I’ve got a week-long stay-cation coming up and I am really excited about it. Sometimes it’s necessary to unplug and just hit the reset button. I plan to spend a lot of time at the coffee shop reading, writing, and having some conversations. There is plenty of housework to catch up on as well.
Most of all I am thrilled to be able to spend more time with the wife and kids. That being said, I am sure I will be almost as excited to get back to the office the following Monday. After all – everything in moderation.
I hope you get some free time to read this weekend. If you’re free next week in the Rockford area and want to talk investing, books, or genealogy for that matter give me a shout.
Here are some of the interesting things I read this past week.
First up is just a fun poll from Tadas Viskanta (@abnormalreturns). The question is about factors and for the uninitiated, a ‘factor’ is a characteristic of a stock that you can easily measure which can be used to determine likelihood of outperformance. For instance, the most famous factor is value. Value is determined by stocks which have low prices compared to the earnings they generate (low P/E ratios). This is a fun thought experiment about what you would do if you found a new factor? A lot of great people chime in with their take as to how would be best to cash-in on the discovery. Finance Blogger Wisdom: an Undiscovered Factor
For the record, I would write a book, trademark an index, and license it out to a fund manager. After some heavy marketing, good initial results, and a book tour, I would short it. Haha.
This article out of the Wall Street Journal is an excellent gauge of your financial literacy. If you don’t score well, it may be an indication you need to study up. – How Financially Literate Are You Really? Let’s Find Out
The next two links are stolen from the CFA Institute’s online magazine, Enterprising Investor (@Enterprising) and Lauren Foster’s (@laurenfosternyc) Weekend Reads. They do a much better job of getting their list out before the actual weekend starts! Good news for me, so I can add some to my weekly link list. If you are into investing and not already subscribed to receive updates from Enterprising Investor, I highly recommend you do so. If you have a CFA charter and you are not subscribed, shame on you.
This one is for anyone who loves the English language and looking for some throw-back words and phrases to bring back to life – 8 Words and Phrases we Should Use Again
And this link, from the NY Times, had to get posted because Norway is on the top of my list for travel goals. – In Norway, the Journey is the Destination
And then, while snooping around the NY Times site, I found this article on attempts to reforest Iceland. Fascinating stuff. Iceland is also in the top 5 in travel goals. – Vikings Razed the Forests. Can Iceland Regrow
This week marked the 30th anniversary of the worst crash in market history. The S&P 500 dropped by 20% in a single day. Just to reiterate how major that was, the average daily move in the market is around 0.03% with a standard deviation of 0.98%. That translates to black Monday being a 20-standard deviation event! That means if returns were random you could expect the market to be down about 1% only 15% of the time, down 2% just 2.5% of the time, and down 3% a mere 0.25% of the time. So down 20% would have the same statistical probability as you winning the mega-millions lottery 20 times in a row.
Now we all know that markets are not random normally distributed creatures, however, it is still shocking to see the scale. This article from Fortune gives Robert Shiller’s take on whether or not it could happen again. – Black Monday 1987
And of course, no recap would be complete without hearing from everyone’s favorite floor trader, Art Cashin. – Market Legend, Art Cashin, Remembers Black Monday 30 Years Later
Finally, watch this commercial from Burger King. Burger King, home of the worst mascot/spokesperson in history with that creepy King character, put together a moving commercial that teaches a power lesson about bullying.
This write-up in Ad-Week tells the story.
On that note, let’s all enjoy the weekend. Be good to one another, look out for one another, and let me know what you think.
Further Reading: Personal Finance 101