Noteworthy this week: The US dominates the World index
The US dominates the World index: Over the past 1.5 decades, the US has outperformed other countries in the MSCI AC World index. The weight of the US in the index has increased from around 40% during the Global Financial Crisis to over 60% now. This is significant to keep in mind when investing in a passive global equity fund. Some experts find the current US weight of 60%+ to be too high.
Not so fun to borrow anymore: As interest rates have risen and concerns about a weaker economy have grown, borrowing by companies has slowed down. In the US, firms have raised less than $70 billion from bond and leveraged loan sales this month, making it the quietest borrowing month this year and the slowest October for borrowing since 2011.
It’s hard to keep up in the US: In October 2023, about 37% of households in the US reported having difficulty paying household expenses. This indicates that many people in the US are living paycheck to paycheck, raising questions about the land of unlimited opportunities and economic mobility.
10% drawdowns happen every 1.6 years: Intra-year drawdowns of 10% in the stock market, such as the one experienced in 2023, are common. It is important to remember this when investing. On average, a 10% drawdown occurs every 1.6 years, while drawdowns of over 30% only happen once per decade.
“War is good”: This statement refutes the idea that war is actually good. While some argue that war benefits defense contractors and industrial production, the reality is that war is a horrific event with devastating consequences. Additionally, war often leads to debt-financed economic growth, which is not sustainable in the long run.
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Weekly market performance: Explore more market performance and periods by clicking the link.
Chart of the week: The Become a Better Investor Community has been discussing the performance chart of five stock strategies and one asset allocation strategy available in the community. Join the community for a free month and access the performance chart.
Podcasts we listened to this week: Ted Oakley from Oxbow Advisors discusses the economy, markets, and investor attitudes in an interview series with Grant Williams. The interview is available on YouTube.
Readings this week: “Smart Things I’ve Read Lately” is a collection of insightful articles and posts. One of the recent posts focuses on optimizing for independence rather than pay in life. The post emphasizes the importance of accountability for output rather than input.
Book recommendation: “The Capitalist Manifesto” by Johan Norberg explores how capitalism has lifted millions out of poverty and hunger. The book provides evidence of the positive impact of free markets on prosperity and technological innovation. It is available on Audible and Kindle.
Memes of the week: Check out the latest memes circulating online.
New episodes of “My Worst Investment Ever”: This week’s episodes feature stories from Jay Pelosky, who was right about Mexico but at the wrong time, Reuben Mattinson, who invested without solid proof of trading, and Jerry Parker, who learned the importance of understanding investing capabilities and limitations.
Published on Become a Better Investor this week: The latest episode of the “Deming in Schools Case Study” series discusses principles 4 and 5, which aim to maximize high-quality learning and work continually on the educational system. The episode features John Dues and Andrew Stotz.
World yield curve inversion: The world yield curve inversion is decreasing due to rising long-term interest rates. This trend is most prominent in Developed Market (DM) Americas and DM Europe. Emerging Markets (EMs) have high interest rates, with Frontier Markets (FMs) experiencing a crushing effect. Rates in EM Asia remain low. Notably, China and India have not experienced yield curve inversion.
Company analysis:
– Huaku Development Company Limited (2548 TT): The company ranks first in profitable growth compared to 300 medium-sized Real Estate companies globally, indicating world-class performance.
– B.Grimm Power Public Company Limited (BGRIM TB): The company’s rank in profitable growth has declined compared to the previous period, resulting in poor performance compared to 320 large Utilities companies worldwide.
– Edan Instruments Incorporated (300206 SZ): The company ranks first in profitable growth compared to 410 medium-sized Health Care companies globally, demonstrating world-class performance.
DISCLAIMER: This content is for informational purposes only and should not be considered as investment advice.
