● Inside the Investments of Warren Buffett: Twenty Cases
By Yefei Lu
Summary via publisher (Columbia University Press)
Since the 1950s, Warren Buffett and his partners have backed some of the twentieth century’s most profitable, trendsetting companies. But how did they know they were making the right investments? What did Buffet and his partners look for in an up-and-coming company, and how can others replicate their approach? A gift to Buffett followers who have long sought a pattern to the investor’s success, Inside the Investments of Warren Buffett presents the most detailed analysis to date of Buffet’s long-term investment portfolio.
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Consumer spending in the US was flat in July, the Commerce Department reports. The surprisingly weak month may be payback for the strong gain in June, which surged 0.8% in today’s revised data. Meanwhile, the year-over-year trend in headline retail ticked lower. Putting it all together suggests that the appetite for consumption is still positive, but the growth rate is easing. Is that a concern? Maybe, although the recent revival in the pace of job creation implies that retail sales will continue to post steady if unspectacular growth.
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Reuters reports that emerging markets are in “melt up” mode as “cash returns to global markets.” The news outlet quotes Bank of America Merrill Lynch’s global strategy team, which advises in a note to clients that “sentiment (is) getting more bullish but not yet at an extreme.” Let’s take a closer look by way of proxy funds.
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Utility stocks remain the top performer among US sectors for the trailing one-year return window, based on a set of proxy ETFs, but the rally in this corner is starting to look a bit tired. For some analysts, the long-running bull market in utilities looks like a bubble. But for now, the sector’s upside momentum over the last 12 months remains second to none.
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Factor funds (aka smart beta funds) have been proliferating like rabbits in recent years, accompanied by marketing hype that can put political campaigns to shame. In some cases the strategies have merit, but playing fast and loose with the facts isn’t uncommon. In the worst cases, products look like thinly veiled excuses to charge relatively high fees with little or no advantages over a plain-vanilla index fund that targets a similar set of securities. How can you tell the difference? A deep dive with analysis is the only solution.
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In late-August 2015, the US stock market tumbled sharply, unleashing a year of heightened volatility that seemed to anticipate the worst for the economy. But the volatility turned out to be a false alarm and equities rebounded, reaching new all-time highs in recent weeks. Mr. Market’s warning, in short, was a dud. In fact, the S&P 500’s various swoons over the past year turned out to be buying opportunities. That’s obvious now, but uncertainty reigned supreme in real time, at least from a markets-only perspective. By contrast, it’s useful to point out that Mr. Market’s tantrums were never verified by real-time monitoring of US macro risk. The lesson: filtering market volatility through a macro prism is essential for separating the signal from the noise.
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Emerging-market stocks topped the performance ledger last week, based on a set of ETF proxies for the major asset classes. The gain (in unhedged US dollar terms) marks the sixth straight weekly advance for this slice of the world’s equity markets.
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● Future: Economic Peril or Prosperity?
Edited by Christopher J. Coyne, et al.
Summary via publisher (Independent Institute)
What will the economy look like in fifty years? How will our lives as consumers and workers be transformed by the coming innovations in technology, the marketplace, and the workplace? How will changes in demographics and dependency affect our political system? Will economic freedom rise or fall? What, if anything, would greater prosperity do for one’s total well-being? Future: Economic Peril or Prosperity? poses these and related questions to a diverse group of economists whose predictions will inspire thoughtful consideration and debate. As co-editor Robert M. Whaples writes in the introductory chapter, “The predicted changes range from innocent innovations that will make life a bit more comfortable…to potentially chilling technologies that might strip our human dignity.”
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US employment growth is looking resilient after all. Companies added 217,000 jobs in July, the Labor Department reports. Although that’s down from June’s 259,000 gain, it’s clear that the economy is still minting new positions at a healthy pace. As a result, the surprisingly dark profile in May, when private sector employment contracted by 1,000, looks like noise.
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The US stock market has reached new highs recently and closed yesterday (Aug. 4) only slightly below a record. In fact, the S&P 500 has been closing at or just below a record high for weeks as the index wiggles within a tight range. From a technical perspective, the latest run of strength look bullish. But what should we make of Mr. Market’s reluctance to do much of anything since the S&P has recovered from a series of sharp selloffs? Is this merely a consolidating phase that leads to even greater heights? Or is the crowd starting to wonder if the rally off the recent lows in February was mostly a speculative binge without fundamental support?
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