Alchanati Campbell & Associates
Familiarity is a feeling of comfort. Your hometown, the local grocery store, the schoolyard you grew up playing in, the subtle voices of your loved ones. Familiarity keeps our knowing in check. It balances our emotions and reassures our thoughts that there is no reason to worry. But it exacerbates the trueness of reality and culture, and it diminishes the excitement of exploration and adventure. Familiarity is an HQ for temporary rest and recuperation. It grants us the pleasures of belonging, love, and clarity. But, it prevents us from finding a new path or a lost love or a better motivation or an inspiration to further enhance our reasons to live... Inspiration has two faces: the first is a product of action, when you actually sit down to produce something; the second, the one that fuels the first, born out of a will to freedom and exploration in a nonlinear way. Life is not suppose to be lived inside of a bubble or in between four walls that constitute a residential dwelling. It’s better not to lead a life that’s too comfortable in one go. You’ll treasure more if you gain things step-by-step.
The Market. “The current environment is the market is asleep at all-time-highs,”(Dave Roberts, an independent trader). Short interest is a statistically and economically significant predictor of future market excess returns (the lower the value, the better the expectations). The unemployment rate is also a good indicator to predict an upcoming recession (the unemployment rate is currently 3.7%, the lowest value since 1969). Boris Johnson was elected the leader of Britain’s governing Conservative Party. Positive earning results, anticipation of lower interest rates, and trade talks between US and China resuming drove the market up. People make decisions all the time; some are risky, and others are riskless. Risky choices are made without advance knowledge of their consequences. Riskless decisions is a transaction for a good or service in exchange for money or labor. Hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns (hedge fund managers motivated by sensation seeking).
Computerization versus the job’s market. About 47% of total US employment is at risk. Wages and educational attainment show a strong negative relationship with the probability of a job becoming computerized. Computerization has greatly impacted employment in routine intensive occupations (jobs that consist of tasks following well-defined procedures that can be performed by an algorithm). Algorithms for big data are now rapidly entering domains and can substitute for labor in a wide range of tasks. Service occupations are less susceptible to computerization because they require a higher degree of flexibility and physical adaptability. “Unless all individuals accept the verdict of the market outcome, the decision whether to adopt an innovation is likely to be resisted by losers through non-market mechanism and political activism, “(Mokyr, 1998). The price decline in the cost of computing has created economic incentives for employers to substitute human labor for computers. The most probable jobs that will be affected or that are currently affected by computerization are: transportation and material moving, production, office and administrative support, farming, fishing, forestry, and sales. The key: acquire creative and social skills so you can’t be replaced.
The goodness of spending money on others. The more money people spent on others, the lower their blood pressure was 2 years later. Spending money on others shapes cardiovascular health, proving that prosocial behavior improves health. With heart disease being the leading cause of death worldwide, the happiness benefits of spending on others will lower your blood pressure and decrease your chances of dying from heart disease. Spending money on others causes neurohormones to release that directly affects blood pressure. Furthermore, volunteering leads to the greatest benefits for at-risk groups. Spending time helping others may have potent effects on the health of at-risk older adults.
EBITDA over net income. Why do some investors like EBITDA over net income? EBITDA is the earnings before interest, taxes, depreciation, and amortization. It is calculated by adding operating income, depreciation, and amortization together. EBITDA is a much stronger indicator of ongoing, operational strength for a firm. Taxes, interest expense, depreciation, and amortization have no bearing on the ongoing operational strength of a firm.
Improving consumer well-being. Much of consumer research assumes that the primary motivation in consumer choice is the pursuit of happiness. Meaning-oriented consumption is consumption motivated by a desire for self-growth, social connectedness, and the pursuit of personal fulfillment. Pleasure-oriented consumption is motivated by a desire to maximize positive affect and minimize negative affect requiring more affective evaluations. Individuals who spend money on time-saving services report greater life satisfaction. Time and money are interchangeable in today’s economy, and people are able to spend money to buy “free time”. One way to prolong happiness is through meaning. More meaningful memories show less happiness decay, making individuals happier for longer. Benefits of meaningful experiences would last longer than the benefits of pleasurable experiences. Taking a vacation has a significant positive effect on meaning at work.
Active versus passive. There are 2 types of equity investors, those who plan on holding for the long term, and those who actively trade. In the next 10 years, I believe one of these types of investors will be almost completely phased out through the advancements of AI in conjunction with HFT (high-frequency trading). Active traders currently speculate on mispriced equities and use technical analysis to find potential opportunities to earn a profit. With the rise of AI and current developments in HFT, we are going to start seeing a more efficient market, which makes it harder to earn profit from an active management strategy, when accounting for excess time spent on trading and fees. Even in the current market, many important figures in the investing community believe a passive strategy beats actively managed portfolios.
Don’t agree? Warren Buffet just won $2.2 million betting on passive versus active on a 10-year basis.
The Alchanati Campbell and Associates Team
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