Benjamin Graham“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

What Benjamin Graham Taught Warren Buffett About Investing

Don’t lose money and play the long game

“Every day, do something foolish, something creative, and something generous.” Those are the words of Benjamin Graham and, according to his most famous student — Warren Buffett — “he excelled most at the last.”

Benjamin Graham is the “father” of value investing, a long-term, contrarian approach to managing money. From 1936 to 1956, Graham’s company achieved a stellar 20% annual return for its investors. If you had invested $10,000 with him over those 20 years, you’d have walked out with $383,375.99 — or about $3.6 million in today’s dollars.

Graham is also one of the main reasons why, today, companies pay dividends to their shareholders.

In 1926, companies first had to file public financial reports. Graham analyzed those of Northern Pipeline, an oil company owned by John D. Rockefeller, and found they had $95 per share in extra cash that they weren’t using. Graham rallied shareholders together and, two years later, received a board seat and $70 per share — along with everyone else. Rockefeller supported his motion and pushed other companies to do the same — which they still do today.

When Warren Buffett first approached Graham in 1951, he offered to work him for free — to which Graham said: “You’re overpriced.” Knowing how much work it is to teach someone who can’t contribute much yet, Graham only hired Buffett three years later, but the rest is history.

Maybe because of Buffett, Graham decided to write his knowledge down. To this day, Buffett, once the richest man in the world, calls Graham’s book The Intelligent Investor “the best book about investing ever written.”

Here are 3 lessons from it that’ll help you understand and grow your money.

1. Follow the 3 risk-mitigating principles.

Warren Buffett often shares his “two only rules for investing:”

  1. Never lose money.
  2. Never forget rule #1.

Buffett has those rules because the value investing approach he learned from Graham follows three core, risk-mitigating principles:

  1. Always analyze the long-term evolution and management principles of a company before investing.
  2. Always protect yourself from losses by diversifying.
  3. Always focus on safe and steady returns over crazy profits.

Nobody can predict the next Facebook, but everyone can protect themselves against losses.

Intelligent investors collect evidence of a gap between current price and intrinsic company value. Only when they find that evidence do they strike — and then wait for the value to unlock.

They invest into a few but not too many of those companies in order to not lose everything when one investment fails, and they’re perfectly happy with any return that beats the stock market average of 8%.

2. Don’t trust Mr. Market.

Graham often imagined the entire stock market as a single person. What would that person be like?

He said that if Mr. Market showed up on your doorstep each day quoting you various stock prices, most of the time, you’d probably ignore him as you would any other door-to-door salesman. You’d think prices are suspiciously cheap or way too high — and you would be right.

Mr. Market is not the brightest, totally unpredictable, and suffers from serious mood swings. Don’t trust Mr. Market.

When Elon tweets the right thing, Tesla’s stock goes up. If it’s the wrong thing, it goes down. When a new iPhone comes out, people queue in line, and Apple’s stock goes up. When an influencer finds a flaw in the phone the next day, the stock plummets.

None of this has anything to do with the value of the company as a whole — and yet, these things affect Mr. Market! Humans are too good at finding patterns. We see them even where none exist.

If you want to be an intelligent investor, you must do your own homework.

3. Develop a formula and stick to it.

A common piece of advice among poker pros is this: Leave your emotions at home. Money is a numbers game. It requires logic, not feelings.

To detach himself and cut the emotional stress out of investing, Benjamin Graham worked by a set of strict formulas. Some of them helped him evaluate companies, others manage his money, such as dollar-cost averaging.

Dollar-cost averaging means you set a fixed budget you will invest at fixed intervals. Every week, month, or quarter, you’ll invest more in the stocks you’ve previously determined are valuable, no matter the price.

For example, I’ve set a recurring transfer for 10% of my income to go into my brokerage account each month. Then, I use that to buy new stocks on my list or more of the ones I already own.

This can also be emotionally demanding because you’ll keep investing the same budget regardless of whether stocks look cheap or expensive, but it’s still much easier than constantly fretting about how much to invest when, why, and into what.

Use formulas in your investing. It’s a great way to protect yourself against losses — and both Buffett and Graham thought that’s what it’s all about.

Summary

The Intelligent Investor explains value investing, a long-term money management strategy focused on steady profits, ignoring the daily whims of the market, and picking companies with high intrinsic value.

Remember these three lessons to take advantage of the miracle of compounding interest:

  1. The three principles of value investing are analyzing companies for their long-term evolution, protecting yourself against losses, and going for consistent profits rather than crazy bets.
  2. The market as a whole is biased, irrational, and moody, especially in the short term. Ignore Mr. Market.
  3. Stick to a set of strict formulas by which you make all your investments.

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

— Benjamin Graham

Glove stock make a come back on yesterday

Yesterday, glove stocks saw a slight improvement, and it kept that momentum through to Tuesday. 4 major and 3 smaller glove stocks, with Top Glove leading the charge, seem to be continuing to launch an offensive.

Top Glove (TOPGLOVE) stocks saw improvement of 58 sens, up to RM16.28
Supermax (SUPERMX) went up by 43 sens to RM8.15
Hartalega (HARTA) was up 50 sens to RM13.00
Kossan Rubber (KOSSAN) were also up by 28 sens at RM8.50
Rubberex (RUBEREX) rose 23 cents to RM3.21
Comfort Gloves (COMFORT) rose 16 cents to RM3.27
Careplus (CAREPLS) rose 4 cents to RM1.50

Glove stocks rose for two consecutive days, proving that the price adjustment that began on the 19th of June was just a technical adjustment, and the market’s outlook for glove stocks remains unchanged. Yesterday, the company reported quarterly results, net profits had nearly quadrupled year-on-year, and gave the glove stocks a confidence
The Central Bank of Malaysia yesterday raised the margin value of the glove-shares (MARGIN) compared to the attitude of reducing the margin value of the glove-shares just a month ago, which caused large amounts of retail investors to rush into the market today.
It found that analysts at major stock markets were still bullish on their outlook for glove stocks, with Top Glove and Supermax were still the “preferred stocks” amongst the glove stocks. Billionaire investor Koon Yew Yin remains bullish on glove stocks, and he believes Supermax will be the best-performing glove stocks.
Koon Yew Yin pointed out that the Supermax has their own distribution centre in the United States and many other countries, which allows them to quickly increase the price of gloves, which could lead to the new price doubling. As a result, expect Supermax earnings to improve for the next quarter, which would be adequate in pushing up share prices.
Koon Yew Yin suggest that small investors should sell their stocks they have on hand that are not performing well, to attack glove stocks. Koon Yew Yin may controversial, but his views are sometimes worth referring to, whether or not his views on glove stocks are right or wrong, investors should still assess his words. He insists that the global demand for gloves will remain high, which is the advantage of the glove stocks.
Whether we’ve seen the best of Top Glove, and Supermax becomes the next star of the show, the investing public should base their decisions off their own conditions and opinions. The highest target price for Top Glove’s share is RM25.00, Koon Yew Yin estimates that the target price of Supermax would easily exceed RM10.00.
Will glove stocks continue moving towards the target within the next few days? It seems highly dependent on whether the market’s sentiment towards glove stocks changes.

How America Overthrew Hawaii’s Last Monarch

Liliuokalani, Last Queen of Hawaii – Royal Central

Hawaii is one of the 50 states that make up the United States of America. Made into an official state in 1959 Hawaii wasn’t always under the control of the United States. For a long time before the discovery of the islands by the Americans the small island chain was independent and was ruled by a monarch.

This would all change when Liliʻuololoku Walania Kamakaʻeha, Hawaii’s last monarch, ascended to the throne in 1891 after her brother’s untimely death the same year. What followed were three years of struggle between the incumbent queen and the United States and its supporters who sought to bring the island chain under the control of the union.

Before the crown

Before becoming the Queen of Hawaii, Lydia (Liliʻuololoku’s first name after her christening) worked closely with her brother, King Kalākaua, to rule the country. During his 1881 world tour, Lydia acted as the Queen regent to the throne and ran the country while he was away.

King Kalākaua in his military uniform


This would prove to be an especially turbulent time for the island chain as a smallpox epidemic was spreading among its population most likely being contracted from Chinese contractors who were working on the islands. She would initiate a lockdown of all ports and quarantine the affected areas leading to the spread to be minimised. By the end of the epidemic 789 mainly native Hawaiians were infected with 289 succumbing to the disease.

After this first regency, the princess would also serve as an envoy for Hawaii most notably to the United Kingdom where she represented the king at Queen Victoria’s Golden Jubilee in 1887. Here they would receive a warm welcome and attend the ceremony among other royals from across the world who travelled to the United Kingdom to take part in the event.

Downfall of the monarchy

The downfall of the monarchy started under King Kalākaua through the Bayonet Constitution of 1887. This marked the beginning of the transfer of power from the native Hawaiians to the Americans. This revolution of sorts was mainly fueled by the plantation owners of Hawaii as they saw the King’s authority as a threat towards their profits mainly because of the tariffs that were placed on the island by the US. The new constitution gave more power to the American’s including handing over control of the famous Pearl Harbour.

The king’s health kept declining during these years until 20 January 1891 when he suffered a stroke during a trip to the United States, leaving Lydia as the new ruling monarch of the island. The McKinley Tariff, a tariff placed on Hawaiian sugar, made the European and American plantation owners very angry with the monarchy. Many thought that by overthrowing the monarchy and joining the United States the tariff would be removed leading to the plantation owners making large profits once again.

Picture from a sugar plantation in Hawaii during the 19th century. Hawaii’s biggest during this century was sugar making those who owned these plantations very powerful.

This disdain towards the monarchy grew to a boiling point on January 17, 1893, when a coup d’état was initiated by the United States citizens and foreign residents residing in Honolulu. As well as the locals, US marines also “took part” in the coup as they were sent in by the US to “protect their assets” on the island. The coup succeeded and the perpetrators shortly established the Republic of Hawaii leading to the removal of Queen Liliʻuololoku from power

The Republic of Hawaii

Flag of the new Republic of Hawaii

Lydia’s official abdication wouldn’t come until 1895 when a pro-monarchy coup was started by some of her supporters leading to the provisional government putting the queen under arrest and imprisoning her in the Washington House. After the coup, Lydia was forced to abdicate her throne to save those who participated in the coup.

After the failed coup was crushed, the queen was placed on military trial and sentenced to 5 years hard labor which was later changed to 5 years of house arrest. On October 13, 1896, Lydia was given a full pardon by the Republic of Hawaii after which she left the country for America living in Brookline, Massachusetts until January 1897.

What followed was many years during which the queen would spend most of her time seeking justice for what she perceived as an illegal coup, even after America’s annexation of the island chain in 1898. Lydia went as far as taking the United States to court citing the Fifth Amendment as her reason for the lawsuit. The lawsuit would be unsuccessful due to the US court invoking an 1864 Kingdom Supreme Court decision over a case involving the Dowager Queen Emma and Kamehameha V as their reasoning for the annexation.

Although her legal pursuits were unsuccessful, she would be successful in getting herself a pension of $1,250, a much smaller sum than she initially wanted. The rest of her life would be spent seeking justice for her people until 1917 when she would die in the Washington House on November 11, 1917, at the age of 79 marking the end of the life of the last Hawaiian monarch.

The funeral procession of Liliuokalani in 1917

By Calin Aneculaesei

Be Aware of the Quiet Ones like Keanu Reeves — They Are the Ones That Actually Make You Think

The Legend of Keanu Reeves | GQ

The smarter you become, the less you speak.

The world doesn’t need more loud guys full of too many words, with buff arms, in tight shirts, and huge egos to match. The world needs quiet people. Why?

Quiet people make you think.
Thinking brings clarity.
Thinking can lead to change.

I’ve always been intrigued by Keanu. He is a quiet person who keeps to himself and still hasn’t figured out how to be famous after twenty-nine years of being one of the most iconic Hollywood Actors of all time.

Keanu doesn’t get fame, attention or noise. Instead, he prefers to be quiet and insert silence in his speeches and TV interviews.

When he does choose to speak, he drops short sentence bombs like this interview with Steven Colbert:

Stephen: “What do you think happens when we die, Keanu Reeves?”

Keanu: I know that the ones who love us will miss us.

In eleven words, Keanu summed up the entire meaning of life. It was a moment of sheer brilliance.

Take Time to Answer a Question

In a relatively unknown interview with Keanu back in 2000, RollingStone writer, Chris Heath, picks up on how Keanu uses silence.

I ask him why he acts. For forty-two seconds, he says nothing. Not a word, a grunt, a prevarication, or a hint that an answer might come. For most of that time, his head is angled at ninety degrees away from me, as if that’s where the oxygen is.

“Uh,” he finally says, “the words that popped into my head were expression and, uh, it’s fun.” A few minutes later, I lob a vague question about whether he ever wants to write or direct. He lets out a kind of quiet sigh.

At its worst, it’s like this. You ask Keanu Reeves a question and . . . just wait. Out in space, planets collide, stars go supernova. On earth, forests fall, animals screech and roar. People shout and rant and weep with anger and joy and just for the hell of it.

5 times Keanu Reeves proved that he is too good to be true | The ...

And, all this time, Reeves sits there, entirely silent.

On this particular occasion, the silence lasts seventy-two seconds.

Rather than answering a question, Keanu waits to see if he has an answer worth giving. He then attempts to edit down his response in his head so that it can be understood. Many of the interviews with Keanu contain huge chunks of silence. That’s why his TV interviews aren’t that in-depth because it takes him time to respond and a three-minute TV interview just doesn’t do it.

The real answers to life’s toughest questions take time to answer.

Softly Spoken Brings People Closer

Billie Eilish does this with her music. Many of her songs contain lyrics that are softly sung and you have to lean in to understand what she’s saying.

Keanu uses softly spoken words in interviews to bring people in and take them on a journey. Hollywood wants him to be loud and fancy, but that’s not how he rolls, and he’s intentional about it.

We’re told to be loud. Social media teaches us to use caps, emojis, hashtags and big, bold captions on our videos to get people to listen.

What if doing the opposite of loud was really the answer to being heard?

A soft voice like Keanu’s draws you in, and then, only then, can you hear what he is trying to say.

One-liners that Break the Room

Keanu Reeves Showdown: The Matrix 4's Release Date Is The Same As ...

Journalist, Miki Turner, shares this thought about Keanu in her story titled “Keanu is a man of a few soft-spoken words.”

It’s not that Reeves is difficult because sometimes he’ll go completely left and deliver a one-liner that will break up the room — like when a reporter asked Reeves if he felt his career was being defined by his “Matrix” experience.

“I am the ambassador for the ‘Matrix’ trilogy,” Reeves said in a deep, robot-like voice. “My operating hours are…”

When you speak less and sit back and listen, during the rare times when you do talk, you have the space to deliver one-liners like Keanu that blow people’s minds and help them to think deeply.

Silence Breeds Curiosity

Keanu uses silence brilliantly in speeches and public performances. The silence helps the listener become curious about what he’s going to say. It breeds suspense and that helps you put your phone away and listen.

Silence breeds curiosity and curiosity leads to a conversation where someone will listen to you.

Being Quiet Interrupts the Pattern

Hollywood actors are typically loud and have large personalities. By being quiet like Keanu, you interrupt people’s thought patterns.

Try this: attend a work meeting that you’re supposed to be contributing to. Say nothing. Sit there and actively listen with an engaged look on your face. Continue to be quiet and resist the urge to fill up time with your voice. Watch what happens. At some point, your silence is going to break the pattern of the meeting. Somebody is going to ask you for your point of view and it’s during that moment that you will be “properly” heard.

The typical pattern of meetings and human conversation is to talk a lot. Try being quiet to break the pattern and help people think with your words.

People can’t resist the urge to talk — they also can’t resist the urge to hear from the people who are extremely quiet.

Pauses Allow Time for Reflection

The quiet ones like Keanu always seem to use strategic pauses.

Between each point they’re trying to make, they add a pause. When giving a compliment or expressing gratitude, they add a pause to ensure the maximum effect is felt by those listening.

Pauses in human dialogue allow our minds to think at a deeper level.

The challenge is often we um and ah our way through pauses rather than intentionally leaving a few.

A pause is a tool you can use to get people to think.

The Smarter you Become, the Less You Speak

This is the key lesson Keanu has taught me: You’re not smart by talking a lot. You’re not having an impact by increasing your speech volume or trying to be important. You’re smart when you do the following:

  • Let people talk first
  • Listen with intention
  • When your face shows you’re engaged in the conversation
  • You practice saying less
  • You lead with empathy

Quiet People Make us Think

Silence is not only golden; it makes you think. And we need more time to think during these uncertain times.

Conversely, you can’t think about what someone is saying if you’re lost in thoughts of what you’re going to say next.

It’s okay to be quiet so you can think.

Quiet people change the world.


By Tim Denning

How Does 2 Billion Dollars Go Missing?

Wirecard slumps 40% as search for missing billions turns to ...

An online payment company who was once the darling of Germany’s Fintech industry lost nearly 12 million dollars of market value and filed for insolvency just days after revealing a 2 billion dollar hole in its balance sheet.

The missing Wirecard money was supposed to be held in 2 trust accounts but auditors investigating the company said they couldn’t find it.  Now everyone is wondering, where did that money go? Even better, did it even ever exist?

What is Wirecard?

Wirecard is a global Fintech company with over 20 years of payment experience, the German company specializes in providing software and systems that link retailers with consumers as well as the financial system.

They collect payment details from people who make purchases, online, or in store. They form the role of confirming settling processing, that whole transaction when you buy anything online. Their background was a lot in gambling and adult entertainment.

Over the years, the company began to bloom as commerce shifted to online and away from cash payments, it attracted interest from giants like SoftBank and Credit Suisse, their stock grew 6 fold between 2016 and 2018 but some have questioned their business model and some have question if they’re actually worth their market valuation.

Wirecard thinks US$2.1b was a fiction in growing 'disaster ...

In 2016, a report accused Wirecard of malpractice, the main accusation was that they were instrumentally involved in the process of illegal gambling (online), the company denied the allegations. Starting early in 2019, a new wave of Financial Times articles on the company’s global operations led to Wirecard calling in KPMG for a special audit which was supposed to demonstrate to the doubters that their business was legitimate.

However, KPMG said they weren’t able to determine the answer to some of those questions. One such question was; why was there a bunch of money supposedly in some trustee account, and whether the money was really there? When auditors went looking for the 2 billion of cash that Wirecard said was in 2 trust accounts in the Phillipines, what they found instead, was a gaping hole. Electronic scans of documents confirming the accounts had been sent to Ernst & Young (EY). EY finally said that these documents weren’t reliable and they thought they been deceived by Wirecard.

Wirecard's former CEO Markus Braun arrested in Germany - CNN

The Wirecard story then began to unravel rather rapidly, which led to CEO Markus Braun stepping down. Wirecard then came out and said that the missing 2 billion probably didn’t exist, and not long after, Markus Braun was then arrested in Munich, on his way back from Vienna. What he stands accused of right now, is inflating the value of the company by feigning business with these “3rd party acquirers”. He has consistently denied wrongdoing. The partner company in question was supposed to process payments for Wirecard in countries it didn’t have full license to operate in. But it couldn’t be determined whether they actually generated revenue for the company at all. In a matter of days, the company had filed for insolvency proceedings, citing over-indebtedness as the reason.

Two. Trillion. Dollars? Here's where all that coronavirus stimulus ...

So where exactly did the 2 billion go you might be wondering? Wirecard executives have proposed 2 theories, 1st being that the numbers were made up, the revenue was never there and that Wirecard was simply trying to inflate the value of its business in order to make its shares more attractive, in order to borrow money. Their other theory is that this “business” did exist, but for some of the “business” wasn’t really being done on behalf of Wirecard, and the money was never put into where it should’ve been put. Instead, they believe that it has been in all or in parts taken by some other people, some where.

Enron's former CFO Andrew Fastow once saw himself as 'a hero ...

Those who are familiar with the Enron Case that happened a decade ago may see the similarities between them. It’ll be interesting to see how this story develops and what else is revealed in the process.

Why Some Countries Drive on the Other Side of the Road

The future of the left: So why do most countries drive on the ...

About 65% of the world drives on the right side of the road. Everyone else drives on the left. What is the origin of driving on the left side of the road, and is it right or wrong?

Countries that continue to drive on the left side of the road are mainly those places that used to be British colonies. In medieval days, most people used the left side of the road. It had to do with safety and security, and the avoidance of getting killed. Anyone with a sword preferred the left side of the road. This enabled the swordsman to keep their right arm close to an opponent and their sword away from them on the left side of their body.

In addition, a horse is easier to mount from the left side for a right-handed person. It just made good sense. A rider could mount their horse on the left side of the road instead of in the middle where they could clog up traffic and make the peasant folk angry. So how did it change to the right?

The shift can be traced back to the 1700s when teams would haul farm products to market pulled by several horses. The products were carried in large wagons, and the driver would ride the rear horse on the left. This allowed him to drive the team with his right arm while keeping an eye out as people passed on the left. It also allowed the driver of the team to make sure he didn’t run into other wagons.

In 1752, Empress Elizabeth of Russia officially declared that traffic must keep to the right, as was the custom for the country at the time. The practice became more widespread in 1789 during the French Revolution. An official rule for right-side driving was made in Paris in 1794.

There was an interesting reason for this change. Before the revolution, the aristocracy traveled on the left side of the road, forcing peasants to the right. Later on, the aristocracy began using the right side of the road to blend in with the peasants, thus cementing France’s drive to the right. Denmark was the next major country to follow and adopted the right-side rule in 1793.

Napoleon Bonaparte - Biography, Facts & Death - HISTORY

Napoleon spread driving on the right further. As he conquered different countries, they were forced to adopt the right-side rule. Only the countries that had denied Napoleon’s attacks kept their left side of the road rules.

The United Kingdom persevered throughout it all and kept their left-side road driving. They made it official and mandatory in 1835. All the countries in the British Empire followed this same rule. After the breakup of the British Empire, all of the countries that had been former British colonies kept the left-side rule except for Egypt, which had been conquered by Napoleon before the British got there. Napoleon even got the Dutch to drive on the right when he conquered the Netherlands, but their colonies continued to drive on the left.

In early America, since it was a British colony, the driving custom was on the left. It wasn’t until the American Revolution when Americans wanted to cut all ties with Britain that they began driving on the right. Even in Canada, there was a divide. The French portion drove on the right, and the British areas drove on the left. It wasn’t until the 1920s before most of Canada agreed on the right side, with the exception of Newfoundland, which joined Canada in 1949.

Over the years, countries in Europe slowly began to change due to influences from World War II and the pervasiveness of the American car, which had the steering wheel on the left. Only four European countries remain with left-side driving; the United Kingdom, Malta, Cyprus, and Ireland. The United Kingdom even played around with the idea of switching to the right in the 1960s, but they discovered it would be cost prohibitive, and the political pressures to remain on the left were too great.

Red Drive on the Right, Blue on the Left

Some Great Facts About Driving on the Left

There have been only three places that have gone from right to left side driving. East Timor did it in 1975, Okinawa, Japan, converted in 1978 because it had been administered by the U.S. after World War II, and Somoa in 2009, mainly because they wanted to import cheaper cars from the left-side driving countries of Australia, New Zealand, and Japan.

In Myanmar, they drove on the left until 1970 when General Ne Win, the ruler at the time, ordered everyone to the right. What was interesting was that he supposedly got the advice to do so from a wizard. The problem was, almost every vehicle in the country had a right-sided steering wheel, and there are still old traffic lights in Rangoon that are on the wrong side of the road.

On September 3, 1967, at 5:00 AM, Sweden moved from driving on the left-hand side of the road to the right on what they called H Day. The H stood for Högertrafikomläggningen, or the Right-Hand Traffic Diversion. Eighty-three percent of Swedes opposed the move in 1955, but in 1963, the Swedish Parliament voted for the switch since Sweden’s neighbors all drove on the right and because many cars in Sweden had the steering wheel on the left (which was believed to be the cause of more accidents).

If you plan to drive in the Bahamas, where they drive on the left, don’t be surprised if you get a rental car with a left-side steering wheel. Due to its location near the United States, many of the cars there are American made. It definitely makes for some interesting drives.


By Daniel Ganninger

FIXATING ON CONSUMER PRICES WHILE IGNORING ASSET PRICES

For most fields of study, the goal is to progress ideas and seek truth. This doesn’t seem to be the case in economics.

It’s not just the Fed; it’s the entire global community. The Central Bank of Sweden recently shared a press release showing they have similar concerns to the Fed and want to facilitate the “supply of credit” while striving to hold market rates down. The bank further stated the difficulties faced with interpreting its inflation statistics during times of pandemic, noting:

For one thing, prices have been lacking for certain goods and services, as these have not been consumed, and for another thing the actual consumption by Swedes during the pandemic does not correspond to the weights in the consumer price index. Quite simply, the Swedish people have bought more toilet paper and fewer trips abroad than the weights in the consumer price index imply.

The problem with measuring “inflation” has also been expressed by the Bank of Canada. It’s not just the relative weights which are problematic, but also the volatility of the data that impacts the “inflationary experience” of the Consumer Price Index sample size, making interpretation difficult:

in any given month, the CPI can be quite volatile and not reflect its long-term trend. That’s because prices of items such as fresh fruit and vegetables or gasoline can jump around a lot, affecting the CPI.

Especially since “these aren’t normal times,”

Canadians are spending much less on gasoline and air travel, and more on food purchased from stores. And until very recently, they weren’t spending anything on haircuts. The implication is that the CPI isn’t fully reflecting people’s current inflationary experience.

In formulating an arbitrary basket of goods to include items such as gasoline, fruits, vegetables, and toilet paper and then assigning an arbitrary weight of relative importance to these items, central bankers obsess over consumer prices while ignoring asset prices such as those of stocks, bonds, and real estate.

Author: Robert Aro

How Fatherhood In the NBA Has Changed Since the Jordan Era

Michael Jordan's kids share what it was like to be raised by the ...

The current generation of NBA stars boasts dynamic athletes who inspire excellence through impressive talent, just like generations of hoopers before them. But one thing that has changed in the league, and significantly, is the role fatherhood plays. The league today is filled with proud fathers, men who don’t hesitate to bring their children into the spotlight with them.

20,000 People Will Pack L.A.'s Staples Center To Pay Tribute To ...
RIP Black Mamba

We think of the late Kobe Bryant as Gianna “Mambacita” Bryant’s father, and Steph Curry as scene-stealer Riley’s dad. Dwyane Wade openly expresses love for Zaya at every turn. Yet, as The Last Dance unwittingly showed over the past five weeks, tremendous NBA stars rarely allowed themselves to be proud dads publicly.

In the late 1980s and ’90s, Michael Jordan’s superstardom couldn’t help but affect his relationship with his children — not just as a father on the road for months at a time, not just as a man with a notoriously tireless work ethic and competitive drive, but as an icon whose impact couldn’t help but create expectations for his kids. During his induction into the Basketball Hall of Fame in 2009, Jordan turned to three of his children and said, “You guys have a heavy burden. I wouldn’t want to be you guys if I had to.”

During that era, could someone simultaneously be considered the best basketball player on earth, an endorsement-deal king, and father of the year all at once? Not quite.

Stephen Curry's Adorable Daughter Riley Took Over His Post-Game ...
Steph and Riley Curry

Now skip ahead two decades to the 2015 NBA Finals. The league’s newly crowned MVP, Steph Curry, was busy helping his team to its first title in 40 years, but in a postgame press conference, another new star emerged. Curry’s daughter Riley, two years old at the time, interrupted the humdrum postgame sports-speak, told her father to be quiet, and curiously wandered the press conference staging area. Yes, Chef Curry became the most popular player in the league that year — but that moment made clear that he’s also a doting, charmingly awkward father balancing parenthood with his newfound superstardom.

There are no vintage clips of MJ’s children comically taking over postgame pressers. In the entire 10-hour stretch of The Last Dance, only three of his children appear in a clip that lasts barely three minutes. His twins with his second wife, Yvette Prieto, are not shown at all. There’s zero mention of his first wife, Juanita Vanoy. While the NBA may be in a different place when it comes to fatherhood, MJ’s dad narrative remains locked off.

Jasmine M. Jordan (@MickiJae) | Twitter
Jasmine Jordan

Jasmine Jordan was two years old in 1993, when her father won his third NBA championship. She recently spoke to the Associated Press about being Michael Jordan’s daughter during the apex of his career. It revealed just how far MJ went to keep his career and his parenthood separate — so much so that his own daughter resorted to Googling facts about him. “I was like, ‘Why is everyone so intrigued by you? You’re just dad. You’re not that cool,’” she said. “But lo and behold, he was kind of a big deal. So, it’s definitely something that’s been eye-opening.”

Did we need to know about MJ’s family life to stay locked into his Black Jesus persona? The Jordan brand smashed through revenue goals like a true-to-the-era Terminator. There is a natural, commerce-based argument that the exponential growth that Nike and the NBA experienced from 1988 to 1993 superseded the impact of MJ and his then-wife Juanita starting a family.

In 1993, the NBA was skyrocketing out of its doldrums. Michael Jordan dunked on everything in sight as an über-Superman who didn’t need a cape to fly. Adding his children to his appeal could’ve crushed him down to earth. Yes, when staring at unprecedented capitalistic growth, absurdist tendencies can become governing logic.

LeBron James' Most Adorable Family Photos - Essence

A quarter-century later, the NBA is in a different place. The league, secure in its global popularity, lacks the urgent pressure of needing to earn every available dollar. Thus, for every fourth-quarter grimace at a referee’s blown call, there’s a postgame hug of a son or daughter. We’ve evolved past the need for players to be presented as cyborgs. They can now, quite literally, embrace their humanity.


By Marcus K. Dowling

Why Diamond Rings Cost So Much

Wedding, Wedding Ring, Wedding Rings, Love, Marriage

If you are a young, unmarried man reading this right now, there’s a good chance you’ll sink thousands into a diamond ring.

It’s total BS. Here is why.

In the late 1870s, the first major diamond mines were being excavated in South Africa.

The different owners of these mines suddenly had a self-created problem: they had too much of this stuff. Ton after ton of diamonds was flowing out of these holes in the ground.

This wasn’t pure luck, because diamonds aren’t actually rare. Scientists believe a quadrillion tons of diamonds are inside the Earth.

The mine owners realized they would end up in a price war with each other if they didn’t somehow stop it. So they merged together to form a diamond conglomerate called De Beers. But it was more like a cartel that controlled the world’s supply of diamonds.


In the early 1900s, De Beers’ strategy of scarcity was mostly paying off. Among wealthy patrons, diamonds sold well and were an effective way to flex wealth and status.

Source: American Gem Society

But at a macro level, diamonds didn’t sell anywhere close to the way they do today.

And they certainly weren’t popular at weddings.


How Diamonds Became a Woman’s Best Friend

The diamond business was crumbling in the 1930s. The world was on fire. The economic shockwave of the Great Depression had just rolled through the country. The second world war was heating up.

In turn, diamond sales, like most luxury goods, were hitting new lows. De Beers’ entire business model was in jeopardy if they didn’t do something drastic.

Advertising had become a much more powerful medium. Companies realized they could shape the minds of consumers far more than they’d previously realized. De Beers hired famed ad agency, N.W. Ayer.

This decision would revolutionize our society’s relationship with diamonds.

So how do you sell diamonds when the world is on fire? Simple. You pair diamonds up to powerful, aspirational emotions.

In 1938, weddings rarely involved diamonds. Even when they did involve jewelry, the agency’s research showed that most women preferred that their husbands spend money on something they could actually use.

N.W. Ayer hired a copywriter, Frances Gerety, who would write all the diamond commercials for decades to come. She’d been explicitly told that the number one goal was to create a situation where all couples in America felt obliged to get a diamond ring for their wedding.

She strategically bridged the idea of a diamond’s long life to the aspirational aspects of love. She released her first “a diamond is forever” campaign.

The original diamond is forever campaign. (Source: De Beers Group)

She then drove home the symbolism of the ring as a mark of a woman being spoken for.

This was particularly relevant because so many young men were deploying to war and were eager to secure a partner back at the home front.

One campaign showed images of fiancées waiting for their men to return.

“Of absence and fond hearts.” (Source: pic via Doc Player)

It included lines like, “For each man’s ring is a personal, masculine reassurance — that time, space, and circumstance — shall not change his devotion.”

These ads milked it hard. They used lots of power words like “forever”, “eternal like a diamond”, “absolute certainty”, and “promise.”

Source: vintage news

“Happily she dreams upon the promise she is given… she is engaged and on her finger, her engagement diamond tells the joys and hopes two hearts now share.”

N.W. Ayer found a weak spot in the hearts and minds of consumers and shot a cannonball through it.

This one is pretty easy to read (double-tap the image to zoom). Watch her work it. She knew exactly what she was doing.

Source: pic via Rubel Minasche

Their campaigns were remarkably effective. Diamond sales went up by double within two years. They then doubled again several times each year after that.

By 1951, 80% of brides in America received a diamond engagement ring. Twenty years prior, it was less than 20%.

Years later, still not satisfied with 80%, De Beers realized the appeal of diamond rings wasn’t generating revenue with lower income brackets. Those consumers saw the rings as outside of their reach.

De Beers expanded their cheaper selection and did a dirty, albeit brilliant marketing tactic:

Source: pic via Quartz

They set an arbitrary spend of two months’ salary for an engagement ring.

And even today, that line has sticking power, with many people saying three months’ salary. De Beers leveraged the male impulse to sacrifice resources as a show of force for their love.


Taking a Step Back

Diamonds have no intrinsic value.

Sure, there’s craftsmanship involved. But you can have that with anything.

A diamond’s value is completely driven by marketing. And we all bought into it. Your diamond loses a ton of value the moment after you buy it. If you are a man in America, there’s a 50% chance your diamond will lose all of its value (divorce).

But we should give credit where credit is due.

We’ll put aside the shady behind-the-scenes business of blood diamonds (which could be a separate essay). We’ll forget the cartel-like practices of De Beers.

At the end of the day, this mining company took a common mineral, gave it false scarcity, and hired a great copywriter to dress it up in heavy emotional language.

In turn, young people have diamond fever. De Beers literally wedged their product as a must in every wedding. Today, they make billions in annual revenue as a result.

You’ll have to look far and wide to find marketing campaigns that created so much value with a product that had none.

And as my parting advice, don’t spend too much money on your wedding ring. Maybe just upgrade it at the ten-year mark after you prove the two of you can live together.

BYE BYE INTEREST RATE

Prior to the ongoing Coronavirus pandemic, researchers from ANBOUND noticed that the global zero-interest as well as the negative-interest monetary environment was expanding in the face of global excess liquidity.

The spread of the Coronavirus has further accelerated the decline in global interest rates. The impact of the pandemic on both economic and financial markets has led the Federal Reserve to adopt ultra-loose interest rates policy with near zero interest rates. Furthermore, central banks have cut their benchmark interest rates in reaction to the Federal Reserve, whilst buying large amounts of government bonds and formulating a large-scale fiscal stimulus package.

A total of 146 countries have introduced interest rate cuts in 2020. Ultra-loose monetary policy, zero interest rate and negative interest rates has become the solution for many countries across the globe. Clearly, the ultra-loose monetary policy implemented by the Federal Reserve, did indeed help ease the crisis in the short term.  In fact, many supporters of ultra-loose monetary policy agrees that the policy is essentially a stop-gap, to reverse the downturn of the economic cycle through policy stimulus before inflation rises.

Distortion of financial market prices

However, if we look at the European Union and Japan’s negative interest rate policy process, we see that years of negative interest rates and QE did not increase inflation. Instead, it caused deflation, reduced growth, and making monetary easing difficult to exit.

In the wake of the 2008 financial crisis, the U.S. responded by raising interest rates in the short term in an attempt to normalize monetary policy. However, in the present day that same policy couldn’t be implemented due to several factors, one being that the capital market is more volatile than before and is prone to panicking. Furthermore, the pressure from President Trump has forced them to continue to abandon that effort. This means that financial markets are becoming more and more influential to central banks, making it difficult to escape the effects of excess capital.

As Anbang Consulting recently suggested, the Federal Reserve’s current ultra-loose money policy has shown negative consequences. This is highlighted in the weakening of the dollar and making it difficult for interest rates to accurately reflect real financial demand and supply, furthermore, it distorts the prices of financial markets.

In this sense, it is true that if global monetary easing continues, interest rates will face certain doom. Former Bank of Japan governor Toshihiko Fukui has said that”1% is the lowest effective interest rate. 1% is seen as the general criterion for the functioning of interest rates, with interest rates below 1% in half of the major countries, and the trend of “death of interest rates” spreads even further.  

The side effects of “killing” interest rates are great. It directly promotes the “debt monetization” of countries, making national policies more and more powerful for the market, the function of the free market itself is gradually being lost.  

In addition, the European Central Bank (ECB) and the Bank of England (BOE) hold about 30% of their national and regional government bonds, while the Bank of Japan’s holdings have reached 50% of the balance of government bond issuance after a long period of QE policy. The Federal Reserve is also following the Bank of Japan’s lead and are starting to buy corporate bonds, which will become the biggest player in financial markets in the future.

As this continues, the tendency of market participants adopting policy arbitrage will grow stronger and the role of financial markets will gradually be lost. At the same time, excessive liquidity has pushed up the price of risky assets, which is also the root cause of the ongoing bubble in the stock market. This means that the stock market and the high-risk bond market are more volatile.

For emerging economies with loose monetary policy, central banks are less credit worthy and risk capital outflows are greater, making them more prone to currency and financial market crises.

The global economy is in a state of fear.

Most worryingly, the “death of interest rates” which would mean low growth sustainability. The global increase in the number of zombie companies that survive under low yields environment has led to a sustained decline in investment efficiency, dragging the real economy into a low-growth, “Japanese” trend.