My Posts (8-14 September, 2024)

Howard Marks' video on risk is probably an evergreen video. It is worth watching if you are interested in risk, not only investment risk but any types of risk.

The more I look into it, the more I am tilting towards hedging FX risk for equity and fixed income investments makes more sense than investing without risk. iShares's EWJ (Japanese equity ETF) and HEWJ (currency hedged Japanese equity ETF) shows a strong argument.

Not all unemployment rates are created equal. To compare apples-to-apples, U-6 is better than the more famous sibling U-6 unemployment data.

Last but not least, my visit to Chiune Sugihara Memorial Hall was very interesting. It reinforced my belief that peace is good.

Investments?

How to Think About Risk with Howard Marks (Oaktree): Easy to understand explanation of risk, especially investment risk. Highly recommend.

Being boring now is paying off for UK stocks (FT): The low allocation to UK equities is curious because allocation to the rest of the world would invite currency risks. Maybe the pension funds do not care because they believe in the long run it would not matter as things cancel out (or they are hedging out the risk). Looking at EWJ (iShares MSCI Japan ETF) and it's currency hedged version HEWJ show that it matters over the long term. (ps. comparing the since inception return "Incept Avg Annual" is meaningless as the inception date for EWJ is Mar 12, 1996 and HEWJ is Jan 31, 2014).?

Hedge-Fund Investors Extract Lower Fees in Response to Subpar Returns (WSJ): I have seen this cash hurdle fee structures with smaller managers, so it is not new. What is newsworthy that larger ones are adopting it, too.

UBS Asset Management cuts exposure to corporate bonds in global portfolios on growth risks(Reuters): Buy low and sell high, sounds prudent. If UBS Asset Management is selling, someone else’s buying. Wonder who that could be?

US U-6 Unemployment Rate (The Daily Shot): The U-6 Unemployment rate is closer to the European definition. The direction is not good.

Recession Probabilities Are Diverging Across Asset Classes (The Daily Shot): "Bond traders are pessimistic about the economy, and stock traders are optimistic. They’re bidding up stock prices. I will tell you that 19 times out of 20, when those two groups disagree, the bond traders are right and early."

Japan Inc.'s 25 trillion yen opportunity: Cashing in on real estate (Nikkei Asia): If you are an investor, there are two ways to play this theme. invest in undervalued stocks with massive real estate holdings or invest in real estate developers who will take advantage. Nevertheless, it seems to be an exciting opportunity.

Britons have ￡430bn of excess cash savings, research finds (FT): Isn't it: British savers have at least ￡430bn of excess savings sitting in cash, to avoid the risk of losing money from investments that they are not sure about, according to a new report. This move is lowering the revenue of financial institutions who earns the fees regardless of the investment return, and also pay advertisements to this newspaper. The sensational sentence by this newspaper clearly shows which side the newspaper stands.

Sustainability

Mitsui's protein push embraces shrimp and poultry (Nikkei Asia): Mr Buffett's favorite Japanese companies are expanding into the food business. The Japanese trading companies have long term vision with an eye on strategically important areas, such as commodities, energy and now food.

Sumitomo has contributed to 17% of global installed geothermal power capacity (Thinkgeoenergy.com) One of Warren Buffett’s favorite Japanese trading company, “Sumitomo Corporation (Sumitomo) officially announced (in June 2024) the contractual hand-over of the Tauhara Geothermal Power Station in New Zealand to Contact Energy. With this achievement, the total installed capacity of geothermal power plants that Sumitomo has contributed to with construction and supply services has reached 2700 MW, or roughly 17% of the total global installed geothermal power capacity.”

Others

Chiune Sugihara Memorial Hall visit (Chiune Sugihara Memorial Hall): A few years before Sugihara’s actions, another Japanese officer took a bold step to save Jewish refugees. In 1938, Lieutenant General Kiichiro Higuchi of the Imperial Japanese Army learned that around 20,000 Jewish refugees had gathered at Otpor on the Siberian-Manchurian border, hoping to enter Manchuria, then under Japanese control. Despite Japan's official policy to deny entry to avoid offending Nazi Germany, Higuchi made a personal decision to defy orders and arrange safe passage for these refugees, repaying the kindness he had received from Jews while stationed in Poland years ago.

Harris, Trump effectively tied in final stretch of 2024 race, NYT/Siena poll shows (Reuters): I’m not sure if it’s really a tight election because everyone is saying it is a tight race.