Wednesday Reading List

If you don’t have any advantage in assessing value; if you don’t have any advantage in telling whether things are much better than people think; and if you’re not particularly good at imagining what the growth will be over three to five years, a passive fund is right for you.

Joel Tillinghast via CNBC

ICYMI: Rising Interest Rates – “The notion that investors directly determine their stock market exposure using the 10-Year Treasury yield can be overblown.”
Why rates are going up and what to do about it.

Roth IRA for Child by Heritage Financial

With summer coming to an end, many kids are wrapping up their summer jobs and preparing for a new school year. It’s the perfect time to reflect on their summer paycheck and encourage kids and grandkids to kick-start their savings

Structured Notes Are Financial Fairy Tales by Alpha Architect

While the title says it all, it’s a must-read if you own one or have been pitched one.  “These are products meant to be sold …never bought (investors earn large negative risk-adjusted returns). Why, then, are they popular? For the same reasons many financial products are popular—they either carry large commissions for the sellers or so greatly favor the issuers that they push the products on unsophisticated investors who cannot fathom the complexity (but are assured by the salespeople and the advertising that these are good and often safe products).”  

Chart of the Week

Chart of S&P 500 Total Return: % of TIme Returns Have Been Positive Over Various Timeframes (Since 1928)
Source: Bespoke Investment Group

Immigration Is Playing a Larger Role of Filling Gaps in the US Labor Force by Investopedia

Businesses have a lot of empty roles to fill. As of June, there were 3.6 million more job openings than there were unemployed workers to fill them, according to data from the Bureau of Labor Statistics. Immigration has helped fill that gap recently and could narrow it further in the coming months. 

19 charts that caught my eye 👀 by TKer

A quick look at 19 charts that tell a good story about the economy and markets.

Why Are Mortgage Rates So High? by Ben Carlson

I don’t know if Ben is right about why rates are so high, but his data showing that it isn’t because of what the 10-Year Treasury’s yield is right now, but instead that the spread over that yield is historically high makes sense as does his view that the Fed no longer buying mortgage-backed securities hurts.

This Fidelity manager has crushed the S&P 500 since 1989—here’s his advice for investors by CNBC

To invest like me, take a long view. Think about what earnings will be in five years. Take a while to consider your possibilities. If you’ve got a truly fantastic long-term story that is truly undervalued, make it bigger — not necessarily 20% of your portfolio, but it’s good to make it important if you think it’s big. It would probably have a lower [price-to-earnings ratio] than the market, high free cash flow yields [a measure of a company’s free cash versus its market value], and it would probably have growth, because the company was doing something special that clients really liked.

Easy to Miss by Humble Dollar

Qualified Charitable Distributions from an IRA are a valuable tax-savings tool you should understand.

The Exact Age When You Make Your Best Financial Decisions by The Wall Street Journal

There’s a magic number for when your expertise and cognitive powers align.

China: Contagion or Contained? by Charles Schwab Asset Management

China’s economy may have spillover effects on global economic and earnings growth, but it’s unlikely to lead to global financial contagion and send stock markets materially lower.

Markets Brief: Value Stocks Have Suffered In 2023 but Are Showing Signs of Recovery by Morningstar

These stocks have led the latest gains for the value side of the market.

Podcast Recommendation

Will Thorndike is the co-founder of Housatonic Partners and host of the 50X podcast. In this episode, they discuss Will’s masterpiece “The Outsiders” and the lessons he brings from writing it. The book covers eight CEOs who excelled at capital allocation and describes the strategies underlying their success. “The Outsiders” was published ten years ago, and recommended by Warren Buffett in his 2012 annual shareholder letter.

Book Recommendation

West by West by Jerry West

The honest and powerful autobiography from basketball legend Jerry West is a must-read for fans of the game.