What's up Me? I Really Wish I Knew You Better

Dear Climber,

What defines a bad day? Waking up late and missing class? Eating candy when you’re on a strict no-sugar diet? Breaking the cork on a scotch bottle and having the other half fall in? Scratching your car on an aluminum signpost when backing into a parking spot? Or, is it going through a whole day without eating because you have no food or hiding in a bomb shelter at night because you live in a terrorist-occupied territory or begging on the side of the road asking anybody for anything? I used to think I wanted the whole world, or nothing. I used to think I had it bad and that my life was tough. I used to think that my stresses were unbearable and nobody felt what I feel. But, the only thing I know now is that what I used to think was ignorant, immature, silly, stupid. At the end of the day, it comes down to empathy. It’s about putting yourself in somebody else’s shoes before seeking to establish any sort of alignment. It’s about being realistic and having a diverse awareness. Don’t tell me you’re stressed out, I’ll just laugh at you.

The Market. The S&P 500 ended its fourth consecutive week of gains at the close today. Some are concerned that the market is becoming overbought and is due for a consolidation. The Federal Reserve is focusing on “patience”. Existing Home Sales dipped below 5 million- coming in at 4.94 million in January- not having low numbers like this since 2015. Emerging markets, developed markets, and US markets all have seen gains since the start of the year- recovering from the mid-December correction.

“More of the same and punish those who still believe in an efficient market.” The strategy is buying the most hated/shorted names while shorting the names that have the highest hedge fund and institutional ownership. This investment strategy has continued to be consistently profitable and has consistently generated alpha. The most hated stocks are Mattel, Under Armour, Nordstrom, Microchip Technology, Discovery and the least shorted names are Johnson & Johnson, Medtronic, JPMorgan, UnitedHealth Group, Exxon Mobil and Microsoft.

The financial industry. Jack Bogle led the campaign for a better, fairer, more consumer-focused investing industry. Now that he’s gone, Tom Coutts is a candidate to take his place. Tom believes that the investment industry may be experiencing a peak. The financial industry “creates little of value, but it is a facilitator for the economy”.  He believes that most firms have an inwardly focus on their own interests and that the industry should evolve to a model based on low fees (enough to cover costs) and a capped performance fee. Many people think that the finance industry serves no purpose with their selfish acts. That banks only care about the money going into their pockets instead of the money going into their client’s pockets. Banks, pension funds, private equity, and asset managers do more than you think. They help raise capital for start-ups that bring innovative technology into the market, they help individuals meet their goals and retire well, they help families finance homes, they help small businesses get loans, and they contribute to GDP, productivity and the growth of the economy.

Reasoning logic down to its roots. What drives us? What formulates our thoughts? What makes us do what we do? It starts with nurture. How our parents raised us, taught us, punished us, rewarded us, loved us… Then nature. How community-based your family is, how close your family is, where you live, who you hang out with, where you went to school, religious beliefs, economic-political standing… Then when you leave the nest and go out into the world, it ends with individual growth and understanding, and your contribution to the world when you no longer exist. Who you make yourself out to be, the core rules and principles that you live by, the experiences and mistakes that you learn from, the relationship you have with yourself and with others, the restrictions and disciplines you impose on yourself… We now live in a world where we’ve connected to everything except ourselves. We read up on others, obsess over the latest gossip and keep up with the hourly following. We lost our courage and increased our insecurity. The secret? You will become way less concerned with what other people think if you when you realize how seldom they do. Everybody else is too worried about themselves to really care what you do.

What drives portfolio performance? Does asset allocation or market timing and security selection drive portfolio performance? Answer: more than 90% of a portfolio’s long-term variation in return was explained by its asset allocation, leaving only a small amount that can be explained by an investor’s ability to time the market or successfully choose individual securities.

Data privacy. As technology continues to evolve and become more available, the chances of that technology being used for unethical purposes increases. This led Bill Gates to ponder, “Should surveillance be usable for petty crimes like jaywalking or minor drug possession? Or is there a higher threshold for certain information? Those aren't easy questions.”
Unfortunately, governments and private companies are answering these questions for us. Passengers aboard American Airlines and Singapore Airlines have reported front-facing cameras in their in-flight entertainment displays. The airlines responded by stating that the cameras are not in use and are automatically installed by the plane’s manufacturers to be used for things like seat to seat video calls. The issue is that the cameras were not disclosed, with passengers not being notified that during their 12 hour plus fights there is a camera pointing right at them. Meanwhile, Democratic lawmakers are calling for high-tech products to be required to disclose their specifications. This is in direct response to Google’s Nest which had an undisclosed microphone in it, and this is not the only case of this. In perhaps the most radical surveillance case known to date, China is using DNA to track its citizens. With the help of American companies, the Chinese Government is forcing members of its Muslin population into “re-education” camps. In these camps the Chinese offered “free medical checkups”, but when the check-ups were administered, they also took fingerprints, face scans, DNA, recorded the patient's voice, and refused to share medical results or findings with patients. The real purpose of these medical checkups is to better track the Muslim population in order to force them to conform to the Communist Party’s beliefs. Instead of the international backlash that should have been expected with these extremely unethical practices, many organizations have come out to talk about the benefits of these practices. American companies have played a large role in China, and currently in the US, companies like 23andMe collect DNA information and hold on to the right to distribute it at their discretion. As consumers, we need to be aware of products of this nature and voice our opinion about companies that collect data from our phones, listen to us in our houses, watch us on flights, and collect DNA from our examinations.



Keep Climbing,


The Alchanati Campbell and Associates Team