*? Success is not Enough: Capitalism is Brutal ?
You have a breakthrough product that the whole world suddenly needs. Your revenue grows by hundreds of percent and your free cash flow explodes to the moon…
…and yet, a few years later your stock might be flat or barely higher (see above for Moderna, Zoom, and Pfizer, but there are countless others).
Pfizer’s 10 and 20-year stock CAGR is around 4%, and it has been underperforming the S&P500 over decades. This company is known for Xanax, Zoloft, Lipitor, Viagra, Advil, and COVID19 mRNA vaccines — many blockbusters and household names generating billions! Yet they couldn’t outperform…
Long-term success in the stock market is hard.
In competitive sectors of the economy (which isn’t all of them, to be clear!), most of the value created isn’t* captured and society as a whole benefits from large positive externalities. In other words, if you live in a market economy, there are millions of people working very hard mostly for your benefit.
The very large and very profitable companies at the top of the power law are extremely visible, but there are millions of companies just in the US, and for most of them, it’s a knife fight just to stay in the game and make a bit of profit… Even just among very large publicly traded companies, a small group provides most of the return of the S&P500 over time and most of the rest underperform

Britt Frank, a licensed psychotherapist and trauma expert, has dedicated her career to helping people get unstuck and is the author of “The Science of Stuck.” I recently talked with her on my podcast, Financial Therapy – It’s Not Just About The Money.

Britt describes two types of being stuck. The first is when we really don’t like any of the possible choices. Then the work isn’t about finding a way out; it’s about figuring out which of the unpleasant choices is the least bad and moving forward.

The second is when your nervous system is locked in a state of self-protection. This is about fear and the body’s natural instinct to avoid perceived danger, even if that danger is change itself and the actual change may be positive.

Her tool for moving from stuck to unstuck is what Britt calls the “micro yes.” A micro yes is an action so small, so seemingly insignificant, that it’s easier to do it than to not do it. The goal isn’t to make a big dramatic change but to gently coax the brain into a state where change feels safe.

For example, if you haven’t been able to start saving, begin with one penny. “Take a penny, put it in a box. When you have ten pennies, put them in the bank,” Britt advises. It sounds ridiculous, but that’s the point. The action is so small that it bypasses the brain’s defenses and doesn’t trigger fear or resistance. Over time, these micro steps compound and slowly build momentum.

For making a will, a micro yes might be as simple as opening Google and typing “attorneys near me” without even hitting search. The next day, you hit search. The day after that, you click on a name. Each task is a tiny bit of progress that breaks the cycle of inaction.

The idea that it’s possible to move from feeling stuck to achieving a goal overnight is a myth that helps keep us stuck. If you’ve ever had your vehicle stuck in mud or snow, you know it won’t go from zero to 60 mph in five seconds. The goal is to go from stuck to motion.

Once you start moving, even in the wrong direction, you’re no longer stuck. From there, you can correct your course and get back on track. Britt points out that the key is, “The second you say yes to anything, even the wrong thing, you are no longer stuck.”

Cullen like many others, felt that the Fed made a mistake not cutting the rates by 25 basis points in July. But cutting 50 now will not go down well from a posture perspective. (Imagine telling people the boat is not sinking. That will make people even more anxious.)

The signals are that economy is slowing down but not too bad. Disinflation is happening but we are not out of the woods yet and no signs that another bout of inflation is round the corner.

https://disciplinefunds.com/2024/09/11/25-or-50/

Discipline Funds

25 or 50?

The big question of the week is 25 or 50? No, we're not talking about the age of Leonardo DiCaprio's next girlfriend (obviously 25). We don't have time to think about about girlfriends (or boyfriends) because we're too busy thinking about Federal Reserve…

NBA teams no longer trade at 5-7x revenue, like they did a decade ago. They’re now commanding 10-14x the top line.

“Thinking about the next 10 years, if you’re just planning to grow the business 5-10% YoY at a flat revenue multiple, it will be hard to underwrite to the returns sophisticated investors demand,” one high ranking club executive said.

https://www.johnwallstreet.com/p/thesis-on-multiple-expansion-necessary-to-invest-in-nba-teams-at-current-valuations

JohnWallStreet

Thesis on Revenue Multiple Expansion Necessary to Invest in NBA Teams at Current Valuations

sports. media. finance.

https://rogersplanning.blogspot.com/2024/09/the-5-rule.html?m=1

Blogspot

The 5% Rule?

Barron's dusted off the retirement bucket playbook in an article while also arguing that a 5% withdrawal rate in retirement can now be cons...

A certain recent feature of the 6-month Singapore Treasury Bill is that.. the yield is dropping significantly.

I guess this is what folks will say unattractive.

https://investmentmoats.com/saving-and-investing-my-money/new-6-month-singapore-t-bill-yield-mid-september-2024-singaporean-savers/

Investment Moats

New 6-Month Singapore T-Bill Yield in Mid-September 2024 Should Fall to 3.04% (for the Singaporean Savers)

A Singapore Treasury Bill issue (BS24118Z) will be auctioned on Thursday, 12th September 2024. If you wish to subscribe successfully, you must place your order via Internet banking (Cash, SRS, CPF-OA, CPF-SA) or in person (CPF)

" I think our industry does a terrible job of explaining time horizons to investors in part because most of the commentary in the industry is about stocks and stocks do not have a defined time horizon. "

I agree with Cullen Roche here. What we read in the financial media is NOT personal advise, and they don't talk about time horizon so much. Thus, a lot of people gets confused and so go to hunt for these magical multi asset funds that paints the picture that they can give you a low volatility with the same or slightly lower or slightly higher return.

It is what your brain wants.

But have you wonder how can these multi asset funds able to magically achieve this?

His underlying message is... maybe you really don't need this... if you understand your time horizon, and match a simple portfolio to the right tenor of instrument.

One of the meta problem is how do you define the "tenor" of something so volatile as equities? And this is what Cullen's work on Defined Duration is about.

https://disciplinefunds.com/2024/08/30/yes-you-can-eat-risk-adjusted-returns/

Discipline Funds

Yes, You CAN Eat Risk Adjusted Returns

There's a popular joke in financial circles that says you can't eat risk adjusted returns. In other words, while it might be interesting mental gymnastics to calculate things like a Sharpe Ratio the statistical output isn't something you eat. In other, other…

Here is the update to the portfolio for the month of August. Probably down $13k after yesterday's night.

Only small notable portfolio movements.

https://investmentmoats.com/money/daedalus-income-portfolio-update-august-2024/

Investment Moats

$1.43 mil Daedalus Income Portfolio Update – August 2024

Here is the update for my Daedalus portfolio for August 2024. If work is not too busy, I will try to provide an update where possible. I explain how I constructed this portfolio in Deconstructing Daedalus

https://rogersplanning.blogspot.com/2024/06/is-diversification-dead.html

Blogspot

Is Diversification Dead?

The title of today's post is essentially the question asked in a Bloomberg Article ( syndicated at Yahoo ). The TLDR is that broad diversifi...