From budding trends to mature industries, Novem Group works hard to stay abreast of developing news.

Here’s what caught our eyes this week:

Click Here: Do Free Markets Still Beat Central Planning?

Plenty of red-washing pieces out there that are just not far from just being mouthpieces of the Chinese government. Most are complete garbage and I avoid them out of principle. This one had a few interesting data points.

2019 Government Spending as a % of GDP: 35.7% in the US and 34.8% in China.

  • I doubted this number at first and double-checked it here.
  • This is Federal/Central government spending… what about other levels of government?
  • I tried chasing down State and Provincial data but didn’t have much luck. It also gets messy because it double-counts (ie the Federal government spends money by sending it the states who then spend it). If anyone finds good data please send it my way.

“If markets order themselves spontaneously, based on self-interest, as Hayek observed, it may be that the growing bureaucracies in both socialist and capitalist countries order themselves according to vested interests. If this is true, it becomes vital to constrain those interests, in order to ensure that the state remains focused on delivering social goods.”

I agree with this entirely. If Hayek was alive today and writing a book, Federal Reserve policy would probably be exhibit A.

“By contrast, Chinese NGOs, business, government, and media together enjoyed the highest level of trust in 2020. While that level fell by ten percentage points (from 82% to 72%) in 2021, China remains in second place.”

Sounds like the survey missed the Uighur demographic. I’m also not sure the Hong Kong protestors would rate China so high.

Click Here: Value’s Turn – Eerie Parallels to 1999 (GMO- Attached)

Nice to see people stick by Value… history might not repeat but it does rhyme.

Play Your Own Game

Morgan Housel should be required reading for every advisor and client.

“It’s so easy to lump everyone into a category called “investors” and view them as playing on the same field called “markets.””

Even if a client says a basic thing like “I want to make money” or “I want to beat ‘the market’ by X%” I think it misrepresents a key point.

  • If you earn a 15% CAGR but your neighbor earned 25% are you happy?
  • If you earn a great return with an exceptional amount of volatility, does the end justify the sleepless nights/risk of total financial ruin?
  • The point is that we are all investing with a different set of goals in mind. Therefore, our portfolios are going to look and behave differently. And that’s okay!

Figure out your own game and play only that game. Don’t compare yourself to people playing another game.

Click Here: Why The Internet Went Down

To me, the internet is powered by rainbows. I have absolutely no idea how it actually works. My understanding of this wizardry ends at unplugging and re-plugging my router.

Last week, Fastly (FSLY) encountered a bug which brought down a significant amount of websites. Why were these sites impacted?

As a Content Delivery Network (CDN) Fastly operates servers around the globe so your smartphone is ‘closer’ to the internet.

  • By serving as this sort of relay, FSLY can improve performance and reduce load times. Sort of like the cut-off man in baseball.

“One of the reasons the Fastly outage seems so wide in scale is that cloud computing service companies like Fastly are consolidating, leaving websites dependent on a shrinking number of providers”

  • Too big to fail doesn’t just apply to the financial industry! When people mention anti-trust concerns, they’re usually talking about the FANG stocks but I don’t think regulatory concerns end with the mega-caps.

Click Here: What a Difference a Year Makes (in Oil)

Inventories are drawing quickly and the market is becoming increasingly tight.

  • Yes, the US is in the process of reopening but Europe is lagging. Europe reopening represents another ‘bullet’ yet to be fired.

This summer, US demand is likely to be very strong and Europe is likely to open. Can US shale productivity respond to fill the gap? G&R says no- I have to agree with them. The prime acreage is drilled. The low-hanging efficiencies are in the rear-view mirror.

Securities offered through American Portfolios Financial Services, Inc., Member FINRA/SIPC. Advisory services offered through Novem Group, an SEC-registered Investment Adviser firm, which is not affiliated with American Portfolios Financial Services, Inc. For entertainment purposes only. Inclusion in this list does not in any way imply endorsement of a particular company, investing approach or industry, articles provided for informational use only and do not constitute legal, investment or tax advice. Any opinions expressed in these links are not the opinions or views of Novem Group or American Portfolios Financial Services, Inc. Opinions expressed are those of the writers only.