In a fortunate twist for investors everywhere, the world did not end in nuclear conflagration this week. We can count ourselves lucky that the US armada was headed in the wrong direction, I guess. Hopefully, French voters will head in the right direction this Sunday.
In the news this week, several stories about the changing face of US retail caught our eye, in addition to some other tidbits. Here’s what we’ve been reading:
Is American Retail at a Historic Tipping Point? (NY Times). After the Great Recession, many of the jobs that were created were in the retail industry. Now, the popularity and wide acceptance of online shopping has caused many of those employment opportunities to disappear. Shocking quote from this piece: “More workers in general merchandise stores have been laid off since October, about 89,000 Americans. That is more than all of the people employed in the United States coal industry…”
From ‘Zombie Malls’ to Bonobos: America’s Retail Transformation (NY Times). Interesting follow-up to prior story, which makes a distinction between Zombie Malls and those which have high-quality tenants, plenty of sales per square foot, and well-heeled customers. Also brings up Bonobos (which is reportedly in discussions to be acquired by Wal-Mart), a retailer that has pioneered a boutique clicks-and-mortar strategy. At Bonobos, you buy online, but can schedule an appointment at a physical “Guideshop” to try before you buy; your order is shipped to your house even if you go into the store. Sears changed American retailing in the XIX century – it’s clear that retailing is again going through a huge transformation in the XXI century.
Investing in Solar and Wind in a Coal and Oil Moment (NY Times). Renewable energy investments may seem like they are under a curse. Even before Trump’s election, a surplus of solar panels caused prices to crash and solar companies to be repriced radically lower (see both our first and second article regarding a recent downgrade of First Solar FSLR). But the way to find investing success is to make a point to break with the crowd, no matter how psychologically painful that may be at the time. This article re-piqued my interest in renewables.
Paradoxes Of Probability And Other Statistical Strangeness (IFLScience.com). There are lies, damn lies, and statistics. This is a good article that explains some basic statistical errors people make when assessing probability. Thanks to FWI member Walter W. for this!
Robots Suck at Value Investing (Institutional Investor). Several investing professionals teamed up with a Haas accounting professor to look at the effectiveness of formulaic value investing – investing in companies based on a simple analysis of price-to-something ratios. Their conclusion? Not very effective at all – value investing requires human analysis, understanding, and judgment. The full paper can be found here.