An awesome list of common misconceptions from Wikipedia.
“Netflix was not founded after its co-founder Reed Hastings was charged a $40 late fee by Blockbuster. Hastings made the story up to summarize Netflix’s value proposition, and Netflix’s founders were actually inspired by Amazon“
“Adidas is not an acronym for either “All day I dream about sports”, “All day I dream about soccer”, or “All day I dream about sex”. The company was named after its founder Adolf “Adi” Dassler in 1949. The backronyms were jokes published in 1978 and 1981.“
““420” did not originate from the Los Angeles police or penal code for marijuana use.California Penal Code section 420 prohibits the obstruction of access to public land. The use of “420” started in 1971 at San Rafael High School, where a group of students would go to smoke at 4:20 pm.“
New data suggests a small “baby bump” among US born mothers as a result of the pandemic.
“The 2021 baby bump is the first major reversal in declining U.S. fertility rates since 2007 and was most pronounced for first births and women under age 25, which suggests the pandemic led some women to start their families earlier. Above age 25, the baby bump was also pronounced for women ages 30-34 and women with a college education, who were more likely to benefit from working from home.“
The big three are increasingly dominant, even more so in small cap stocks.
“Last year, the big once again became even bigger. At the end of 2021, Vanguard, BlackRock and State Street, the three biggest index fund providers, together control on average 18.7 per cent of S&P 500 companies, according to Lazard. Their ownership of smaller companies is even more concentrated. By the end of last year, they held 22.8 per cent of shares in the midsized S&P 400 index, and 28.2 per cent of the small-company S&P 600 benchmark.“
If you haven’t already checked out this great expert interview transcripts database (20,000+ and counting) you can grab a free 2 week free trial here (just use a business email and name required, hit activation link).
“By Allison’s account, in 12 of 16 historical examples, competing empires ended up in military conflict, and Allison sees the US-China relationship as a rerun of these precedent“
The counter point is this great chart from JPM showing how intertwined economically the two powers are vs. historic struggles.
However, the direction of travel isn’t supportive.
A prime example is 2022 CHIPS Act, the most bipartisan piece of legislation in a long time.
NB this was a good transcript covering the impact on semi equipment companies (use this link to sign up for free).
“This risk is particularly noteworthy given that many companies with loans outstanding are carrying significant debt loads.The average debt-to-EBITDA ratio in new U.S. loan transactions hit a record-high 5.5x in 1Q2022, above the 4.9x recorded just before the Global Financial Crisis.“
“Importantly, companies involved in these transactions were often more highly levered than they appeared on paper, as many used aggressive EBITDA adjustments (e.g., for synergies, cost cuts, etc.) when making these leverage calculations.”
Cloud Vendor market was $159bn annual run-rate market in Q2, still growing 37% (though slowing).
This growth has actually come with pretty good economics. (From this Battery VC deck).
One very interesting feature of these vendors is they also happen to run huge cloud based products (think Xbox for example) which means they are customers of their own infrastructure – utilising it and making it better.
“GS PB long/short ratio stays at longer term relatively depressed levels. This is not to be used as an input for short term trading strategies, but worth having in the back of your head.“
One of the clear harbingers of the sharp rally last week was not just very negative sentiment, or the CPI print itself, it was the overly calm VIX index.
The VIX spent most of October falling, despite the bearish drum beat.
“Here’s the US junk bond CDS credit spread index, which remains well below its 2008, 2011 and 2020 peaks, and the shape of the CDS curve, which tends to invert [Pictured] as markets freak out about a rash of near-term defaults.“
Interesting chart from Mauboussin showing the distribution of ROIC of the Russell 3000 index.
“The mode is an ROIC of 5 to 10 percent, and the distribution is shaped like a bell between the tails. But nearly 30 percent of the sample are at the extremes of an ROIC of -20 percent or less or 30 percent or more.“
