Weekly Recap: What We’ve Been Reading

News & Commentary

Jun 26, 2020

This is the inaugural issue of our weekly recap of what we’ve been reading. The we I’m referring to includes myself and our team at Alliance. In this weekly post, I’ll share the three most interesting articles from our reading and add some commentary. This week features an article about ESG investing, one likening today’s market to the tech bubble and an article about investing in individual stocks. Enjoy!

ESG Article

This article is a bit on the philosophical side in regards to corporate governance. Before I get into the article, can we take a minute to acknowledge the guy who isn’t wearing his mask? Jamie Dimon (the guy in shorts who probably wore them purposely to make the employees more comfortable) is one of the most powerful and visible figures on Wall Street. He was not above the mask. I wonder what this guy is thinking. Probably the same thing as the guy you see at the grocery store wearing it around his neck like it was a ticket to get into the store while everyone else is wearing it.

Sorry for the digression. ESG investing has grown in popularity in recent history and will continue to be a factor. I think it is more of a buzz phrase in our industry that most money managers are using as a new marketing tool. However, it is very important. You would think that every company acts with high ethical and fiduciary standards, but they don’t. This article digs very deep into it and focuses on executive incentives for short term performance. The author concludes that some of the short-term incentives can cloud judgement and lead to mismanagement, ultimately having a negative impact on long term performance.

Tech Bubble Article

This article contains an opinion of the direction of the market, particularly relating to tech. If you haven’t noticed, tech has been a very strong contributor to the recovery in the market and many are projecting that to continue. This particular article is comparing the recent run to the tech bubble of the late 90’s while insinuating that history is going to repeat itself. He includes a link in there to another article from March highlighting the 20 year anniversary of the tech bubble. There are some very interesting stats in it, but the one that stood out most to me was that Cisco’s total return for the past 20 years including dividends has been -24.90%.  

Article About Investing in Individual Stocks

This article is so accurate and should be read by anybody who is thinking about investing or anyone who is questioning their current investment strategy. We are living in a time where everyone appears to be making a lot of money on stocks that they don’t know a whole lot about. As I noted in a recent post, the Davey Dave Trader revolution is making a lot of people question what they are doing. This article is a reminder that individual stock picking is difficult. It requires a lot of research and monitoring. Purchasing stocks without doing the homework is risky and can lead to serious consequences.

As an avid reader and student of the market, it is fascinating to me that there could be so many differing opinions written with strong conviction by very educated people. It is equally as interesting that there are periods in history where less is more when it applies to knowledge. The tech bubble article makes you want to sell everything and sit in cash. The individual stock article would be laughed at by the Dave Portnoy’s of the world right now. Finally, the ESG article reminds you that there is more to investing than the numbers. I’ll close with the same thoughts as the author of the individual stock article. The more boring, diversified approach without attempting to time the market, should build more wealth over the long term.


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