” Learning how not to lose money is more important than learning how to make money.”
5. Naval on Twitter: “How to Get Rich (without getting lucky)” – “Ignore people playing status games. They gain status by attacking people playing wealth creation games.”  SMS here:  Is this a tweet?  An X?  Maybe they’re history?
6. How to Read: Lots of Inputs and a Strong Filter – “Similar to dating, a book you’re not into after 10 minutes of attention has little chance of a happy ending. Slam it shut and move on.”
7. Threadzilla – ” There has never been a firm in the modern economy that’s fallen this far, this fast that has not been accused of fraud.”
8. How Fortunes Are Made: Revisiting From Predators to Icons – “Instead, they argued, great fortunes arise from a set of favorable initial conditions (perhaps today they would use the term ‘privilege’) in combination with Strategic Intuition, the ability to recognize and take advantage of extraordinary opportunities that lead to an “intense accumulation of capital.””
9. Dynamic MTB Fit – “A RideLogic dynamic MTB fit focuses on out-of-the saddle handing. We position your bars relative to your feet. This is critical for technical/expressive riding. Independently, we position the saddle relative to your feet. The saddle-to-bar relationship is incidental.”
10. Crest and Oral-B have a new way to get rid of your old toothbrushes and dental products – “All you have to do is pack up a box with your used oral care products, print the free label, and ship it out to the recycling facility. “

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.

Updated stats:

“The people who didn’t do any work at home never did any work in the office. They’re just easier to identify when they work from home. Hard workers are hard workers no matter where they operate.” – Farnam Street Brain Food

More books, less articles appears to be a by-product of traveling.

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

1. Jim Grant Warns of ‘Long Cycle’ of Rising Interest Rates, Bond Bear Market – “It would not surprise me at all if we were embarked on something resembling a generation-length bear market in bonds, meaning rising yields and falling prices. That would fit the form.”
2. How to spot a house price bubble – “First, they show that until the 1970s, house prices were mostly determined by the cost of materials and labour to build a house, the supply of houses and population growth. But since the 1970s the drivers have shifted. Between 1970 and 2012 about 70% of the house price increase can be explained by the increase in capital and the cost of capital, while an additional 20% is explained by population growth.”
3. The Great US Treasury Bond Rout Is Far From Over – “I have what might be disconcerting news: It’s not over.”
4. Chart of the Week: Commercial Real Estate Collapse – “According to the Green Street Commercial Property Price Index prices are now down by 15%. That’s the largest decline we’ve seen since the GFC. “
5. Enough with Interest Rates Already – “So, to sum up: for at least 40 years, the level of real policy rates has had no discernable effect on changes in the level of inflation.”
6. The new way of work – “The pandemic didn’t create distributed work, the laptop did. Human interaction is critical, but the office isn’t actually the most effective way to create that.”
7. The Lesson to Unlearn – “Tests can be divided into two kinds: those that are imposed by authorities, and those that aren’t. Tests that aren’t imposed by authorities are inherently unhackable, in the sense that no one is claiming they’re tests of anything more than they actually test”
8. The brave new world of probability and statistics – “The sobering consequence is that a significant portion of the models, funds and strategies employed in the investment world, including many of those marketed to individual investors, may be merely statistical mirages. “
9. Change Your Perspective – “My colleague Ben Carlson likes to point out that average annual returns for the S&P500 is 8%, a number that market almost never returns on an annual basis.”
10. What Would Happen if the Fed Caves to 4%-5% Core PCE Inflation, Gives up on 2%, as some Folks are Clamoring For? – “Long-term yields will explode.”

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.

Updated stats:

“When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles – generally three to twelve of them – that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.” — John T. Reed in Succeeding

Apologies for the silence.  As I alluded to earlier, my family and I embarked on a six week trip to the Pacific Northwest and Alaska in early May.  

We’re back now and “decamping” a bit.  And starting to get ready for our next trip.

Here are my most influential reads from back in May – in no particular order:

1. The Great Pandemic Mortgage Refinance Boom – “Approximately one-third of outstanding mortgage balances was refinanced during the seven quarters of the refi boom, and an additional 17 percent of mortgages outstanding were refreshed through home sales during a time of high demand for housing.”
2. DoubleLine’s Gundlach warns of echoes of S&L crisis at regional banks – “This is kind of the same phenomena, and I don’t really see what’s going to make it stop, unless the Fed is going to cut interest rates, which there’s no inclination of cutting interest rates at the next meeting,”
3. These 4 free apps can help identify every flower and tree around you – “The easiest to use is Seek.”  SMS: We used this a bunch on our trip and it was super fun.
4. Despite Fed Tightening and Bank Collapses, It’s Still an Astoundingly Loose Financial Situation in La-La-Land – “So, despite the rate hikes and QT by the Fed, financial conditions are still looser than the long-term average, though they have become somewhat less loosey-goosey than during the free-money era.”
5. Press Pause – “What we do know is the fastest set of rate hikes in modern times have been breaking things, and if it continues, it’s likely to get worse.”  SMS: I would argue we broke things on the way up (i.e., housing prices); people just tended to find those outcomes more fun.
6. The Spectrum of Financial Dependence and Independence – “Congrats. You are no longer reliant on bosses or clients. You can deal with them if you want, and you probably will. But only if you want, when you want, with who you want. Which feels good.”
7. The Druck hates to lose money – “If I get an idea and I think it’s attractive for whatever reason . . . I generally go ahead and buy it, and then tell the analysts to poke holes in it and if it turns out I was wrong I get out. I don’t like to wait around. “
8. Some Things I Think – “A big problem with bubbles is the reflexive association between wealth and wisdom, so a bunch of crazy ideas are taken seriously because a temporarily rich person said it.”
9. The Fed’s Interest Rates Are still Fueling Inflation rather than Dousing it, and People Getting Used to this Inflation – “When we look back 60 years, we see what an extraordinary period this QE and interest rate repression since 2008 has been. During almost the entire 14 years — except for a few months in 2019 — the Fed’s policy rate was far below the rate of core CPI.”
10. How to Make Friends as an Adult – “Therefore, fairly late in life, you have to teach yourself to deliberately make time and space for friendships. “.

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.

Top clicks across the site last month:

1. Financial Model vs. Operating Model
2. Bears Watching: Short Yields & Fed Funds Rate
3. Excel Tips: Football Field Chart
4. Operating Model Tips
5. Email: Don’t Fire & Forget

Updated stats:

“Often, we get what we tolerate.” – Seth Godin

Lots of reading this month!  Some of that was cleaning out a bunch of older articles – that either needed to read or passed over.  Generally, I have around 200 or so saved articles in my queue.  See a bit more on my reading system here.

Also, got through a few books, which is nice.  Again, my eyes here tend to be larger than my pace of reading.  Check out my latest note: The Go-Go Years

This month was a bit more interesting as well event-wise.  The Fed has done exactly what they said they would.  Take that for listening to them!  And, Congress has embarked on a course of stupidity and political suicide by holding the debt ceiling / default gun to their own heads.  Again, no surprise.

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

1. Read Old Books – “Yet, as sobering as this all may be, there is a silver lining. If the majority of people (and therefore investors) continuously fail to learn from others’ mistakes, shouldn’t there be significant value in being in the minority that does? Of course, but how? One way to start is by reading old books.”
2. Mohamed El-Erian, Citing Hamilton, Says the Fed Should Talk Less – “I’m more worried about economic contagion than financial contagion—namely, that the banking tremors we’ve had will lead to a reduction in credit to the economy over the course of this year and early next year, increasing the risk not just of recession but stagflation.”
3. My Most Valuable Season – “Outside of the energy sector, it has been a long time since any part of the economy has truly lost. This means that most 20- and 30- year old’s have never truly felt job insecurity.”
4. The Phillips Curve is Still Working Just Fine – “The Phillips Curve is a very simple idea and a very powerful model. It  simply says that when labor is in short supply, its price goes up”.
5. How 3% Mortgages Altered the Housing Market for Years to Come – “So they’re not selling, and they’re not buying. They’ve left the market.”
6. Walk with me… – “A short, 20-minute stroll around a friend’s neighborhood at sunset became the highlight of my day.”  SMS: We had a very similar experience during the early part of the pandemic.
7. Why I am not investing in a buyout for a long time to come – “Inflated returns, denial of volatility, high prices and fees, excessive leverage, absence of covenants on buyout debt — all this together represents fantasy thinking. It is what happens when a successful investment model becomes too popular.”  SMS: FT continues their critique of private equity.
8. Why cutting your personal carbon footprint matters – “The most impactful ways to reduce personal emissions are familiar by now: Fly and drive less, eat less meat, switch to electric cars, and install electricity-based home heating.”
9. The lies we tell ourselves – “It concerns me that it seems like markets, the Fed, and policymakers are operating under the assumption that eventually we’ll get our old economy back. Or after this rather unfortunate hiccup, inflation will fall to below 2% and we’ll go back to near-zero interest rates.”
10. Taxes – “But we can make a major step toward closing the gap between our spending and our revenue. By actually collecting the taxes we’re owed. The distraction is tax rates; the focus should be the tax code and enforcement.”.

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.

Top clicks across the site last month:

1. Financial Model vs. Operating Model
2. Bears Watching: Short Yields & Fed Funds Rate
3. Excel Tips: Football Field Chart
4. Operating Model Tips
5. Email: Don’t Fire & Forget

Updated stats: