The Philosophical Investor's Blog

D(ata)-Day

Data D(ata)

I have been turning to charts more regularly for my weekly blog posts than I have in the past. Like most people, I see many of the challenges and price pressures resulting from the massively disrupted global supply chain. It shows up in terribly unreliable contractors (I’m having a pool built so I am experiencing this first hand) and the significant increase in the cost of materials that are leading to the rationing of some goods like plywood and even chlorine.

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A Deeper Dive into Housing

Deep dive into housing

Last week I discussed the possibility that housing could be the canary in the coal mine with regard to an important area of the economy starting to be impacted by higher prices. I wanted to go more in-depth with many more housing-related charts and then end with one non-housing chart that I think trumps everything else in terms of why I think the Fed will remain on hold in terms of raising rates.

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Transitioning to Transitory Inflation?

Transitory Inflation

The multi-trillion dollar question is whether inflation is transitory. The Fed and other central bankers believe it is as this chart depicts.

Fed Still Declaring Transitory Inflation Z-Scored Rolling 1-year Average 2000 - 2020

As I’ve written about before, the Fed’s reaction function has switched from a forecasting-based approach to one that is now outcomes-focused in terms of needing to see tangible improvements occurring on Main Street even if it leads to speculation and large rewards on Wall Street.

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Choose One's Models Carefully

Chinese Labor

Japan has been my model for why I think interest rates will stay low. Its rapidly aging society has led to a shrinking pool of labor over the last two decades which has led to less consumption and more savings. In addition, public spending has increased significantly to help keep the economy growing in the face of strong demographic headwinds.

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Inflation - Temporary Peak or Just Starting?

inflation

Inflation is clearly one of the hottest topics for investors in particular and society more generally as the following chart shows. Core inflation has not moved commensurately with the exploding interest in the topic.

Inflation is going to be the HOTTEST topic of Q2 and Q3

The following charts show why inflation is such a hot topic.

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Get A Grip

get a grip Gary Tennis

33 days after my heart surgery I resumed playing tennis. Of course, it was not at the same level or intensity as it was prior to my surgery but it was great to get back on the court nonetheless.

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Basketball Masters and The Infinite Game

Basketball

I’ve written many times over the years regarding my interest in the subject of mastery. I have great admiration for people who go deep into their craft and come to know it so well that they continuously find an edge to enable them to be successful over the long term and be able to persevere through the inevitable adversities that life throws our way.

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Lumbering in Pain

Lumber

Although CWS is largely an owner/operator of apartment communities, we have been developing new communities for over 25 years. Approximately 15% of our portfolio consists of properties we have developed. Given the large amount of capital looking to own apartments and the compression in cap rates,

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A Muddled Approach to Guesstimating Libor's Next Peak

LIBOR Guesstimating Libor's Next Peak

Although I’m in the camp that the Fed will stick to its word and not raise short-term interest rates until after 2023 at the earliest, the market is betting differently. Rather than focusing on when the Fed will start raising rates, let’s assume that they will.

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Sayonara Bonds

Japanese Bond Treasuries

The first quarter was incredibly ugly for bond investors, particularly those with exposure to longer-maturity ones. Bond investors were not happy as Treasuries generated the worst quarterly return since 1980.

A Bad Quarter for Bonds - Bloomberg Barclays treasury index fell 4% 1973 - 2020

So who were the big sellers of Treasuries?

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