Tech M&A

 Five months into 2022, the Nasdaq-100 index is down over 25%. Tech stocks have been hit the hardest, which should lead to mergers and acquisitions by big tech. Elon Musk may take Twitter private and the CEO of FTX bought a big chunk of HOOD.

Three types of financial opportunities

 J. David Stein divides financial opportunities into three categories based on the likelihood of the financial outcome: investing, speculating, gambling. Investing has a high likelihood of a positive return, speculating has a very uncertain return, and gambling has a high likelihood of negative return. Another common aspect distinguishing investment and speculation is that an investment often yields a positive cash flow and a speculation does not.

Link: Money for the Rest of Us

Benjamin Graham in The Intelligent Investor describes an investment as having a reasonable return over a long period of time, while a speculation is a hope for a large return over a short period of time.

Carl Icahn: The restless billionaire

 HBO is showing a two hour documentary on Carl Icahn and his history as an activist investor. It chronicles his take over of TWA and subsequent failure along with his many successes. It’s a fascinating tale of his investing career including getting into tech stocks like Netflix and Apple.

Link: Documentary

Ark Invest 2022

 Ark Invest just announced their big ideas for investing in disruptive technologies. Link It’s interesting to see they deemphasized cloud technology to focus on AI and Robotics. Robotics has the highest estimated CAGR of their picks with 51% and AI the lowest at 26%. Although AI seems to have the largest estimated market at $108T in 2030.

10K vs 10Q

 Public US companies each quarter produce a 10Q quarterly report with unaudited financial statements, and they yearly produce a 10K annual report with audited financial statements. These reports contain the summary of the company’s revenues, costs, profits, equity, debt, and cash flows.

Jack Bogle Investing Rules

Barry Ritholz presents this philosophy from Jack Bogle

https://ritholtz.com/2022/01/jack-bogles-rules-for-investing/

 Investing Versus Speculation

1. Remember Reversion to the Mean
2. Time Is Your Friend, Impulse Is Your Enemy
3. Buy Right and Hold Tight
4. Have Realistic Expectations: The Bagel and the Doughnut
5. Forget the Needle, Buy the Haystack
6. Minimize the Croupier’s Take
7. There’s No Escaping Risk
8. Beware of Fighting the Last War
9. The Hedgehog Bests the Fox
10. Stay the Course

These translate to

Bogle’s Rules
1. Select low-cost funds
2. Consider carefully the added costs of advice
3. Do not overrate past fund performance
4. Use past performance to determine consistency and risk
5. Beware of stars (as in, star mutual fund managers)
6. Beware of asset size
7. Don’t own too many funds
8. Buy your fund portfolio – and hold it

Details here

http://johncbogle.com/wordpress/wp-content/uploads/2013/05/c09.pdf

Callan Periodic Table

 The Callan Periodic Table of investment returns ranks the returns of different stock investment sectors for each year going back 20 years. It’s interesting to see how different sectors outperform and underperform in different years and over the last 20 years. Callan ranks 9 different sectors including stocks, bonds, real estate, and cash equivalents.

Link: https://www.callan.com/periodic-table/