Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web.
Twenty years working for investment banks has consistently reinforced the idea that for investors, psychology matters far more than stock or bond selection technique. This is the main reason I think Michael Mauboussin's decade-old "Decision Making for Investors" is the best paper ever written for a general audience.
Morgan Housel from Motley Fool (I really wish they'd change the name of that site – the analysis is far more serious than it suggests) continues the theme by more or less proving there's no way to predict the market future:
"You would have never believed it if, eight years ago, someone told you the Federal Reserve would print $3-trillion and what followed would be some of the lowest inflation in decades. You would have never believed it if, in 2008, as U.S. 'peak oil' arguments were everywhere, that within six years America would be pumping more oil than Saudi Arabia…You would have never believed it if, three years ago, someone told you that Uber, an app connecting you with a stranger in a Honda Civic, would be worth almost as much as General Motors."
The post is a compelling reminder that no matter what investors think, they cannot know what's going to happen. This is why portfolio risk needs to be managed at all times, regardless of how rosy or terrible the outlook becomes.
"Decision-Making for Investors Theory, Practice, and Pitfalls" – Mauboussin
"You Would Have Never Believed It" – Housel, Motley Fool
Bloomberg provides a ray of sunshine for mining investors this morning with a report noting a global shortage of zinc:
"The fate of MMG's mine highlights a growing new trend in the zinc market. From Africa to Ireland, mines that have produced the metal for decades are now tapped out. Morgan Stanley estimates that by 2017 more than 1.2 million metric tons of annual mined supply will be taken out of production. That's more than the U.S. uses in an entire year."
"In a World Filled With Gluts, One Metal Is Suddenly Hard to Find" – Bloomberg
The iron ore price, on the other hand, continues to fall off the face of the earth.
"Goldman Sees Many Iron Mine Closures as ABN Flags $40 Risk" –Bloomberg
The tide of bearish outlooks on the domestic economy continues this morning with the Organization for Economic Co-operation and Development update on the global economy. As always, the ROB's Michael Babad has the details:
"The OECD released its monthly composite leading indicators, which signal stronger times for the euro zone, the United States, Britain and Japan… 'On the other hand, CLIs signal growth easing in China and Canada, albeit from relatively high levels,' the group said."
The OECD report follows a study by European economists from the Bank of Spain, and the University of London, that forecasts that Canadian economic growth will be 1.6-per-cent lower per year than the previous decade until 2019 because of demographic effects.
"Curse of the Canadian dollar" – Babad, Report on Business
"Demographic structure and the macroeconomy" – VoxEu
Tweet of the Day: "@Convertbond Shell Buyout of BG Group … Price: $81B …Value: Multiple of enterprise value to 2016 cash flow is near 11x, double Shell's"
Diversion: "[Cable] Cord Cutting and Hollywood: The Sequel" – McArdle, BloombergView
Scott Barlow