Stingy Investor Contact - Subscribe - Login
  Home | Articles | Links | SNW
Article Archive: 2024

The Stingy News Weekly: March 3, 2024
03/03/24   SNW
This week we have dividends, retirement, losses, and more.

The case for and against dividend ETFs
03/03/24   Dividends
"Unlike stock prices, which move based on the whims of market participants, dividends are set by company management and have been far more stable than prices historically. My favorite example of this comes from The Great Depression where monthly prices declined by nearly 90% (from peak to trough) but dividends weren't even cut in half."

Don't cut your losses?
03/03/24   Momentum
"'Cut your losses' is not a good strategy, as it underperformed the benchmark buy-and-hold portfolio. As Baur and Dimpfl noted, 'Losing stocks rarely continue to fall, which is not surprising in a world where stock markets rise and economies grow on average. In other words, if a rising tide lifts all boats, a cut-your-losses strategy cannot work.'"

Comfort has a cost
03/03/24   Bonds
"In the financial markets, you'll typically pay a high price for certainty. That price is paid in lower investment returns, and sometimes also in greater financial hassles. Yet I see investors paying that price again and again."

Rule, Britannia
03/03/24   World
"We think a long-term bet on upward mean reversion for Europe should also include a cap-weighted allocation to the UK because discounts are greater in Britain. UK stocks represent around 24% of aggregate tickers in the combined investment opportunity sets of the UK and Europe."

The Globe's Dividend All-Stars
03/03/24   Stingy Investing
"We're pleased to present the Globe's Dividend All-Stars, which highlights the best dividend-paying stocks on the Toronto Stock Exchange (TSX). It includes a wealth of information on the 200 largest companies in the land for bargain seekers and income investors alike. Each stock is measured up for its overall investment appeal and the top 20 five-star stocks make it into the Dividend All-Stars portfolio."

A Protestant retirement ethic?
03/03/24   Retirement
"Moshe Milevsky and Marcos Velazquez have identified one area where there is an advantage to being a Protestant, or at least living in a heavily Protestant society. They document a statistically significant relationship between the share of Protestants living in a country and the quality of the pension system in that country."

The Stingy News Weekly: February 25, 2024
02/25/24   SNW
This week we have dividends, Buffett, retirement, and more.

Buffett's 2023 letter to investors
02/25/24   Buffett
"With that focus, and with our present mix of businesses, Berkshire should do a bit better than the average American corporation and, more important, should also operate with materially less risk of permanent loss of capital. Anything beyond 'slightly better,' though, is wishful thinking"

The low-volatility factor
02/25/24   Markets
"The low-volatility premium may be the most compelling anomaly in financial markets: Less risky securities outperform their riskier counterparts over the long term."

The blue and yellow can
02/25/24   Markets
"the current market reminds us of the late 1990's when investors were also crowding into tech and high-quality stocks. Stocks such as Coca-Cola (KO) were in high demand as investors looked for ways to participate in the rising equity market while minimizing risk. As investors crowded into Coca-Cola's stock to reduce risk, its valuation soared along with the risk of overpaying. The flight into quality eventually resulted in losses, as Coca-Cola's stock declined over 50% from its cycle peak in 1998 to its trough in 2003, reminding us that good businesses don't always make good investments."

Japan's orphans
02/25/24   Value Investing
"Abandoned, deep-value micro-caps found sufficient buyers to produce a sizable premium over other strategies, even when the size premium only worked 50% of the time and liquidity levels and relative valuations for Japan were falling."

The Globe's Dividend All-Stars
02/24/24   Stingy Investing
"We're pleased to present the Globe's Dividend All-Stars, which highlights the best dividend-paying stocks on the Toronto Stock Exchange (TSX). It includes a wealth of information on the 200 largest companies in the land for bargain seekers and income investors alike. Each stock is measured up for its overall investment appeal and the top 20 five-star stocks make it into the Dividend All-Stars portfolio." [$]

The Globe's Top 20 Dividend All-Stars
02/24/24   Stingy Investing
"We combine all of our yield, value, and market measures to rate the 200 largest dividend stocks on the TSX. Only 20 get a full five out of five stars and are put into the new Dividend All-Stars portfolio." [$]

Faulty assumptions
02/24/24   Retirement
"Many people put a lot of faith in planning software, betting their financial life on assumptions, projections and past performance. The assumptions are usually theirs, but are they accurate? Do they reflect the reality of how they'll live in retirement?"

The Stingy News Weekly: February 17, 2024
02/17/24   SNW
This week we have retirement, all stocks, bond yields, and more.

Why not 100% equities
02/16/24   Asness
"The paper comes to the rather startling game-changing conclusion that long-term investors should be 100% in equities, not in a more diversified portfolio. We have been down this road before with this idea refuted with alacrity and panache at least as far back as the mid-1990s."

Yield is not return
02/16/24   Bonds
"Over the history of our internal bond dataset, returns for bonds rated single B have been 3% behind their yields, and returns for bonds rated CCC have been 7% behind their yields. We suspect that the average result for highly levered private credit deals will fall within that range."

How many factors do you need?
02/16/24   Markets
"Putting all this together, we end up with the knowledge that the factor zoo can be reduced to some 10 to 20 factors and that among the most important factors to consider are value, momentum, quality, and growth."

The persistence of growth
02/16/24   Markets
"An implicit assumption in most forecasts is that growth is persistent. While analysts underwrite high growth for companies that have grown quickly and slow growth for companies that have grown slowly in the past, a large body of evidence demonstrates that reversion to the mean of both positive and negative abnormal earnings growth is the norm."

Fire meets ice
02/16/24   Retirement
"While I think our current concept of retirement could do with some tweaking, I wouldn't want to discourage folks from saving aggressively for their later years. At the same time, I think it’s instructive to think about a different model of retirement, one where we continue to earn at least some income well into our 70s and perhaps beyond."

Fear of heights
02/16/24   Indexing
"In other words, we'd all prefer to invest when the market's cheap, but investors were still better off putting money into the market at all-time highs than not at all. The lesson: Investors who wait on the sidelines in the hope of earning better returns may miss out on receiving any returns."

The Stingy News Weekly: February 9, 2024
02/09/24   SNW
This week we have increasing returns, bias, spending, and more.

Increasing returns
02/09/24   Markets
"Although Adam Smith pointed out increasing returns two and a half centuries ago, much of economic theory over time has featured perfect competition and decreasing returns. However, Kenneth Arrow, an economist and also a Nobel Prize winner, noted that a review of economic studies over time reveals that, “[the theory of increasing returns] acts like an underground river, springing to the surface only every few decades.”10 Research over the past 50 years has allowed the river to flow to the surface, and it is time to see what it has to say and what it means." [pdf]

Overcoming experimenter bias
02/09/24   Markets
"One dramatic visual example of backtest overfitting is shown in the graph at the right, which displays the mean excess return (compared to benchmarks) of newly minted exchange-traded index-linked funds, both in the months of design prior to submission to U.S. Securities and Exchange Commission for approval, and in the months after the fund was actually fielded. The 'knee' in the graph at 0 shows unmistakably the difference between statistically overfit designs and actual field experience."

Thoughts on spending money
02/09/24   Thrift
"Everyone can spend money in a way that will make them happier, but there is no universal formula on how to do it. The nice stuff that makes me happy might seem crazy to you, and vice versa. Like many things in finance, debates over what kind of lifestyle you should live are often just people with different personalities talking over each other."

Overrated things in personal finance
02/09/24   Thrift
"Retiring at age 35 sounds interesting in principle, but it in practice, it would be hell. Imagine being completely idle and have nothing to do except worry about your small pile of money turning to dust."

Pods, passive flows, and punters
02/09/24   Markets
"Eventually, the market is a weighing machine. If you want some evidence " even from some of the most iconic, well-followed, index-heavy, retail-engaged, pod-owned, successful companies, it is still, eventually, about the fundies."

The Stingy News Weekly: February 3, 2024
02/03/24   SNW
This week we have happiness, plans, passive, value, and more.

Keep your investment plan on track
02/03/24   Behaviour
"When you don't watch the market every day, you can finally see with unquestionable clarity that what you would have expected to happen didn't. The unexpected did."

The right level of inflation
02/03/24   World
"once inflation surpasses 1%, views change quite quickly. The share of people who think inflation is too high and would better be lower starts to rise quickly, while the share of people who think inflation would be just right drops fast. This indicates that any change in the inflation target will likely trigger a significant public debate and will not be easy to communicate to the public."

Investing at all-time highs
02/03/24   Markets
"Historically, equities (as a whole) tend to outperform in the short run following all-time highs, but there is less clarity over longer time periods."

Valuing Japan's reform
02/03/24   Value Investing
"44% of Japanese companies trade at <1x P/B, but they're almost all microcaps"

Trend to passive investing
02/03/24   Indexing
"Expense ratios (about 70 basis points higher for active funds) largely explained the differences between gross and net returns for both active and index funds."

Happiness research
02/03/24   Behaviour
"From meditation to smiling, researchers take a second look at studies claiming to reveal what makes us happy."

The Stingy News Weekly: January 28, 2024
01/28/24   SNW
This week we have the Globe 250, bond yields, momentum, indexing, and more.

From COW to KARS
01/28/24   Indexing
"The ideal investment, in my opinion, is a simple, broadly diversified stock or bond index fund, such as one that tracks the S&P 500."

Moving average distance and momentum
01/28/24   Momentum Investing
"Our research suggests that active managers should pay attention to the distance between short- and long-run moving averages of prices in developing models for forecasting equity returns. We show that trading rules based on this distance present significant profits in historical data after accounting for reasonable trading cost estimates."

Ask what your credit quality pays
01/28/24   Bonds
"So rather than target a 7% yield, or any other yield, perhaps the right question is: "What's the best I can do in the liquid credit market?" The yield on the BB index is a good approximation. Right now, the BB index yields 6.6%. Meanwhile, the single B index yields 7.8% and the high-yield index yields 7.9%. Those are juicy 7% yields, but they are also less likely to be realized."

The Globe 250 for 2024
01/28/24   Stingy Investing
"We’re pleased to toast the New Year with our Megastar ranking of Canada’s largest publicly traded companies. It contains key investing data on 250 major stocks, with a star rating for each company’s momentum appeal and another for its value merit. Both are combined to form the Megastar portfolio, which outperformed the market by 9.4 percentage points since last year. Cheers!"

Return-to-office mandates
01/28/24   Management
"Results of our determinant analyses are consistent with managers using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance. Also, our findings do not support the argument that managers impose mandate because they believe RTO increases firm values. Further, our difference in differences tests report significant declines in employees' job satisfactions mandates but no significant changes in financial performance or firm values after RTO mandates."

Investing in beauty trends
01/21/24   Markets
"Fashion may garner the attention but it's the little things - lipsticks and face creams - that steadily rake in the dollars no matter who is designing the frocks that season."

The Stingy News Weekly: January 21, 2024
01/21/24   SNW
This week we have beauty, highs, money, China, and more.

New all-time highs
01/21/24   Markets
"Most of the time new highs are followed by more new highs. The average one, three, five and ten year total returns following new highs were +16%, +27%, +59% and +206%, respectively."

Our money pit
01/21/24   Thrift
"We just finished a project that proved so expensive that, if I revealed the cost, my reputation for frugality would be in tatters. The cost was comfortably - or perhaps uncomfortably - into six figures. What if we sold our Philadelphia townhome tomorrow? I figure we might recoup half of what we just spent."

Adding China?
01/21/24   World
"To the extent that your portfolio is diversified internationally, it's important to keep an eye on developments elsewhere. At the top of the list: China, which is now the world's second-largest economy."

Regional growth and returns
01/21/24   Markets
"We believe the simple argument to invest in the fastest-growing region doesn't work as an investment strategy - something investors should be conscious of as they hear the seductive calls to overweight the United States even further."

Should your job determine how you invest?
01/21/24   Markets
"For example, as someone who works in the financial industry, this table suggests that I should have some of my wealth invested in commodities (despite their poor track record) and that I shouldn’t have any allocation to REITs."

Asset Mixer Update
01/16/24   Stingy Investing
We've updated our Asset Mixer to include real return data for 2023.

Periodic Table Update
01/16/24   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include real return data for 2023.

The Stingy News Weekly: January 14, 2024
01/14/24   SNW
This week we have the Charlie, forecasts, 100% stocks, shorts, and more.

Oh those share price forecasts
01/14/24   Markets
"A simple forecast of a 7.5% return for the S&P 500 (the average annual price change since the end of World War II) would have been better than either the analyst bottom-up forecasts or the strategists’ forecasts. Over the last twenty years, it would have been slightly pessimistic, but the root mean square error (RMSE) as a measure of forecast accuracy of this simple 7.5% forecast was lower than either the RMSE of the bottom-up analyst forecasts or the strategists’ forecasts."

A lifetime of wisdom
01/14/24   Munger
"Though Munger was an active investment manager, he didn’t base his decisions on forecasts. He simply looked to buy good businesses with honest managers at attractive prices. That was the extent of the time he spent on predictions."

The all U.S. stock portfolio
01/14/24   Markets
"Though the U.S. stock market is far more diversified than any other stock market on Earth, investing 100% of your portfolio into U.S. stocks is inherently tilting your portfolio toward the U.S. technology sector."

Money misconceptions
01/14/24   Markets
"Sure, a big paycheck makes it easier to save. But in the end, what matters is your savings rate as a percentage of your income, rather than the size of your paycheck. In other words, a modest earner could potentially achieve financial freedom faster than a high-income individual with undisciplined spending and savings habits."

Costly shorts
01/14/24   Markets
"we believe in most instances the most pragmatic application of hard-to-borrow data is to steer clear of taking long positions in these stocks, serving as a strategic compass in the often-tumultuous seas of market speculation."

Ways you pay more for less
01/14/24   Thrift
"Andrew Chang breaks down four reasons your grocery bill might be rising" [video]

The Stingy News Weekly: January 7, 2024
01/07/24   SNW
This week we have the trading, balance, biotech, and more.

Crowded trades
01/07/24   Markets
"On average, crowded stocks were associated with future superior returns, while the least crowded stocks provided inferior returns"

Your money or your life
01/07/24   Thrift
"This partially explains why only 1 in 4 people with over $3 million in investable assets are self-made"

The biotech boneyard
01/06/24   Markets
"It seems that there is but one savior for biotechs with no revenue: get to revenue."

Turned the tide
01/06/24   Tech
"Forty years ago, scientists did the impossible. Why doesn’t anyone remember?"

  Articles by
  Norman Rothery

  Growth Investing
  Real Estate
  Stingy Investing
  Value Investing

  Warren Buffett
  Benjamin Graham
  Charlie Munger
  David Dreman
  Martin Whitman
  Tweedy Browne
  James Montier
  John Dorfman
  Prem Watsa
  Francis Chou
  Walter Schloss
  Seth Klarman
  Nassim Taleb
  Robert Shiller
  James Grant
  John Bogle
  John Neff
  Bill Gross
  Dan Hallett
  Tim Cestnick
  Jason Zweig
  Norm Rothery

Article Archive

About Us | Legal | Contact Us
Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...