The ability to distinguish between the noise and the signal is a rare skill within the confines of the financial markets and investment world. In our modern times, there is too much emphasis on the stock market while this particular market may tend to disguise macroeconomic realities, especially when isolated in the broader context of indices. Especially for a retail investor, there are many other investment vehicles ranging from physical assets such as real estate and precious metals to commodities and other diversified portfolios the underlying assets of which may still be the physical assets. In this article, I will introduce other important financial markets that will be utilized as reliable proxies to understand current market conditions and are generally ignored by retail investors. In these perilous times, ignoring these fundamental markets and solely focusing on stocks may ruin your wealth and derail your plans to financial freedom. The content can also be used as a blueprint for understanding different set of investment vehicles and comprehending the fundamental differences between markets, as well as increasing your financial acumen with respect to removing the noise from the signal.
Category Archives: Investment Management
On economics you have been taught wrong ðŸ§
Unfortunately, the dismal science taught in our schools and universities rests on many blatantly wrong assumptions.
From the definition and calculation of inflation to investment management and worshipping only a small subset of assets while ignoring those that would lead to greater financial freedom, the economics, as a subject, is losing ground while being mired in farfetched quant analyses and losing its connection with the realities of daily life and our changing world.
In this article, I elaborated on the most common misconceptions that are being perpetuated through the teaching of economics. The reality appears to be quite different from what you are being told every day.
Which company is this?
Which company is this?
Hints:
-It operates in a traditionally analog business that is tested by digital challengers.
-However, it continues to beat every one of them in terms of profitability.
-Operational excellence, efficient cash flow management, customer loyalty, and customer service are their hallmarks.
-It also started its digitization initiative, currently comprising 16% of its total net sales at maximum (does not disclose exact number)
-It has a positive book value, so do not mistake it for other companies that are technically accounting insolvent.
-Its stock is currently traded at a P/E of 45-50.
-Its stock is currently traded at a P/B of 15.
—
Note: This article is based on a social media post I wrote almost 4 years ago. In the article, I will unveil the company and dissect its operations and its stock. Moreover, we will try to look into whether much has changed since the first time I published my post.
Retirement, Financial Independence, and Withdrawal Rates 💸
Can a portfolio containing bonds increase the success rate of an orderly retirement?
What is the required withdrawal rate for such a portfolio to succeed?
As riskier securities, stocks may provide more returns and higher sustainable withdrawal rates, however at what cost, i.e. risk?
What may be the composition of a portfolio that would allow you to withdraw at 4% annually, $3500 each month for the next 20 years?
As assets that are more dependent on the current fiat currency rules continue to struggle, the success rate of such portfolios will dwindle.
In this article, I expand on how retirement funds are constructed and why many of them will fail eventually given today’s gloomy conditions while also answering each question mentioned above. In addition, I will also share my thoughts on what I myself do to survive and explain the illusion of measuring your returns in terms of just percentages and fiat currencies.