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Market Talk, December 12th 2021

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Market Talk, December 12th 2021

Edition #36

Conor Mac
Dec 12, 2021
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Market Talk, December 12th 2021

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Market Talk

Market Talk is a free Sunday issue, where I share a curation of the best things I have consumed during the week.

Each Sunday I will share:

• A Quick update on what’s coming for IT Subscribers

• The greatest articles I have read during the week

• The best pieces of company-related insights I have consumed over the week

• One stellar podcast or interview


For Subscribers

After sending out Part 1 (Etsy, PayPal, Square) of my earnings recap (where I look to provide more concise thoughts on the six companies I am yet to comment on), I will release Part 2 (IAC, Alphabet, Sea Limited) next week. Following that, I will issue a full report on Lululemon. Otherwise, I am still working on the upcoming Company Spotlight issue for December.

Give a gift subscription

Seeing as it’s Christmas if you know of anyone who may be interested in my writings or supporting Investment Talk, the option to gift a subscription is now available on Substack :)


📈 Market Action 📉

Here are your quick updates from the past week for various asset classes.

Global Equities

Source: (FinViz)

The S&P 500

Source: (FinViz)

Sectoral ETFs for the US

Source: (SPDRIndustryETFs)


🌎 Global Indices 🌎

The Americas

Source: (Koyfin)

Europe & UK

Source: (Koyfin)

Asia

Source: (Koyfin)


🔇 US Market Sentiment 🔇

Fear & Greed Index

The CNN Greed and Fear Index measures market sentiment based on seven factors; momentum, price strength, price breadth, put/call ratios, junk bond demand, volatility, and safe-haven demand.

The current reading stands at 38 up from 20 last week.

Source: (CNN)

Volatility

The CBOE VIX closed at 18.70, down from 30.75 the week before.


Major Earnings for the Coming Week

Some of the major earnings for the upcoming week, compiled by Fincredible.

Source: (Fincredible)

Upcoming IPOs

Source: (Nasdaq)


Articles of the Week

Here is a shortlist of a few interesting pieces that I have read over the course of the week, to feed your mind.

Note, these articles are not numerically listed in order of perceived value.

To access the suggested article, click the purple link after the source subheading.

1) The Many Worlds of Enough

Length: Dense Read

Source: (More to That)

Lawrence Yeo is one of those authors with a gift for storytelling. In this piece, he discusses the internal motivation to aim towards generating what we see as “enough” wealth to become content and the pitfalls that come with that. “That greed resets any goals you once had, and short of becoming a monk, you are destined to shift that goal by a few more commas.”

I struggled to put into words how great this piece is for fear of doing it an injustice. I suggest you just read it and soak in the lesson.

“That final word is often viewed as the antidote to any strain of desire. That if you could stop moving the goalpost, you’ll be able to disregard the pull of greed, longing, or any variant of these feelings. To a large extent, this is true. By defining what enough means, you’re giving yourself a concrete barometer to judge your desires by, and whether or not they are worth having. It’s the best way to tell your future self, “Hey, don’t forget where you come from.”

The problem, however, is that this future self is a projection of your present-day desires. When you’re defining what enough means, you’re effectively saying, “Given what I want today, I just need this much more of it to be satisfied in the future.” But how plausible is it that what you want today will remain unchanged as you march onward to your goal?

Oftentimes, we envision our progress toward Enough as a continuous journey between where we are now, and where we want to be. Enough is elusive because when you reach it, you’re no longer the person that once desired it. Once you occupy an entirely new world, that prior version of yourself is largely inaccessible.”

2) Nintendo Comes to a Fork in the Road

Length: Moderate Read

Source: (Ensemble Capital)

Granted I usually save company-related publications for the ‘Other’ segment, but this piece on Nintendo by Ensemble Capital was thoughtful enough to include here. The cyclical nature of Nintendo (lead by the rise and maturity of their generations of hardware) is an interesting phenomenon. As they approach the maturity of their latest flagship product, the Nintendo Switch, unit sales of the hardware are projected to decline YoY across the next 5-years. History has shown the share price correlates with this decline.

However, the team at Ensemble are bold enough to utter the four most dangerous words in the stock market; “this time is different”. Arguing that the “table is set for Nintendo to enter a new phase that would benefit all stakeholders”. A fascinating read, indeed.

“There’s no question that, with Switch in its sixth year, we’ve reached a fork in the road. Either Nintendo goes back to the “same old” Nintendo or it executes on a new strategy that smooths out console cycles and generates higher-margin revenue through higher digital software sales and subscriptions.

To us, all indications point to Nintendo management recognizing that this time is different. The table is set for Nintendo to enter a new phase that would benefit all stakeholders. Management only needs to, borrowing the phrase from Yogi Berra, take the fork in the road. We believe they’re taking steps in that direction.”

3) Volatility Takes a Bite

Length: Light Read

Source: (Woodlock House Capital)

Chris Mayer’s investing style may not be for everyone (author of 100-baggers) but I find his writings on the mental side of holding LT to be insightful. I personally don’t seek 100-baggers (a 2 or 5 bagger would suffice) but I do align with the idea that LT ownership of a business will endure periods of relative ‘cheapness’, ‘fairly priced’ and ‘exorbitant’ market valuations. Holding throughout each of those periods is hard graft.

In this piece, Mayer shares his thoughts on avoiding the daily blow-by-blow on share prices.

“Those prices flashing before your eyes cry out for action. Feeding that into your brain every day (or worse, multiples times a day) invariably compresses timeframes and makes every day seem important. Then before you know it, you are one of those people who go around with explanations for why such-and-such stock was up (or down) that day. Seems a recipe for madness. (As Gandalf said in Lord of the Rings: "Tell me, friend, when did Saruman The Wise abandon reason for madness?" I don’t know if this quote really applies here, but I felt like sticking it in).

I prefer to cultivate a general awareness of where prices are. But I couldn’t help myself after we closed the books on the month of November because it was an interesting and unusual month. Also because, frankly, it meted out some unusual pain.”

4) Trading Engineered: How to Read Stock Charts

Length: Moderate Read

Source: (Trading Engineered)

This is less of a “this article was great” and more of a “Richard Moglen does great work” type of entry into Market Talk. Whilst this particular issue was great for those looking to learn how to understand TA, I wanted to quickly highlight Richard’s newsletter today.

In my own writing, I am not a frequenter of the TA school of thought. But I realise that some of my readers either; (1) use technical analysis or (2) would like to learn how to. As such, I would recommend checking out Richard’s substack, Trading Engineered. Richard is one of the hardest working young investors I know and is a pupil of the CANSLIM method. (I interviewed him a while back, so check that out for more context).

The reason I write Market Talk is to highlight interesting research or investors for readers so that they can discover and learn. Richard’s work has an education-bent, so would be great for newcomers, or those looking to sharpen their TA skills.


Other Items I Read This Week

Note: ($) indicates there is a paywall on this content.

• The Reformed Broker: The Volatility is the Point

• Doomberg: How to Brick an Entire Economy

• Stephen Diehl: Web3 is Bullshit

• The Verge: Discord’s new Premium Memberships let creators monetize servers

🕵️ Company Insight 🕵️

• Enlightened Capital (FRC): A rare bank compounder

• Invest Karo India (HEROMOTOCO): The Business of Hero Moto Corp

• Financial Times (SBUX): Starbucks workers approve first US union at Buffalo store

• Tech Crunch (MTCH): Tinder partners with Spotify to launch ‘Music Mode’ feature

• The Verge (MVRS): Meta opens up access to its VR social platform Horizon Worlds

• The Verge (MVRS): WhatsApp launches cryptocurrency payments pilot in the US

• Ensemble Capital (NTDOY): Nintendo Comes to a Fork in the Road

• Stretechery (AMZN): The Amazon Empire Strikes Back

• Compounding Curiosity (SE): Punch Card Investor, Sea Ltd Deep Dive

• Tech Crunch (TWTR): Twitter acquires Quill


Podcast of the Week

There is a huge range of Podcasts to listen to, and the choice can feel quite saturated at times. Here, I will share one podcast I listened to during the week, that I feel is worth your time.

Michael Mauboussin Master Class

Acquired Podcast

In this episode of Acquired hosts Ben and David sit down with Michael Mauboussin to discuss skill and luck, moats and how they are measured, VC, decision making, expectations investing, and how to parse valuations in the current market environment. The title does is justice, it is a masterclass for all listeners.

Host: Ben Gilbert and David Rosenthal

Guest: Michael Mauboussin


Thank you for reading Market Talk and have a great week,

New to the newsletter? Sign up here.

Want to learn more? Browse the about page.

Conor,

Author of Investment Talk


You can reach out to me here:

Twitter: @Investmenttalkk/@TheITNewsletter

Commonstock: Investment Talk

Pinterest: @InvestmentTalkkk

Email: Investmenttalkk@gmail.com


Disclaimer

These are opinions only of the individual author. The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company. All content is purely subjective and you should do your own due diligence.
Occasio Capital Ltd makes no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece. Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice. Any projections contained in the Information are based on a number of assumptions as to market conditions and there can be no guarantee that any projected outcomes will be achieved. Occasio Capital Ltd does not accept any liability for any direct, consequential or other loss arising from reliance on the contents of this presentation. Occasio Capital Ltd is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.
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Market Talk, December 12th 2021

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Market Talk, December 12th 2021

www.investmenttalk.co
Terry Cheng
Writes 美股老司機
Dec 12, 2021Liked by Conor Mac

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