July’s Ford truck sales: best in 9 years!

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Another sign that there is nothing to worry about the US economy — Yet.

Pickup trucks are generally used by small businesses and contractors, so the strengths or weaknesses in pickup truck sales can indicate the condition of the economy. The most important thing is to notice that it is increasing, abide more slowly.

Source: Bespoke Premium

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Is gold an investment?

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It has been awhile since I have written a post. But I am back now.

For those who follow the financial market through the Greek turmoil, it is hard to escape the fact that the gold price has plunged to a five year low. It is now trading at USD 1100 an ounce, a 42% drop since the 2011 high of USD 1900.30 an ounce.

I am not going to join the goldbug bashing train on this post, but I want to address some thoughts gold as an investment option. It is a normal occurrence during a drinking session at a local pub that someone would mention gold as a good investment. Here is what I am currently thinking of it. I hope that people would correct me if I am wrong.

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On fairness

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As I was writing this post, the Greeks are deciding on their future in the Eurozone whether or not they will stay with the Euro. There is a good post that summaries the key aspects on this decision and its potential effects. I really recommend reading it.

Lately I have been reading Richard Thaler’s Misbehaving. It is essentially Thaler’s academic autobiography that combines his personal journey as a researcher in the early days of behavioural economics with insights gained from that field.

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Link: Should money earn interest?

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,

I came across today two interesting articles that ask a similar question.

Should the money itself generate any return?

I don’t claim to understand the explanation given in this article, but I think it is worth reading. In the nutshell, it comes down to this assumption in economics: investors should be rewarded monetarily for taking financial risk. And

“money”, of course, is short duration or zero duration financial assets and always bears some level of risk (credit risk, reinvestment risk, inflation risk, etc).

Money may be modelled as a long-term government zero coupon bond with no reinvestment risk and no default risk. In reality, there is always default risk. Just think of Grexit saga or the US debt ceiling crisis in 2011.

  

Is a housing bubble being formed in Australia?

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A couple of weeks ago, our treasurer Joe Hockey stirred the pot by advising Australians wanting to buy their first home to “get a good job that pays good money”. Technically, he is right. It is increasingly harder today for average Australian households to buy their residential home than 30 years ago. So, What are the impacts? What may potentially be the driving forces in pushing the prices today? And finally, what are the implications?

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Asking WHY…

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I have mentioned that Motivation 3.0 can be categorised by autonomy, mastery and purpose. In the last one, I will discuss the third tripod: purpose.

There is no better place to start than with Simon Sinek’s remark:

“All organizations start with WHY, but only the great ones keep their WHY clear year after year. Those who forget WHY they were founded show up to the race every day to outdo someone else instead of to outdo themselves. The pursuit, for those who lose sight of WHY they are running the race, is for the medal or to beat someone else.”

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Link: The Original Value Factor: Price-to-Book

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Interesting read on using price-to-book ratio to identify value investments. Patrick O’Shaughnessy remarked that “if everyone tilts towards value, value stocks will stop being value!”

We should be equally excited and worried that factor investing—which I’ll define as buying a basket of stocks based on proven metrics like value and momentum, rather than buying them because of fundamental research—has become the rage. Excited because it has—historically—been a superior way to invest. But worried because as Yogi Berra said of some restaurant’s popularity, “nobody goes there anymore, it’s too crowded.

Thara – What strike me as interesting is that  the proportion of assets that are intangible started to increase significantly around 1999-2002 at the height of Dot-com bubble and the crash that followed.

Source: Investor’s Field Guide

UPDATE: the second post that on investing using price-to-book ratio. Some important points:

It has worked quite nicely in small-cap

It has not worked as well in large-cap stocks

Price-to-book delivers the best returns when it is used to compare each stock against all others, but requires taking large sector bets

Price-to-tangible book may be a slight improvement over regular price-to-book, but not by much

The very cheapest stocks (those with the lowest price-to-book ratios) have performed poorly

Price-to-book should not be used in isolation

Getting more of what we don’t want

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In this blog, we talk about a lot of about incentives and how with right incentives we can nudge people to do more of things we value and less of things we don’t need. It is often assumed amongst ourselves that if you want people to be more productive, you incentivise through promises of bonuses or increase in salary or promotion. But is this what psychologists have learnt over the last half of century?

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