Weekend Reading – Who Should NOT Invest in Total Market Index Funds?

Weekend Reading is a collection of Investment Research and Lifestyle topics from all corners of the Web.We source the highest quality insights from Wall Street and Main Street that you may apply to your investment process. Unlike the rest of Bankeronwheels.com, this series is provided without additional guidance. As usual, everything is to be used at your own risk.  Below is the type of content we shortlist.

Someone is sitting in the shade today because someone planted a tree a long time ago

INVEST WISELY

This section is dedicated to research on how to invest for the Long Run using Passive Investment Strategies. Read Topics related to (i) Portfolio Construction and Asset Allocation (ii) Acting wisely by avoiding behavioural traps and also (iii) publications that help understand how financial markets work.

CONSTRUCT YOUR PORTFOLIO

Accumulating vs. Distributing ETFs – Snowball Your Wealth and Sidestep Tax Leakage (Bankeronwheels.com)

Compounding is a powerful wealth-creation tool. But taxes and fees can sabotage your plan. Typically, up to 2-3% of the 7% average annual total return from Global Stocks comes in the form of dividends. But what happens to compounding if we distribute them? We take a look at how to optimise your ETF selection for the compounding magic to work without leaking too much in unnecessary taxes.

[Read our article]

HOW TO INVEST

UNDERSTAND FINANCIAL MARKETS

Comparing the Speed of Interest Rate Hikes (1988-2023)

After the latest rate hike on May 3rd, U.S. interest rates have reached levels not seen since 2007. The Federal Reserve has been aggressive with its interest rate hikes as it tries to combat sticky inflation. In fact, rates have risen nearly five percentage points (p.p.) in just 14 months. This graphic explores both the speed and severity of current interest rate hikes to other periods of monetary tightening over the past 35 years. When we last compared the speed of interest rate hikes in September 2022, the current cycle was the fastest but not the most severe. In the months since, the total rate change of 4.88 p.p. has surpassed that of the ‘04-‘06 rate hike cycle. During the ‘04-‘06 cycle, the Federal Reserve eventually decided to pause hikes due to moderate economic growth and contained inflation expectations.

Read more on Visual Capitalist

ACTIVE INVESTING

This section relates to improving your knowledge about active investing.  If you decide to sin, then sin only a little. Given ample evidence, combined active bets should be ideally a relatively small fraction of your portfolio. This section also includes Sustainable Investing. You can invest in a Socially Responsible way, but there are many ESG traps. Learn how to invest sustainably, and what it means for expected returns, with our definitive guide to sustainable investing

FACTOR & Thematic investing

Who Should NOT Invest in Total Market Index Funds? (Ben Felix - 9 Min)

I have told you in many of my videos that low-cost total market index funds are the most sensible investments for most people – just own the market. I stand by that statement, but as true as it is, there is a lot more nuance to making good asset allocation decisions. How do you know if you’re like most people? And if you’re not like most people, how should your portfolio be different from the market?

STOCKS

Inside the battle for chips that will power artificial intelligence (Bloomberg - 59 Min )

Listen also on:

Nobody knows for sure who is going to make all the money when it comes to artificial intelligence. One thing is clear though — AI requires a lot of computing power and that means demand for semiconductors. Right now, Nvidia has been a huge winner in the space, with their chips powering both the training of AI models (like ChatGPT) and the inference (the results of a query.) But others want in on the action as well. So how big will this market be?

The Top 20 stocks in the S&P 500 contribute the most to its YTD return

The total return of the S&P 500 YTD is 7.55%, and the top 20 stocks have contributed to 7.08% of that! This is despite the fact that they are under 30% of the weight of the S&P 500. Of the top 20, particular heavy lifters include Apple, Microsoft and NVIDIA, contributing 1.49%, 1.15%, and 1.00% respectively.

Despite difficulties the tech industry has recently been facing, with highly publicised layoffs, these companies still clearly dominate in the S&P 500 both by weight and contributions to return. In fact, looking at the top 20, only 4 are not a part of the information technology sector.

Read more on Geniune Impact

SUSTAINABLE investing

ALTERNATIVE ASSET CLASSES

WALL STREET

The corporate raider throwing Stones from his own glass house

Until this week Icahn Enterprises had a market capitalisation of around $18bn, more than triple the reported net value of its assets. These include majority ownership of energy and car companies, in addition to an activist-investment portfolio. On May 2nd Hindenburg Research, a short-selling outfit founded in 2017 by Nathan Anderson, accused Icahn Enterprises of operating a “Ponzi-like” structure. Icahn Enterprises has shed more than a third of its market value since Hindenburg released its report. Read more on Hindenburg Research

crypto

BAD BETS

On Covered Calls & Funding The Lifestyle You Want (Rational Reminder - 1 hr 4 Min )

We all have different levels of risk tolerance. But how is that risk measured for complex investment strategies like covered calls? And how can you be sure it’s an accurate reflection of reality?
Later, Jonathan Hollow and Robin Powell discuss their new book How to Fund the Life You Want: What everyone needs to know about savings, pensions and investments.

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PERSONAL FINANCE

This section is dedicated to UK and European Products. It can also touch on other European jurisdictions outside the Euro-zone.

Wealth Management

Visualized: Real Interest Rates by Country

Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors alike.

They can have significant implications for people’s ability to access credit, manage debts, and buy more expensive goods such as cars and houses.

This graphic uses data from Infinity Asset Management to visualize the real interest rates (ex ante) of 40 major world economies, by subtracting projected inflation over the next 12 months from current nominal rates.

Read more on Visual Capitalist

FINANCIAL PRODUCTS

COST OF LIVING

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DESIGN YOUR LIFESTYLE

Personal Development

Health & Wellness

CAREERS & REMOTE WORK

Should You Quit Your Job? (The Outcome - 12 Min )

Should you quit your job and start a business? Joe Rogan & Garyvee talks about how to know when to quit your job and how to actually do what you love. This will be the most life changing speech you will see. It will motivate you to quit your job at the right time.

Work, Play & Surf: 5 Beach Gateways for Digital Nomads from Okinawa to Koh Lanta (Bankeronwheels.com)

Over the past year, Raph and I worked remotely from Digital Nomad places in Asia and Europe. Sometimes illusionary in a corporate environment, work-life balance can also be tricky on the move. We tested different coworking spaces, but sometimes adapted a work-from-home style when options were limited. Time off while travelling can be incredibly rewarding. We wanted to bring out unique activities each place offers to make your choice easier.

[Read our article]

EARLY RETIREMENT

Travel

TECH

The Inside Story of ChatGPT’s Astonishing Potential (Greg Brockman - 30 Min )

In a talk from the cutting edge of technology, OpenAI cofounder Greg Brockman explores the underlying design principles of ChatGPT and demos some mind-blowing, unreleased plug-ins for the chatbot that sent shockwaves across the world. After the talk, head of TED Chris Anderson joins Brockman to dig into the timeline of ChatGPT’s development and get Brockman’s take on the risks, raised by many in the tech industry and beyond, of releasing such a powerful tool into the world.
From Bankeronwheels.com
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Liked the quality of our guides? There is more. Every week we release new guides, tools and compile the best insights from all corners of the web related to investing, early retirement & lifestyle along with exclusive articles, and way more.  Probably the best newsletter for Individual Investors in Europe and the UK. Try it. Feel free to unsubscribe at any time.

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Our interactions with hundreds of investors revealed two trends: Index investing forms the backbone of their portfolios, and Interactive Brokers emerges as the go-to platform for a majority of investors.

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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash. 

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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash. 

miscellaneous

Shooting Breeze on the $1mn Bitcoin Bet, Japanophilia, AI, Preventing Hangovers and more (The Tim Ferris Show - 1 hr 43 Min )

Technologist, serial entrepreneur, world-class investor & self-experimenter Kevin Rose joins Tim for another episode of The Random Show. In this one, they discuss affordable luxuries for priceless lives, suiting up for a visit to the Magic Castle, Eliza Ivanova’s art, Tim’s secret for supple skin, 19th-century Nintendo, Balaji’s bet, the science of hangover remedies, Moonbirds over Tokyo, an unexpected Sanbo Zen inquisition, Japanese death poems, escape rooms, high-fidelity immersive sound, Nanoblocks, and much more!

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