Economic Outlook

Where did the planes go?

Boeing’s miserable results and outlook yesterday will be reinforced by similar dire numbers from Airbus.  The US plane maker delivered a mere 20 aircraft in Q2.  Revenues from passenger plane sales tumbled 68% while income from service and maintenance nose-dived. It’s cutting production as orders are delayed or cancelled.  It doesn’t expect aviation to return to normal for 3 years, and plans to lay off…Click to read full article.

The Odds Are Stacked Against Investors In A Post-Covid Economy

Since the March 23rd lows, retail investors have jumped into the equity market with little concern about the potential risk. The “Pavlovian” response to the Fed’s massive monetary interventions has pushed “risk-taking” to extremes. Unfortunately, the odds are stacked against investors in a post-COVID economy.

In a recent newsletter, we discussed our process of “taking profits” in positions that had reached more extreme overbought conditions. As is usual in a market where “momentum” is in vogue, we received numerous emails about the “folly” of selling our technology holdings.

It Isn’t Folly.

It is a usual practice of mitigating risk to protect capital for our long-term investment cycle. Interestingly, while there is little doubt that patience is a virtue for investors, exercising prudence is equally important. Despite the basic math, and historical evidence proving its usefulness, investors typically ignore prudence, especially when it is required most. The “siren’s song” of a momentum-driven market fueled by a “speculative greed” is inevitably too compelling for many investors…CLICK for complete article

The Investment Sector Defying A Global Pandemic

Amid a global pandemic that has collapsed more than 100,000 businesses and decimated entire sectors, one industry has ballooned to be bigger than Twitter, Facebook, WhatsApp, Instagram and SnapChat combined.

It’s thought to be  10x bigger than the marijuana industry.

Some people think its total legal and illegal spending worldwide is approaching  $2 trillion, and it’s still growing strong in complete defiance of the pandemic.

Welcome to the global sports betting industry, where merger mania is creating crisis-resistant powerhouses.

And as sportsbooks are still pulling in tens of millions of dollars every month during the pandemic, one off-the-radar consolidation play offers some real opportunities:

The first phase of the growing online gaming and sports betting industry was all about getting the tech right. The second phase is about bringing it all together.

A pioneer early entrant leader in sports betting technology is hitting Phase II hard, with major acquisitions…CLICK for complete article

BlackRock Makes A Run On Asian Stocks

Now that BlackRock has largely taken over Wall Street, whispers from its corridors are heavily weighted, and the latest two are troubling: It’s downgrading U.S. stocks and prefers the Asian market.

In other words, the king of Wall Street says it’s time to diversify.

After major market movement that has seen U.S. equities bounce back from a dismal March, BlackRock sees a new surge in COVID-19 cases as likely to put a dent in this trend.

On Monday, BlackRock–which oversees nearly $6.5 trillion in global assets–downgraded U.S. stocks from neutral to overweight, and advised clients to start shopping internationally for diversification.

Why? Because the amazing performance of the U.S. equities market this summer has largely been propped up by trillions of dollars in government stimulus and the Federal Reserve’s effort to save the corporate bond market by buying the bonds.

Now, unemployment checks will dry up. More stimulus remains in question, and COVID-19 is no longer flattening–it’s reviving itself with a vengeance as Americans in large numbers decide they simply don’t care or are impervious to the virus.

What investors will be watching carefully is the next policy decision to come out of Congress and the White House about stimulus. If they announce there will be no more unemployment benefits when they end in three weeks, there could easily be an equities sell-off…CLICK for complete article

Moon richer in metals than previously thought — NASA

Plans to start mining the Moon as early as 2025 became more attractive this week after a US National Aeronautics and Space Administration (NASA) team found evidence that the Earth’s natural satellite may, underneath its surface, be richer in metals than previously thought.

Using data from the Miniature Radio Frequency (Mini-RF) instrument onboard NASA’s Lunar Reconnaissance Orbiter (LRO), a team of researchers came to the conclusion that the lunar subsurface contains higher concentration of certain metals, such as iron and titanium, than estimated. The study, published in the journal Earth and Planetary Science Letters, contends the most popular theory surrounding the Moon’s origins. The hypothesis contends the satellite was formed when a Mars-sized object collided with Earth, vaporizing large portions of the Earth’s upper crust…CLICK for complete article

15-Investing Rules To Win The Long-Game

It is times, such as now, where logic states that we must participate in the current opportunity. However, emotions of “greed” and “fear” cause individual’s to take on too much exposure, or worry they have too much and a crash could come at any moment. These emotionally driven decisions tend to lead to worse outcomes over time.

As Howard Marks’ stated above, it is in times like these that individuals must remain unemotional and adhere to a strict investment discipline. It is from Marks’ view on risk management that I thought sharing the rules that drive our own investment discipline. 

I am often tagged as “bearish” due to my analysis of economic and fundamental data for “what it is” rather than “what I hope it to be.” In reality, I am neither bullish or bearish. I follow a very simple set of rules which are the core of our portfolio management philosophy. We focus on capital preservation and long-term “risk-adjusted” returns…CLICK for complete article