Your weekend Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Too busy during the week? Catch up with last week's readings:

Businesses

A tale of two film companies - Why Kodak died and Fujifilm thrived (Link)

How the American consumer got addicted to choice (Link)

This year Lunchables turn 30.  Some things don’t change, such as selling convenience to parents and fun to kids. (Link)

Health

20 Americans die each day waiting for organs. Can pigs save them? $(Link)

Economy 

Some good news to start the weekend - five economic reasons to be thankful (Link)

A short story about what happened to the U.S. economy since the end of World War II (Link)

Why the housing markets is struggling to keep pace with the booming economy $(Link)

How American household finances are changing (Link)

Well regarded venture capital firm Andreessen Horowitz’s presentation about the future -
some interesting insights into sectors to avoid (Link)

Investors

What investors want - an infographic explaining what investors want from advisers
and why they invest (Link)

This quarter, a number of companies have seen their share price decline after posting better than expected results.  Is this a function of consensus estimates having less relevance in today’s real-time data driven world?  (Link)

On the lighter side 

Santa dropped by our office on his way to the parade this weekend (Link)

A holiday gift for everyone...naughty or nice - Check out our EdgePointer's 2018 holiday
wish list (Link)

Charts 

Get the Edge
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Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

A holiday gift for everyone...naughty or nice - Check out our EdgePointer's 2018 holiday wish list (Link)

Well regarded venture capital firm Andreessen Horowitz’s presentation about the future - Some interesting insights into sectors to avoid (Link)

Friday charts:

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

This year Lunchables turn 30.  Some things don’t change, such as selling convenience to parents and fun to kids. (Link)

"Lunchables currently has an 84 percent share of the market for kids’ 'combination lunches' and its dominance is sustained by its meat-cheese-and-cracker boxes, which remain the best-selling and longest-running Lunchables product." 

What investors want - an infographic explaining what investors want from advisers
and why they invest (Link)

This quarter, a number of companies have seen their share price decline after posting better than expected results.  Is this a function of consensus estimates having less relevance in today’s real-time data driven world?  (Link)

"Investors are saying, 'Forget about whether you beat earnings expectations last quarter. What's your outlook for next quarter, next year? What's your guidance. That's all we care about now."

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Contrarian hire or wrong hire? Japan's new cyber-security minister is the person
tasked with ensuring the digital safety of the 2020 Olympic Games in Tokyo and
says he's never used a computer (Link)

Check out this graph showing the amount of gigabits of data (at 4G LTE speeds) you can get today for the equivalent of €30 a month in various markets around the world

How American household finances are changing (Link)

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

How the American consumer got addicted to choice (Link)

"At a meeting with the CEO of a digital jukebox company, he learned the average digital music player offers around 10,000 different albums. The CEO asked him what percentage of the 10,000 albums sold at least one track per quarter. Using the 80/20 rule where 80% of sales tend to come from 20% of the products, you would assume the number is fairly small. Astonishingly, the answer was 98%!"


Why the housing markets is struggling to keep pace with the booming economy $(Link)

"It seems that sellers are unhappily realizing that they aren’t going to get what they thought their house was worth six months ago, and buyers still think homes are too expensive.That helps explain why transaction volume, especially for new houses, has fallen substantially while prices haven’t (at least yet). It’s a standoff. And the outcome of the standoff will, in the aggregate, play a role in shaping the future of the economy."


20 Americans die each day waiting for organs. Can pigs save them? $(Link)

"After years of setbacks, the past two years have seen a cascade of record-breaking xenotransplants using primate models, and researchers are working with regulators to prepare for clinical trials with humans. The first pig-to-human skin graft using live cells is set to take place this month in Boston". 

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Santa dropped by our office on his way to the parade this weekend (Link)

A short story about what happened to the U.S. economy since the end of World War II (Link)

A tale of two film companies - Why Kodak died and Fujifilm thrived (Link)

Your weekend Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Too busy during the week? Catch up with last week's readings:


Businesses

Biosimiliars to slash drug costs in rich countries ($) (Link)

Growth of microbrands threatens consumer-goods giants ($) (Link)

Daniel Schwartz, who took over Burger King at 32, explains how to find and develop
young talent*  (Link)

Apple's strategy after iPhone's peak (Link)

TripAdvisor’s move away from paid advertising on Google to TV advertising (Link)
          ___________________________

Investing

Things you see during every market correction (Link)

A few simple charts highlighting how some of our prosperity could be an illusion (Link)

Indices: There are now 3.7 million published indices $ (Link)

The illegal sports gambling market has grown to $150 billion annually.  Much of that money
will now shift to legitimate entities. (Link)

Debt investing in emerging markets - Payment in Ham  $(Link)
          ___________________________

Health 

Dark-roast coffee may prevent Alzheimer's and Parkinson's (Link)

Bill Gates on why the world deserves a better toilet (Link)

Worldwide 
          ___________________________

More than a fifth of China's homes are vacant & third-home purchases at record high (Link)


Canada is a lot smaller than  you think - maps show Canada and Russia taking up 25%
of Earth's surface when in reality they occupy closer to 5% (Link) 
          ___________________________

Charts

Opportunity set increasing in fixed income:

How about that multiple compression?

S&P 500 Index's Price to Earning Ratio changes year over year.  The P/E ratio is a price multiple which shows how much investors are willing to pay per dollar of earnings. The S&P 500 Index is a broad-based market-capitalization-weighted index of 500 of the largest and most widely held U.S. stocks. 

* EdgePoint Investment Group Inc. owns a stake in Restaurant Brands International and may be buying or selling positions in the security.  

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

The illegal sports gambling market has grown to $150 billion annually.  Much of that money
will now shift to legitimate entities.  (Link)
           __________________________

Debt investing in emerging markets - Payment in Ham  (Link)

"A Chinese company has come up with an innovative way to placate creditors - as long as they like ham. Chuying Agro-Pastoral Group Co. said holders of 271 million yuan ($39 million) of its debt have agreed to take ham or pork gift packages instead of interest payments, according to a filing on the Shenzhen Stock Exchange on Thursday. The Zhengzhou-based pork producer failed to repay 500 million yuan of local bonds due this week amid a cash crunch caused by the spread of African swine fever. “Payment in kind becomes PIH (Pay In Ham)," said Owen Gallimore, head of credit strategy from Australia & New Zealand Banking Group. For Judy Kwok-Cheung, director of fixed income research at Bank of Singapore, these cases illustrate the liquidity concern facing small and medium enterprises in China."

        __________________________

TripAdvisor’s move away from paid advertising on Google to TV advertising (Link)

         __________________________


Friday Humour

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

A few simple charts highlighting how some of our prosperity could be an illusion (Link)                   ___________________________ Apple's strategy after iPhone's peak (Link)           ___________________________ Stat of the day:  There are now 3.7 million published indices $(Link)  "Indices measuring markets have ballooned in number by another 438,000 to more  than 3.7 million in the past year, as providers produce a blizzard of bond market, environment,  social and governance benchmarks. Gauges designed by benchmark providers to measure  everything from the performance of small Chinese companies and African debt derivatives  to the music streaming industry or groups that adhere to Catholic values have been spurred  by the rising popularity of passive investing."           ___________________________ How about that multiple compression? S&P 500 Index's Price to Earning Ratio changes year over year.  The P/E ratio is a price multiple which shows how much  investors are willing to pay per dollar of earnings. The S&P 500 Index is a broad-based market-capitalization-weighted index of 500 of the largest and most widely held U.S. stocks.

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Daniel Schwartz, who took over Burger King at 32, explains how to find and develop young talent*  (Link)

          ___________________________

Canada is a lot smaller than  you think - maps show Canada and Russia taking up 25% of Earth's surface when in reality they occupy closer to 5% (Link)

          ___________________________

More than a fifth of China's homes are vacant & third-home purchases at record high (Link)

---

* EdgePoint Investment Group Inc. owns a stake in Restaurant Brands International and may be buying or selling positions in the security.  

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:


Dark-roast coffee may prevent Alzheimer's and Parkinson's (Link)
          ___________________________

Bill Gates on why the world deserves a better toilet (Link)
          ___________________________

Opportunity set increasing in fixed income:

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Things you see during every market correction (Link)
          ___________________________

Biosimiliars to slash drug costs in rich countries ($) (Link)

"Biosimilars approvals are on the rise, promising cheaper biotech drugs in the long run.  The global market for them could triple to $15 billion by 2020, and could reduce U.S. healthcare spending by $54 billion over the next decade."
          ___________________________

Growth of microbrands threatens consumer-goods giants ($) (Link)

"The growth of direct-to-consumer brands (Casper, Warby Parker, Glossier, etc.) is driving a significant shift in the consumer-goods sector, challenging established giants. The biggest food-and-beverage companies drove only 3% of total industry growth between 2011 and 2015 with a long tail of 20,000 companies below the top 100 producing half of all growth. The growth of "just-in-time" manufacturing means startups no longer need to splurge on inventory, and other service providers can pass on economies of scale once available only to giants. Microbrands can also sell their products through Amazon, and can use online ad platforms to target consumers with great accuracy. The giants are well aware of the threat, and in response are snapping up companies at high premiums."

 

Your weekend Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Too busy during the week? Catch up with last week's readings:


Businesses

An empire built on Nutella (Link)

No cash needed at this café. Students pay the tab with their personal data (Link)

Everything you wear is athleisure (Link)

Software-related posts through the years & the 10th anniversary of Bitcoin whitepaper (Link)

The rise and fall of the popular game app HQ Trivia. Jeopardy disruptor? Not so much (Link)


Investing

Berkshire Hathaway meeting transcripts by year (Link)

A brief attempt at finding the source of Peter Lynch's success on the Magellan Fund (Link)

The "No Jerks" rule of investing (Link)

Big Tech's sell off - Rising rates are only part of the story $ (Link)

Making sense of multiples - interview with Michael Mauboussin (Link)

Mauboussin's research paper on valuation multiples (Link)

George's book recommendation: Expectations Investing: Reading Stock Prices for Better Returns by Mauboussin       

Correlation vs. causation using McDonald's pork-based sandwich: The McRib (Link)

📺 Buffett and Munger on how they never have an opinion about the market - 1994 Berkshire Hathaway Annual Meeting (Link)

Every past decline looks like an opportunity, every future decline looks like risk. (Link)

The library of mistakes - Check out this library in Edinburgh where you'll find a collection of books and other materials related to business and finance failures with the goal of learning lessons of the past. (Link)

Boredom begets action - The Madame Bovary Effect (Link)

Have another cup and read a little longer

Doctors hate their computers - where did health care tech go wrong? (Link)
 
On the lighter side

We surveyed our Operations team, who always seems to be jonesing for java, about their daily coffee intake. The longest order? A grande, half-sweet, vanilla latte with soy milk and caramel drizzle (yes, they're those people). On average, their daily dose is two on weekdays and three on weekends. With an average age of 40, investing their caffeine cash* for the next 25 years in the S&P 500 Index at an estimated annualized 9% per year would result in $259,000 at age 65. Coffee anybody?
          ___________________________

Because we can't get enough of George, this is what the back of his business card looks like:

George Droulias, CFA
Masters in Power of Compounding

 

Get the Edge
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

The library of mistakes - Check out this library in Edinburgh where you'll find a collection of books and other materials related to business and finance failures with the goal of learning lessons of the past. (Link)
          ___________________________

The rise and fall of the popular game app HQ Trivia. Jeopardy disruptor? Not so much (Link)
          ___________________________

Boredom begets action - The Madame Bovary Effect (Link)

"More than any other author I know, Flaubert captures and communicates the immense power of boredom over human behaviour.  Why is dullness such a powerful impediment to attention? What makes for greatness as a stock picker is the discipline to act appropriately on whatever the market is giving you, particularly when you’re being dealt one low conviction hand after another. The hardest thing in the world for talented people is to ignore our mental shriek of unused capacities, and to avoid turning a low edge and odds opportunity into an unreasonably high conviction bet simply because we want it so badly and have analyzed the situation so smartly".        

Get the Edge:
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Fun stat of the day:

We surveyed our Operations team, who always seems to be jonesing for java, about their daily coffee intake. The longest order? A grande, half-sweet, vanilla latte with soy milk and caramel drizzle (yes, they're those people). On average, their daily dose is two on weekdays and three on weekends. With an average age of 40, investing their caffeine cash* for the next 25 years in the S&P 500 Index at an estimated annualized 9% per year would result in $259,000 at age 65. Coffee anybody?
          ___________________________

Correlation vs. causation using McDonald's pork-based sandwich: The McRib (Link)



 "While you might laugh at the McRib Effect as an obvious example of correlation does not equal causation,  I don’t see how it is that different from a lot of the arguments I see being made about financial markets every single day.  Some pundit will claim that event X caused the market to drop or how President A was better than President B for stocks.  All of these arguments boil down to inferring simple causality for a complex, chaotic system involving millions of decision makers.  To think that one individual has an effect that is both large and measurable on aggregate equity performance is absurd."

          ___________________________


📺 Buffett and Munger on how they never have an opinion about the market - 1994 Berkshire Hathaway Annual Meeting (Link)

"The best thing that can happen from Berkshire’s standpoint (we don’t wish this on anybody) is to have markets that go down tremendous amounts.  We are going to be buyers of things over time. If you’re going to be buyers of groceries overtime, you’ll want prices of groceries to go down, if you’re going to be buying cars overtime, you’ll want car prices to go down.  We buy businesses. We buy pieces of businesses and we’ll be much better off if we can buy them at attractive prices."

           ___________________________


Every past decline looks like an opportunity, every future decline looks like risk. (Link)

"The biggest factor affecting market returns over a short period of time are changes in investor moods. And moods don’t care about spreadsheet, reasoning, formulas, or metrics. They make fools out of those who try to predict them."




*Assumptions: Weekday coffee consumption: a grande Starbucks latte: $4.45, A grande Americano: $2.25.  Weekend consumption: one latte and two Americanos. Index return assumption based on the S&P 500 Index's performance over the last 25 years, source: Bloomberg LP.  In C$. The S&P 500 Index is a broad-based market-capitalization-weighted index of 500 of the largest and most widely held U.S. stocks.

Get the Edge:
Click here to view an archive of:

Investment Education
Book Recommendations
Food for thought
Glimpses into EdgePointers' lives
...and Daily Musings
           __________________________

Today's links:

Making sense of multiples - interview with Michael Mauboussin (Link)

"Popular multiples, including  P/E and EV/EBITDA have a number of limitations but the main one is that they fail to account for capital intensity—be it working capital, capital expenditures, or acquisitions. That means that two businesses can have the same growth in earnings or EBITDA but very different capital needs. The company that needs less capital to grow will be more valuable because there will be more cash available to distribute to shareholders.

...Your job as an investor is to figure out when the market’s expectations are unduly high or low. One analogy is betting at the horse race track. You don’t generate excess returns by picking winners; you win by figuring out which horse has odds that misspecify the horse’s chances of winning."

...and if you're interested in reading his research paper on valuation multiples on a cold winter day (Link)

__________________________

Mauboussin also happens to be the author of one of George's favourite investing books:
Expectations Investing: Reading Stock Prices for Better Returns                    

__________________________

Because we can't get enough of George, this is what the back of his business card looks like:



George Droulias, CFA
Masters in Power of Compounding

Get the Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Today's links:

Everything you wear is athleisure (Link)

China's 5 steps for recruiting spies (Link)

Big Tech's sell off - Rising rates are only part of the story $ (Link)

Software-related posts through the years & the 10th anniversary of Bitcoin whitepaper (Link)

Get the Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Today's links:

An empire built on Nutella (Link)

No cash needed at this café. Students pay the tab with their personal data (Link)

Berkshire Hathaway meeting transcripts by year (Link)

A brief attempt at finding the source of Peter Lynch's success on the Magellan Fund (Link)

The "No Jerks" rule of investing (Link)

Your weekend Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Too busy during the week? Catch up with last week's readings:

Businesses
Probiotics & antibiotics create a killer combination (Link)
Disrupting addresses using a three word system $ (Link)
          ___________________________

Investing
Is Smart Beta really smart? (Link)
The fall issue of Graham & Doddsville (Link)
📺 Markel's Tom Gayner on how he became a successful investor (Link)
What Billy Beane and Jim Simons have in common (Link)
Deconstructing the October market sell-off (Link)
Study finds boutiques beat larger managers with remarkable consistency (Link)
Inflation, not recession, the big risk for investors (Link)
Gold demand up from all investors...except ETFs (Link)

On the inapplicability of norms from "Mastering the Market Cycle" by Howard Marks:

"Here's a fun question: for how many of the 47 years from 1970 through 2016 was the annual return on the S&P 500 within 2% of 'normal' - that is, between 8% and 12%?
I expected the answer to be 'not that often', but I was surprised to learn that it happened only three times! It also surprised me to learn that the return had been more than 20 percentage points away from 'normal' - either up more than 30% or down more than 10% more than one quarter of the time: 13 out of the last 47 years. So one thing that can be said with total conviction about stock market performance is that the average certainly isn't the norm. Also, most of those 13 extreme up or down years were within a year or two of another year of similarly extreme performance in the same direction."
          ___________________________

Investor behaviour
The surprising power of the long game (Link)
The psychology of sitting in cash (Link)
No one is crazy (Link)
On the railway bubble during the 1800s (Link)
When the great alpaca bubble burst (Link)
                   ___________________________

Across the world
Some quick charts on China's inequality (Link)
How the economic crisis is changing Argentina's diet (Link)
          ___________________________

On the lighter side
And the winner of our internal photo contest is... (Link)
Check out these scary costumes from our little Halloween monsters! (Link)
          ___________________________

Charts



Opportunity is increasing in high yield bonds:

 

Get the Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Today's links:

Check out these scary costumes from our little Halloween monsters! (Link)
__________________________

No one is crazy, but everyone justifies actions based on poor reasonings, including you (Link)
__________________________

Opportunity increasing in high yield bonds

Study finds boutiques beat larger managers with remarkable consistency (Link)
__________________________

On the inapplicability of norms from "Mastering the Market Cycle"  by Howard Marks:

"Here's a fun question: for how many of the 47 years from 1970 through 2016 was the annual return on the S&P 500 within 2% of 'normal' - that is, between 8% and 12%?
I expected the answer to be 'not that often', but I was surprised to learn that it happened only three times! It also surprised me to learn that the return had been more than 20 percentage points away from 'normal' - either up more than 30% or down more than 10% more than one quarter of the time: 13 out of the last 47 years. So one thing that can be said with total conviction about stock market performance is that the average certainly isn't the norm. Also, most of those 13 extreme up or down years were within a year or two of another year of similarly extreme performance in the same direction."
__________________________

Gold demand up from all investors...except ETFs (Link)
__________________________

Inflation, not recession, the big risk for investors (Link)
__________________________

Companies are raising prices as costs rise

Get the Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Today's links:

What Billy Beane and Jim Simons have in common (Link)
__________________________

Some quick charts on China's inequality (Link)
__________________________

Deconstructing the October market sell-off (Link)
__________________________

On the railway bubble during the 1800s (Link)
__________________________

How the economic crisis is changing Argentina's diet (Link)
__________________________

Check out the winner of our internal photo contest (Link)