Richard Thaler on small cap stock investing

We are mainly invested in small caps.  This is not because we believe small companies to perform better than large corporations.  Rather, it is because we believe that active management has a better chance of success with small caps. 

This has to do with the simple rules of economics: There is less competition in the small caps segment.  Every asset manager around the world has an opinion on Apple or Google.  But if we take a closer look at a small, boring company that makes ball bearings in Iowa, there might be two analysts tracking the stock.  Hence, the market is much more likely to be mispricing this company.

~ Richard Thaler, "'Everyone thinks they are a particularly clever investor'," The Market, July 26, 2021

Richard Thaler on the retail investing boom

Part of what is going on right now is what I call the "bored market theory."  Especially at the beginning of the pandemic, there was almost nothing to do because of the lockdown measures.  There wasn't even any sports on TV because all games were canceled.  So there was nothing to bet on, which is why a lot of people started investing in stocks. 

An important development in this regard preceded the pandemic, at least in the US. It had to do with something that shouldn't really matter in a rational world: free trading...  People like it when something is free.  The combination of free trading and boredom has rekindled interest in investing, especially at the level of individual stocks.  In contrast, a mutual fund or - even worse - an index fund is dead boring.  The entertainment value is practically zero.

~ Richard Thaler, "'Everyone thinks they are a particularly clever investor'," The Market, July 26, 2021

Doug Casey on technology and freedom

Let’s get back to technology for a moment.  Here’s the good news.  Although throughout history technology has always been first in the hands of the State, in the hands of the rulers, it always devolves to the common man, where it’s a genuine liberator. 

For instance, the bad guys got gunpowder first and used it to cement themselves in power starting in the 14th century.  But after a while, the technology drifted down to the peasants.  Gunpowder then allowed the common man to take out an armored mounted knight.  Although gunpowder helped the rulers to start with, it overturned them in the end. 

The same is true of computers. At first, only governments and large corporations could afford computers; they used them to keep track of the plebs.  But now everybody has a computer.  It’s more or less a level playing field, a two-way street.  So don’t worry about technology, because it’s always on the side of the average guy in the long run.  When the Singularity arrives in a generation or so, if Ray Kurzweil is right, the whole nature of life itself—forget about politics—will be utterly changed.

~ Doug Casey, "Doug Casey's Next 5 Shocking Predictions...," International Man, July 22, 2021

Doug Casey on the fall of Big Tech

Q: What do you think the role of Big Tech companies will be? 

Doug Casey: Trends in motion tend to stay in motion until they reach a climax, a crisis, at which point anything can happen. 

We’re headed for a gigantic world crisis. My guess is that the long-standing trend towards Big Tech getting bigger and more powerful won’t continue—in other words, Big Tech is in the same position that Big Oil was in 1980. It looked like they were going to take over the world. Oil stocks were over 30% of the S&P 500, but today, they’re under 3%. 

Big business in general, and now Big Tech in particular, have always had a very cozy relationship with big government—and big government likes that. The two of them fit together like a hand in glove. Big government funnels contracts to Big Tech, and Big Tech acts as the State’s handmaiden. 

It’s part of why the average guy has lost faith in government, corporations, and our institutions. They’re now losing faith in the money as inflation rises. When the stock market crashes, they’re going to lose faith in the financial markets. 

Massive societal change is looming. But that doesn’t mean the cultures of either Big Tech companies or the government are going to change. Why? Because throughout society, the elite are overwhelmingly statist and collectivist oriented. They’re quite comfortable and don’t want to rock the boat. 

The Big Tech companies all started small, founded by entrepreneurial geniuses. Now, however, they’re gigantic and mostly run by managers, “suits,” who have no skin in the game other than shares they get through option grants. They’re so large that they resemble dinosaurs at the end of the Cretaceous. After a certain point, however, the bigger a company gets, the less efficient it becomes. It can’t be managed properly, and it falls apart. 

As the crisis unfolds, I think these companies are going to fall apart. Their share prices certainly will.

~ Doug Casey, "Doug Casey's Next 5 Shocking Predictions...," International Man, July 22, 2021

Erik von Kuehnelt-Leddihn on socialism vs. capitalism

Socialism... has always been a "clear, but false idea."  A free market economy, on the other hand, is far more complex and cannot be explained in a nutshell.  In the political arena it competes poorly with the notion of collective ownership and central planning —until the latter’s bankruptcy is proved in practice.

~ Erik von Kuehnelt-Leddihn, "Portrait of an Evil Man: Karl Marx," The Freeman, September 1973, pp. 657-665

Thomas Sowell on collective guilt and individual responsibility

Have we reached the ultimate stage of absurdity where some people are held responsible for things that happened before they were born, while other people are not held responsible for what they themselves are doing today?

~ Thomas Sowell

Russell Lamberti on sports and egalitarianism

Sport is a radical hierarchy of excellence sorted by genetics, upbringing, resources, luck, volition and character.  Egalitarians therefore hate sport and are driven relentlessly to disfigure it with ideology.

~ Russell Lamberti, tweet, July 29, 2021

Andrew Cuomo on vaccine drives

We have to get in those communities, and we have to knock on those doors, and we have to convince people, and put them in a car, and drive them, and get that vaccine in their arm.  That is the mission.

~ New York Governor Andrew Cuomo, "Cuomo Says He Will Knock On Doors And Put People In Cars To Get COVID-19 Vaccine," Shore News Network, July 26, 2021

Malcolm Forbes on dreaming

When you cease to dream you cease to live.

~ Malcolm Forbes

Daily Mail: "The Internet may be only a passing fad" (2000)

The Internet may be only a passing fad for many users, according to a report. 

Researchers found that millions were turning their back on the world wide web, frustrated by its limitations and unwilling to pay high access charges.

They say that e-mail, far from replacing other forms of communication, is adding to an overload of information.

Experts from the Virtual Society project, which published the report, say predictions that the Internet would revolutionize the way society works have proved wildly inaccurate.

~ "Internet 'may be just a passing fad as millions give up on it'," Daily Mail, December 5, 2000

Denis Waitley on overcoming adversity

Failure should be our teacher, not our undertaker.  Failure is delay, not defeat.  It is a temporary detour, not a dead end.  Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.

~ Denis Waitley

(Congratulations, Annemiek van Vleuten, on one of the most incredible comebacks in sports.  After a horrific crash in the 2016 Rio Olympics, she won the gold medal in the women's individual time trial in Toyko at the age of 38.)

Tokyo Olympics - July 28, 2021

Johh Hathaway on the great monetary experiment

The consituency for sound money is all but vanished. 

~ Johh Hathaway, co-portfolio manager, Sprott Gold Equity Fund

Thomas Sowell on fairness

Since this is an era when many people are concerned about "fairness" and "social justice," what is your "fair share" of what someone else has worked for?

~ Thomas Sowell

Jason Warnick: "Retail investing is here to stay"

We think retail investing is a trend that’s here to stay.  If you look at the data, the growth in retail actually started years before we launched.  Our contribution has really been to accelerate the process.

~ Robinhood CFO Jason Warnick, July 26, 2021

(Robinhood is going public on July 30 with an expected valuation of $35 billion.)

Charles Akre on judgement

Good judgement comes from experience, experience comes from bad judgement.

~ Charles Akre, GuruFocus Value Conference, 2018

Christopher Morley on success

There is only one success - to be able to spend your life in your own way.

~ Christopher Morley

James Madison on tools of oppressors

Oppressors can tyrannize only when they achieve a standing army, an enslaved press, and a disarmed populace.

~ James Madison

James Madison
1894

Kevin Duffy on Netflix and woke content

Over the past five years, Netflix has taken on $10 billion in debt to create a lot of woke content.  What happens when the woke bubble eventually bursts?  Will Netflix be sitting on a collection of disco records that end up in a landfill?

~ Kevin Duffy, July 21, 2021

Robert L. Bradley on green regulations

Greenhouse gas control practices that are uneconomic penalize either consumers or stockholders while politicizing the issue of corporate responsibility.  Few will be satisfied, and the ineffectual measures will eventually have to be abandoned.

~ Robert L. Bradley, Jr.

Robert L. Bradley on regulation

Complex regulation in place of simple-rules capitalism disrupts market processes and corrupts business incentives.

~ Robert L. Bradley, Jr.

Kevin Duffy on romanticism and human progress

Life in hunter-gatherer times was a competition for scarce resources: tribal, brutal and short. The agricultural and industrial revolutions lifted man out of the Malthusian trap where free trade, cooperation and ingenuity now matter.  

Without private property there is no civilized society.  The warring that exists today is largely genetic: we haven't fully evolved from our tribal roots.  It manifests itself in large gangs (known as governments) that foment conflict and distrust.

~ Kevin Duffy, tweet, July 21, 2021

Robert Bradley on resources

Resources come from the mind and not the ground.  Human ingenuity and advances in thinking and technology can access resources that were unaccessible before.

Robert L. Bradley, Jr., "The Climate Policy Threat," 6:40 mark, Freedom Adventure podcast, July 20, 2021

Ernest Hemingway on virtue

The best people possess a feeling for beauty, the courage to take risks, the discipline to tell the truth, the capacity for sacrifice.  Ironically, their virtues make them vulnerable; they are often wounded, sometimes destroyed.

~ Ernest Hemingway

Dogecoin creator on the cryptocurrency industry

The cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like “get rich quick” funnel designed to extract new money from the financially desperate and naive.

~ Jackson Palmer, creator of Dogecoin as a joke, tweet, July 14, 2021

Milton Friedman on economic fallacies

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

~ Milton Friedman

Royal Meeker on minimum wage laws

It is much better to enact a minimum-wage law even if it deprives these unfortunates of work.  Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind. 

~ Royal Meeker, Princeton scholar and labor commissioner to Woodrow Wilson, as quoted in Political Science Quarterly, Vol. 25, 1910

Kevin Duffy on what ails the economy and stock market

The economy suffers from sclerosis, central bankers from psychosis, speculators from hypnosis and the stock market from halitosis...

~ Kevin Duffy, tweet, July 20, 2021

Rupal Bhansali on why ultralow rates won't support the stock market

Q: Won’t ultralow interest rates continue to support the stock market? 

A: No, because stock prices already reflect them. It is important to build a foresight portfolio, not a hindsight portfolio.

~ Rupal J. Bhansali, Ariel Investments, "Barron's Midyear Roundtable: Stocks Are Pricey. 42 Bargains From Barron’s Investing Experts.," Barron's, July 18, 2021

Marios Hadjikyriacos on big government fighting the coronavirus

The overwhelming firepower from governments and central banks was enough to fight the pandemic, but not enough to annihilate it.

~ Marios Hadjikyriacos, senior investment analyst at XM, "Dow skids 600 points lower as spread of delta variant rattles Wall Street," MarketWatch.com, July 19, 2021

Bloomberg Businessweek: retail investors account for 60% of trading on Indonesia's stock market

Like the U.S., Indonesia has seen a convergence of social media with a new interest in trading by small investors.  Retail investors accounted for about a third of daily trading in Indonesia's stock market as of June 2020.  A year later, that has almost doubled to 60%.  About 80% of these people are 40 or younger.

~ Bloomberg Businessweek, "Mixing Markets, Faith, and Instagram: A celebrity preacher in Indonesia shows that meme stocks are a global phenomenon," July 19, 2021

Laura Rublin on economic stimulus

Ultralow interest rates and ultrahigh spending by the Federal Reserve and federal government helped the U.S. economy not only survive the devastating impact of the Covid-19 pandemic, but also thrive in its near aftermath.

~ Laura Rublin, "2021 Midyear Roundtable: Yes, There's Plenty of Value Left in This Market," Barron's, July 17, 2021

Curt Howland on government and the lust to dominate

There have always been, are, and always will be, people who suffer from the mental illness known as Libido Dominandi, the “lust to dominate.”  Psychopaths who will do anything, say anything, to get what they want. Such people gravitate to government because it is through the state that their domination is given the illusion of legitimacy, where they can hit people and take their stuff all day long, and get away with it. 

Psychopaths in government have had six thousand years of hitting people and taking their stuff to come up with a raft of excuses and rationalizations to justify their Libido Dominandi.  The best minds have been hired to write histories which glorify those in government, celebrate their mass murder, rationalize their predation, and to then teach it to children so when those children grow up they will continue to obey.

~ Curt Howland, "Why is libertarian philosophy unpopular?," Quora, June 15, 2021

Genevieve Roch-Decter on resourcefulness

I take inspiration from Tony Robbins' words: "It's not resources that counts, it's being resourceful."

~ Genevieve Roch-Decter

Janet Yellen: "inflation expectations look quite well contained"

Measures of inflation expectations, I think, look quite well contained over the medium term.  Those expectations are actually the driver of price-setting behavior.  And so it is important that we monitor it carefully, but I believe fundamentally this is something that will settle down.

~ Janet Yellen, Treasury Secretary, interview with CNBC's Sara Eisen, July 15, 2021

Michael Burry on time preference

If you are considering a career on Wall Street or in Washington, DC, you should be aware of the social proof that operates there.  This is that many, if not most, people will be doing questionable things that obviously make money and obviously earn respect from common peers.  If you find yourself in such a place, I would ask you to consider a rule I learned as a physician: first, do no harm.  Besides, life is not that short.  Life is well and long enough for you to regret any activity or habit involving exchange of long-term risk for short-term benefit.  This is what many, if not most, Americans did during the refinancing and consumption boom of last decade and it was what our government did in egging on the boom.  This is also the gospel of drunk drivers and cheating spouses.  Of course, when you encounter the opposite: the short-term risk exchanged for long-term benefit, consider hitting that button again and again and again.

~ Michael Burry, "Dr. Michael J. Burry at UCLA Economics Commencement 2012," YouTube.com, 18:45 mark, June 20, 2012

Hendrik Bessembinder on the boom in retail trading

I welcome the increase in retail trading, the idea of the stock market being a place with wide participation. Economists can't tell people they shouldn't get some fun.

~ Hendrik Bessembinder, professor, Arizona State University, July 11, 2021

(As quoted in Barron's, "The Market's Meme Generation")

Charles Schumer on the Senates $3.5 trillion budget plan

We are very proud of this plan.  We know we have a long road to go...  If we pass this, this is the most profound change to help American families in generations.

~ Senate Majority Leader Charles Schumer, "Democrats unveil $3.5T go-it-alone plan to fulfill Biden’s agenda," Politico, July 14, 2021

Kevin Duffy makes the case for gold and gold stocks

Q: What’s your case for gold? 

A: No one can predict the future with certainty.  That’s why I look at multiple paths, different scenarios with multiple twists and turns.  I think there's at least a 10% chance that we could ultimately have a hyperinflation over the next ten years.  So we have to be prepared for that possibility.  But what happens if we get a scenario with a global recession first? In this case, it’s highly likely that commodity and energy prices decline.  If gold stays flat or even down slightly, the miners should benefit as their cost structure falls more than the price of gold.  They already generate strong free cash flows, and the industry is much more conservative than it was ten or twenty years ago, much more focused on profitability.  So we have the best of both worlds: Not only do we have a cash flow generative business and a disciplined industry that’s not destroying capital, but we also have an option value if something were to go badly wrong with the great monetary experiment.

~ Kevin Duffy, "The Next Bear Market Has Already Started," The Market, July 1, 2021

Tom Engle on trading

The biggest investing mistake is trying to out-trade a world of traders.

~ Tom Engle, The Motley Fool, "Interview with Tom Engle: Investing Legend," Chris Reining blog, 2015

Tom Engle on position sizing

If a company is the next big thing, a little position is all I need.  If it isn't the next big thing, a little position is all I want.

~ Tom Engle, The Motley Fool

Jenny Johnson: "the next decade is not going to have the same tailwinds"

We've just come off a decade where there's been massive central banks pumping money into the system. You've had interest rates at historically low levels...  You can't fall off the floor; they're probably not going  much lower.  So they're either going to stay there for a while or go up...  Look at the passive bond indexes: Their durations have expanded over the last 15 years.  That becomes a different risk.  Equity markets where 6 stocks accounted for 50% of the return in the last 10 years.  There have been great tailwinds this last decade, but I could say one thing for sure is "the next decade is not going to have the same tailwinds."  So there's going to be some real challenges there.

~ Jenny Johnson, Franklin Templeton CEO, Yahoo Finance interview, July 14, 2021

Robert Olstein on patience and investing

The desire to perform all the time is usually a barrier to performing over time.

~ Robert Olstein

Nassim Taleb on addictions

The three most harmful addictions are heroin, carbohydrates, and a monthly salary.

~ Nassim Taleb

Kevin Duffy: "This kind of wild frenetic rotation is not unusual at the top of bubbles"

I think we’re in a rotation phase right now.  All of the speculators – young people and day traders – have been drawn into the casino, and they’re not going to leave until they’re flat broke: When the poker table shuts down, they move to the roulette section, and when that stops working, they go to the blackjack table.  This kind of wild frenetic rotation is not unusual at the top of bubbles.

~ Kevin Duffy, "The Next Bear Market Has Already Started," The Market, July 1, 2021

Thomas Sowell on dis-education and decline

Ours may be the first civilization destroyed, not by the power of our enemies, but by the ignorance of our teachers and the dangerous nonsense they are teaching our children.  In an age of artificial intelligence, they are creating artificial stupidity.

~ Thomas Sowell

President Biden: "We're now on track for the highest economic growth in 40 years" (2021)

We're in the midst of an historic economic recovery.  And because our successful vaccination program strategy has been working and the immediate relief through the American Rescue Plan has brought back our economy from the worst economic crisis in nearly a century, America is now on track.  We're now on track for the highest economic growth in 40 years. 

~ President Joe Biden, "Remarks by President Biden At Signing of An Executive Order Promoting Competition in the American Economy," White House state dining room, July 9, 2021

Albert Einstein on imagination and knowledge

Imagination is more important than knowledge.  For knowledge is limited to all we know and understand, while imagination embraces the entire world and all there will ever be to know and understand.

~ Albert Einstein

Albert Einstein on imagining the future

Imagination is everything: It is the preview of life's coming attractions.

~ Albert Einstein

Albert Einstein on imagination

Logic will get you from A to B.  Imagination will take you everywhere.

~ Albert Einstein

Tim Carney on the symbiotic relationship between Big Business and government

Big business and big government are not enemies that a lot of people think they are...  When government gets bigger, whether it's through spending or taxes or regulation, the big guys - big business - benefits.

~ Tim Carney, "John Stossel: Big Business Loves Big Government," YouTube, 0:05 mark, July 6, 2021