ANOTHER ESSAY ON "HOW TO PICK LONGER TERM STOCK MARKET WINNERS"

Cape 28 September 2021

If we do decide to allocate our capital to stocks, this then raises some follow-on questions: What stocks should we buy? How can we assess their strength? Do they have any weaknesses? What are their future prospects like? Will they be able to handle an inflationary environment? You might know that our philosophy at Simply Wall St is to not try to predict where the market is going or what will happen next in the macro environment. Instead we’d do well to continue following some core investment principles that have stood the test of time. One of them is:  Buy high-quality businesses with good long term prospects at a price below their intrinsic value. Here’s some questions, a checklist of sorts, that can be useful to ask ourselves when looking at a stock (and how Simply Wall St can help in some areas): 1. Is the company a high-quality business that generates high returns on capital? “Quality” businesses are those that have a sustainable competitive advantage over their competitors. Think of things like brand power (Apple NASDAQ:AAPL), economies of scale (Costco - NASDAQ:COST), or network effects (Facebook - NASDAQ:FB).   In terms of determining the company’s return on capital (how much it makes per dollar invested), you can check out the Simply Wall St Past Performance section within each company’s report to see how well the company allocates money. Here’s an example of Apple’s returns. 2. Does the company have good future prospects? As mentioned in Part 2, it’s much easier to invest in industries with tailwinds rather than headwinds. If the company has good growth prospects with more room left in its Total Addressable Market (TAM) to serve, then it’s got room to grow. On Simply Wall St you can check out the Future Growth section, here’s Amazon (NASDAQ:AMZN) for example. 3. Is the business capital intensive? If the business requires a lot of upfront capital invested to generate its product or service (think manufacturing or construction), then it can be vulnerable to inflation pressures if the cost of its inputs increase. However if it’s a capital light business model (think software), then it’s less vulnerable to having its margins eaten away by inflation (that is if its costs increase but it can’t increase its prices equally). Here again, for example, we can see Apple’s operating expenses remaining flat while revenues have increased, which have helped drive profit margins higher. 4. Can the business raise its prices at or above the rate of inflation? Think about it this way, does the business provide enough value to customers where they are happy to pay up if prices increase? Or would they go to the cheaper alternatives? Is the business in a market where consumers are simply looking for the cheapest product, or does the company have a business or status where it can afford to raise its prices and not lose any customers?  5. Is the business able to afford its debt? (if it has any)  Given the current low interest rate and inflationary environment, taking on debt is actually quite an appealing source of capital. So utilizing debt effectively can help a company increase its profitability. The key here is to assess if the debt is affordable, especially if interest rates were to rise.  Within the Financial Health section, we run checks on the affordability and absolute level of debt, so you can get a quick understanding of both how leveraged a company is, and how affordable that debt is. 6. Is the business in a growing industry? As mentioned before, investing with tailwinds is easier than investing in an industry facing headwinds. You may know of industries that are growing and that you want to invest in, but not be aware of the particular companies within it. We’ve got a screener to help with that. If you want to look at the Renewable energy sector for example, which we know is growing, you can start by checking out the Global Renewable energy screener we’ve developed, then drilling down from there depending on what country you want to look at. 6. Is the company trading at a discount or premium to its intrinsic value? We could do a whole email series on the nuances of valuation, so we won’t go into depth here but just keep this in mind. A high quality business can become a bad investment if you pay too much. If now isn’t the right time to buy, be patient. If the company still ticks all the other boxes for you, it’s worth putting it on your Watchlist within SWS because the market can fluctuate and give you an opportunity to buy at a better price. From there, you can monitor all its developments, set your own fair value and we’ll keep you up to date on all the important updates. This list is by no means all-encompassing, but by simply following this short checklist and other timeless investment principles (which we’ve covered in our 3-part election series last year), we can position ourselves to: Better withstand whatever macro-environment we face Make more informed investment decisions Avoid succumbing to FOMO Be confident in the portfolio of high-quality stocks that we own Take advantage of structural growth opportunities Not overpay for businesses, no matter how good they are Wrapping up So that brings us to the end of our 3-part series! We’ve covered 3 global issues that are causing structural multi-year changes and how to navigate or take advantage of them, with some help from the Simply Wall St platform. We hope you’ve enjoyed this series and got some value out of the content covered! Invest Well, Michael Paige Simply Wall St Download the app This email is from Simply Wall Street Pty Ltd, 17-21 Bellevue Street, Surry Hills, NSW, Australia. Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this email is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us. Privacy Policy Terms and Conditions Unsubscribe - Unsubscribe Preferences

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MAPS OF MEANING : THE ARCHITECTURE OF BELIEF

Cape 27 September - Jordan Peterson 'Maps of Meaning"

Why have people from different cultures and eras formulated myths and stories with similar structures? What does this similarity tell us about the mind, morality, and structure of the world itself? Jordan Peterson offers a provocative new hypothesis that explores the connection between what modern neuropsychology tells us about the brain and what rituals, myths, and religious stories have long narrated. A cutting-edge work that brings together neuropsychology, cognitive science, and Freudian and Jungian approaches to mythology and narrative, Maps of Meaning presents a rich theory that makes the wisdom and meaning of myth accessible to the critical modern mind.

Review

"The book reflects its author's profound moral sense and vast erudition in areas ranging from clinical psychology to scripture and a good deal of personal soul-searching and experience...with patients who include prisoners, alcoholics and the mentally ill." -- Montreal Gazette
"This is not a book to be abstracted and summarized. Rather it should be read at leisure...and employed as a stimulus and reference to expand one's own maps of meaning. I plan to return to Peterson's musings and mapping many times over the next few years." -- Am J Psychiatry
"...a brilliant enlargement of our understanding of human motivation...a beautiful work." -- Sheldon H. White, Harvard University
"...unique...a brilliant new synthesis of the meaning of mythologies and our human need to relate in story form the deep structure of our experiences." -- Keith Oatley, University of Toronto

From the Back Cover

Jordan Peterson's book is a brilliant enlargement of our understanding of human motivation. He follows a path that has been recommended by many scientist-scholars in the past - but one that is, in practice, so extraordinarily demanding that it is hardly ever done well. Peterson synthesizes research and scholarly literatures ranging from neuroscience to archaeology. He aligns the finds of those literatures with the writings of such authors as Jung, Nietzsche, Dostoevsky, and Solzhenitsyn. There is loving detail in this book - reflection, thoughtfulness, careful study, a passionate desire to understand. This is a beautiful work. (Sheldon H. White, Chair, Department of Psychology, Harvard University).

About the Author

Jordan B. Peterson is a clinical psychologist and Professor at the University of Toronto and was formerly at Harvard University. He has published numerous articles on drug abuse, alcoholism and aggression.

Excerpt. © Reprinted by permission. All rights reserved.

Self-consciousness means knowledge of individual vulnerability. The process by which this knowledge comes to be can destroy faith in individual worth. This means - in concrete terms - that an individual may come to sacrifice his own experience, in the course of development, because its pursuit creates social conflict, or exposes individual inadequacy. However, it is only through such conflict that change takes place, and weakness must be recognized, before it can be transformed into strength. This means that the sacrifice of individuality eliminates any possibility that individual strength can be discovered or developed, and that the world itself might progress.

Individuals whose life is without meaning hate themselves, for their weakness, and hate life, for making them weak. This hatred manifests itself in absolute identification with destructive power, in its mythological, historical and biological manifestations; manifests itself in the desire for the absolute extinction of existence. Such identification leads man to poison whatever he touches, to generate unnecessary misery in the face of inevitable suffering, to turn his fellows against themselves, to intermingle earth with hell - merely to attain vengeance upon God and his creation.

The human purpose, if such a thing can be considered, is to pursue meaning - to extend the domain of light, of consciousness - in spite of limitation. A meaningful event exists on the boundary between order and chaos. The pursuit of meaning exposes the individual to the unknown in gradual fashion, allowing him to develop strength and adaptive ability in proportion to the seriousness of his pursuit. It is during contact with the unknown that human power grows, individually and then historically. Meaning is the subjective experience associated with that contact, in sufficient proportion. The great religious myths state that continued pursuit of meaning, adopted voluntarily and without self-deception, will lead the individual to discover his identity with God. This "revealed identity" will make him capable of withstanding the tragedy of life. Abandonment of meaning, by contrast, reduces man to his mortal weaknesses. This makes him hate life, and work towards its elimination.

Meaning is the most profound manifestation of instinct. Man is a creature attracted by the unknown; a creature adapted for its conquest. The subjective sense of meaning is the instinct governing rate of contact with the unknown. Too much exposure turns change to chaos; too little promotes stagnation and degeneration. The appropriate balance produces a powerful individual, confident in the ability to withstand life, ever more able to deal with nature and society, ever closer to the heroic ideal. Each individual, constitutionally unique, finds meaning in different pursuits, if he has the courage to maintain his difference. Manifestation of individual diversity, transformed into knowledge that can be transferred socially, changes the face of history itself, and moves each generation of man farther into the unknown.

Social and biological conditions define the boundaries of individual existence. The unfailing pursuit of interest provides the subjective means by which these conditions can be met, and their boundaries transcended. Meaning is the instinct that makes life possible. When it is abandoned, individuality loses its redeeming power. The great lie is that meaning does not exist, or that it is not important. When meaning is denied, hatred for life and the wish for its destruction inevitably rules:

"If you bring forth what is within you, what you bring forth will save you. If you do not bring forth what is within you, what you do not bring forth will destroy you."

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A VINDY DAY - ALL ABOUT VINDALOO

Cape 27 September 2021

Here is a little peek into the history of Vindaloo - a classic dish that has strong European influence. 

It took elements from the Portuguese and English cuisine to create something uniquely Indian. It is an Indianised version of a popular Portuguese dish Carne de vinha d'alhos (the Portuguese version of Boeuf Bourguignon or Irish Stew with Guinness if you prefer) in which meat is marinated in wine vinegar and garlic. 

It made its way to India in the 15th century along with Portuguese explorers. Carne de vinha d'alhos was a dish that was usually carried by travelers and sailors. It had liberal use of vinegar and garlic and can be preserved. Indian cooks of Goa used local ingredients like palm vinegar, tamarind, black pepper, and spices. With the introduction of chilly to the Indian cuisine by the Portuguese, it adapted itself to a fiery rich curry. The British took up Vindaloo and made it their own and it became an integral part of Indian cuisine.

Kerala Style Beef Vindaloo

Vindaloo became popular in Goa, Konkan, and Kerala because of the Portuguese and Anglo Indian community. Cochin was a one-time Portuguese stronghold and their influence can be seen in the local cuisine. This dish is a must among Christians and the Anglo Indian community of the region, for special occasions and celebrations. 

Vinagiri irachi has the spicy kick of black pepper and the earthy flavor of mustard, fennel, fenugreek, and cumin. Chilly powder like kashmiri is preferred for the colour rather than heat. Black pepper was the spice of choice for generations in Kerala cooking. 

Goan Vindaloo uses the pungent liquor feni but the Cochin recipe uses a milder local coconut vinegar. A small piece of drumstick or Muringa trees bark is also added as meat tenderizer. 

There is no tamarind, tomatoes or vegetables in vinagiri curry and can be made with both beef and pork. There is also liberal use of coconut oil and curry leaves.

http://kichencorner.blogspot.com/2019/10/kerala-beef-vindaloo-anglo-indian-recipe.html

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WOULD THE PEOPLE OF NORTHERN IRELAND VOTE TO STAY IN THE UNION?

Cape 25 Sep 2021

Of the 18 MPs elected in 2019 in Northern Ireland to the UK Parliament, 9 nine are Irish Nationalists, 8 eight are Unionist and 1 one is unaligned.

7 Seven of the Nationalists won't take up their seats at Westminster as they don't acknowledge the legitimacy of British rule.

All 5 five of the border constituencies returned Irish Nationalist MPs. 3 Three of the 4 four Belfast constituencies elected Irish Nationalists.

But is the union is on the way out?

Those 9 nine nationalist MPs got 37.7% of the vote and the 8 eight unionists 42.3%. With the unaligned with 16.8%, reckon 65% of their supporters would vote to stay in the U.K. and even 9% of Sinn Fein Fein voters and 35% of SDLP voters would vote to remain in the U.K. i.e. there has been no change in the percentage of NI voters who would opt for a united Ireland in the past 40 years. 

Seems it's not going to happen anytime soon.

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THAILAND : IDEAL ENTRY REQUIREMENTS

1. Lateral flow is sufficient for fully vaccinated visitors. Why? Testing is not really needed once the population is vaccinated, but until then a pre-flight LFT is sufficient.

2. No quarantine for fully vaccinated. Why? Because any positives are eliminated at pre-flight test.

3. No covid insurance. Why? They are never hospitalised for covid (if comorbidities, it can be a different story).

4. Many changes can be made to simplify the permission to stay.

5. A credible plan to restore and enhance the tourist sector, "build back better" applies to infrastructure and staff.

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STOCK MARKETS MELTING?

Yes, there's 

1. this Chinese property collapse 300billion$ 

- lots of Chinese bought off-plan and will be really angry, 

-then there's the supply chain all those companies working for Evergrande who could go bust,

-then there's all the debt and interest that banks might not get back so they won't have money to lend (this is called a "credit crunch") and so many companies will not be able to borrow, no start up, no grow.

Will the Chinese govt step in? They've said no in general, but ...who knows? 

-Pull any investments in China.

2. an energy crisis - the UK govt may help peoole pay a hugely inflated gas bill

3.  Fed tapering of the 160b they buy in the bond markets every month

4. A rate Fed interest rate hike next year and 

5. inflationary pressures are they temporary or are they building?

But we are so very conditioned to "buy on the dips" that maybe this will be jyst another opportunity....

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AUKUS. THIS IS THE DEAL AND THE FRENCH ARE TOAST

Of course the French reaction can be the result of jealousy: fear of loss. Except here, the loss has materialised. 

In fact, we see the authentic hurt pride of the French: they thought they had something to be proud of, but their subs were rejected. And we see the hubristic hurt pride of Macron: his sense of his self-importance is punctured.

Reality is, the Astralians asked for nuclear subs from the UK and US because the French subs were not up to the mark: the requirement is for a force to counter the rise of China. The French could not be let in on the change of plan and only learnt what was going on when they read the newspapers. This is normal as they could not be trusted with this information any earlier.

The French hurt is understandable. As is the UK's relishing this plate of cold revenge for French continual nuisance tactics over Brexit.

We can expect retaliation and some sulking too from the French. Also attemps to console her from the Americans. Macron has met his Waterloo.

The real importance should not be lost in this moment of high drama. This is the moment the fight-back against the Rise of China truly began. We do not imagine it will concern only submarines! It is a new military alliance with a common enemy: China. Further members may be added: Japan, India, Malaysia, Taiwan...

Nato will need reform. The inclusion of Russia could be contemplated on strategic grounds, given its growing closeness to China.

This alliance could also mature into a new free trade area, and one the EU could in time apply to join, offering hope for the survival of their own free trade area, the Single Market and Customs Union.

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OUR FREEDOMS

In case we forget, our freedoms are longstanding and many, notably 

freedom from false arrest

the right to an unbiased jury trial in serious cases

freedom of speech, the press and media

freedom of religious worship or to dissent

freedom to give the government the boot every 4-5 years, Brexit as reassuring proof of that even when the establishment spent four years opposing the popular vote and the losers leave with good grace, and do not call in the military to overturn a democratically determined result.  

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FRENCH SUBS, WOUNDED PRIDE

 The French reaction is one of wounded pride. 

It could be that they thought they had something of worth (the subs), but no, the subs were found to be inadequate, not up to the mark. That would be an authentic pride, wounded.

But it could a hubristic pride. This would be from narcissistic arrogance and self-importance (a known French character weakness) which often precedes disaster.

After all, it has been well known for the last six to 12 months that the order would be cancelled. The wait was while a more suitable product could be found. AUKUS was the moment.

Justified pride is from one's accomplishments. But the French reduced the spec, lengthened delivery time and almost doubled the cost. Of a product that became dated. Where they could have upgraded to nuclear and made realistic commitments.

So, was it wounded authentic pride? Or wounded hubristic pride? And how to stop the French retaliating or going into a big sulk? After all, they are an important member of the club of democracies; and we all have weaknesses and make mistakes.

19 September 2021

Australia canned the contract legally and pay a compensation.

The diesel subs are no longer fit for purpose.

More broadly, something has to be done about China and this is the start.

The French suffer from wounded pride - they thought they had a world class product, source of national pride, they don't. Their narcissistic, self-important leader takes it as a personal affront.

The French are excluded, presumably because cannot be trusted, but something will be done to dress up that wounded pride.

After all, they are a G7 democracy and  with Germany, lead the EU.

My advice would be for the French to consider their place and role on the global stage, what their best long-term loyalties demand of them, and be sure to pay their way in future, and be serious humble and respectful and not snap at the heels of the leadership for reasons related to ego.

20 Sep

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IS IT TIME TO REFORM DEMOCRACY?

Actually, it is time to requalify voters. Democracy is broke.

Try : property owners, over 26 years of age, under 26 BMI.

14 Sep 2021 

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THE ROLE OF THE FATHER (IT IS SELFLESS & GIVING)

You can say that God has given us each a role or roles, as well as special gifts, to use for the benefit of others.

Now you mentioned the Greek myths. They teach us the importance of bravery, intelligence, and tell us about right and wrong. They show that we can be rewarded or punished for our good actions or our missteps.

You also mentioned "love". The father loves his wife and his children. But love is not so much a condition (I am loved by my father, I love you), it is an action. I lavish you with love. I do things for you. Not for me, but for you and for us.

And if the father loves, he can expect to receive respect and admiration, for his actions.

That is how it works. The wheel of love goes one way from father to wife and children; and back comes respect, admiration, awe, maybe a little fear.

And remember that this is all happening now, in the real world, in real time. It is not so much a promise about à theoretical future - that a man who lavishes love on his family will be praised and respected - it is something the father must catch up with, and do right away, starting from now.

For me, things get a bit dangerous because as part of this paradigm, when the father loves his wife, she, in return, must obey him. Love demands obedience. No! It is not a hierarchy or pyramid like that!!! It is a circle. Love and respect flow both ways, these days.

14 September 2021

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