A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
The highly useful Think B.I.G. blog from Bespoke Investment Group calculated the performance of Warren Buffett's portfolio holdings and finds, like many investors in 2014, the Sage is underperforming.
Mr. Buffett has the advantage of truly, verifiably not caring about short-term performance – he has compared it to a popularity contest – but there are some interesting trends within the numbers.
Year to date, the laggards in the portfolio are all global consumer companies, including long term holding Coca-Cola Co.. Other holdings in this category are General Motors Co., Proctor & Gamble, Wal-Mart Stores Inc.and American Express Co.
For what it's worth, I expect Berkshire Hathaway to reduce holdings in GM. Not just because their cars break, but recent generous financing (which is under federal investigation) has pulled future sales forward, leaving a hole in the sales forecast in the three-to-five-year range.
"A year to forget for the Oracle" – Think B.I.G.
"U.S. starts civil inquiry of subprime car lending" – NYT Dealbook
Canadian investors are right to ignore Europe in most cases, but recent data bring up an important caveat. The Canadian economy is not sensitive to EU economic activity, but the domestic bank stocks can be.
Data released Wednesday showed a sharp slide in German manufacturing orders but more importantly, wretched Italian growth numbers indicate an ongoing recession. Italy's banking sector is not overly healthy and the recession is doing nothing to help the rise in non-performing loans. It's early yet, but there is a risk of contagion into the Canadian banking sector, if things get much worse.
"German manufacturing orders drop" – Wall Street Journal
"Italy recession, German orders signal euro-area struggle" – Bloomberg
Mohamed El-Erian, ex-Pacific Investment Management Co. LLC bigwig and now chief economic advisor to its parent company, Allianz SE, brings up some key points while putting recent market volatility into context. Mr. El-Erian writes:
"Having already rallied beyond levels easily validated by underlying fundamentals, markets were no longer able to ignore the compounding risks… The breakdown in traditional correlations among different asset classes renders such a sell-off even more unsettling, potentially triggering investor reactions that compound the initial adverse market moves."
The post concludes with helpful tips from the field of behavioual economics.
"Asset sell-off reminder of financial stability threats" – El-Erian, Financial Times (subscription may be required)
I have pointed out global agriculture as one of, if not the most, promising long-term investment trends. It appears that Chinese companies agree, as they have been buying up New Zealand farmland so quickly that the Kiwi government doesn't even know how much they own at this point.
"New Zealanders fear that China is snapping up their pristine farmland" – Quartz
"Not-Stupid Investing, Step One: Look for secular growth trends (includes agriculture theme)" – Inside the Market
Tweet of the Day – Amazing chart from @planmaestro ""@PlanMaestro: 8. Global Protein Consumption ~ the global eater pic.twitter.com/CBQT1vLscH"
Diversion: "Utterly nerdy explanation for why Gandalf didn't just send the ring to Mount Doom via eagles. tickld.com/x/this-guy-jus… "
Follow Scott Barlow on Twitter @SBarlow_ROB
Scott Barlow