Sell! Buy! Markets hate complex headlines (Chicago Booth Review). An academic at University of Chicago’s Booth School of Business looked at the popularity of headlines on the SeekingAlpha stock research site. He found, unsurprisingly, that people liked simple messages. As intelligent investors, we should be more interested in articles that we can fit into a sensible framework for making decisions! This is a link to a summary of the paper by Amy Merrick which in turn links to the original research.
Shell Heads for Cleaner Future With Sale of Polluting Oil Sands (Bloomberg). With oil prices down 10% over the past 10 days or so (now trading for less than $50 / bbl once again), we get news of Shell placing its vote that 1) the world is transitioning into a lower carbon future and 2) that high-cost oil reserves might be better off left where they are. I don’t want to read too much into this, but believe that the oil price drop and Shell’s divestment may inform our thinking about National Oilwell Varco (NOV), about which we wrote in March 2016.
Brazil’s worst-ever recession unexpectedly deepens in late 2016 (Reuters). In a recent report on Caterpillar, I commented that after Brazil had suffered from such a long recession, it was bound to turn around one of these days. Looks like that day is not yet here…
What the Best Mentors Do (Harvard Business Review). One of our goals at IOI is to serve as a mentor to people learning the science of investing, so this article from HBR caught my eye. One of my favorite bits of advice is this:
Shout loudly with your optimism, and keep quiet with your cynicism
Trump administration: We may ignore World Trade Organization (CNN Money). Egad. Something tells me that little Donald did not get high marks from his pre-school teachers in the field of “Working and playing well with others.” On the one hand, I think these kind of trade frictions will make me and our members some good money on our bearish investment in Union Pacific. On the other hand, I’m not happy to see our nation retrogressing like it is!
Bubbles for Fama (Greenwood, et al, Harvard University). Warning! This piece rates an 8 out of 10 on the wonkish-paper scale. One of the most infuriating things about (fake) Nobel Prize winning economist, Eugene Fama is his consistent refusal to believe that speculative bubbles exist. Having lived through a few and being younger than Dr. Fama, I have always had a hard time understanding why he couldn’t see them. This paper explains 1) why Fama’s arguments against the existence of bubbles are overly simplistic and 2) points out characteristics of financial bubbles. Love the title too as it reminds me of “Flowers for Algernon”.
I post a lot of links to articles to Twitter – it is the only social media that I can stand, but I still don’t buy anything advertised there – so follow me to see what I’m reading and publishing on a near real-time basis.
Bonus: Cool Picture of the Week (Ramsess II a/k/a Ozymandias sculpture)
Percy Bysshe Shelley, 1792 – 1822
I met a traveller from an antique land
Who said: “Two vast and trunkless legs of stone
Stand in the desert . . . Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed:
And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.