3 Rules of Thumb for Policymakers

3 Rules of Thumb for Policymakers - Ray Dalio

1. Don't have debt rise faster than income
2. Don't have income rise faster than productivity
3. Do all that you can to raise your productivity

10 Causes of Major Stock Market Crashes

10 causes of major stock market crashes:

• political events 
• government actions
• war, terrorist attack
• currency crisis
• credit crisis
• debt defaults
• bank failures
• commodity price crisis
• stock crashes in a major market becomes contagious
• technical (flash crashes)

Many of these events cannot be predicted. These events can happen anywhere in the world. Global markets are now highly correlated. Thus, to avoid these black swans with certainty, you'd have to be out of the market most of the time. 

Hence, an investor should stay invested and the safest way to invest is by value investing.

Here's 2 Things Which Could Upset the Malaysian Market

Potential black swans for Malaysia in 2017, according to James Hay (Pangolin Investment):

1. terrorist attack
2. rising interest rates

overconnected

Key takeways from the book Overconnected by William H. Davidow :

• connectedivity created new business models (e.g. railroad, internet)
• overconnectivity can cause instability from positive feedback 
• overconnectivity can cause vulnerability from overspecialization
• complex systems are at risk of accidents and contagions
• overconnectivity was a factor in the collapse of Iceland and the subprime crisis
• need to reduce the positive feedback (e.g. through regulation), design more robust systems and restructure overconnected systems

ICAP AGM/Open Day 2016

Notes:

• not good outlook for O&G, property
• not keen on USD beneficiaries (short term)
• cash as call option
• clean energy and electric/driverless cars (Tony Seba)
• entrepreneurship is tough in Malaysia (different from independent business operator)
• use heart-mind to make decision (Mencius)
• opium trade benefited US (e.g. funded ivy league universities)
•  Trump to win elections (disastrous policies)

Ten Golden Rules of Equity Investing

Ten Golden Rules of Equity Investing

1. treatment of minority shareholders
2. Remember that companies are about peple not assets
3. Balance sheet strength is crucial
4. Understand what you are buying
5. Be wary of overambition
6. Think long term
7. Benchmarks are measuring devices not portfolio construction tools
8. Take advantage of irrational behaviour
9. Do your own research
10. Focus on growth industries in which it is possible to have a sustainable competitive advantage

Hugh Young, Aberdeen Asset Management

end of high returns?

For over 40 years, asset returns and alpha generation from penthouse investment managers have been materially aided by declines in interest rates, trade globalization, and an enormous expansion of credit – that is debt. Those trends are coming to an end if only because in some cases they can go no further. Those historic returns have been a function of leverage and the capture of “carry”, producing attractive income and capital gains. A repeat performance is not only unlikely, it is impossible unless you are a friend of Elon Musk and you’ve got the gumption to blast off for Mars. Planet Earth does not offer such opportunities.
-Bill Gross