📑 Research Notes for 2021-09-20
This week, we look at the slowing recovery, impacts of index fund popularity, and how to invest in businesses that compound capital.
We conduct extensive investment research and share the most interesting content that we come across every week. Here is a curated list of this week’s top observations.
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The Recovery Is Slowing, Yet Central Banks Remain Confident.
(Bloomberg)
The robust economic rebound from the pandemic appears to have evolved into a much slower rebuilding phase, and in the past few weeks central banks have issued warnings about the pace of vaccinations. What’s the outlook for the recovery, and the eventual withdrawal of central bank support?
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A Longtime Analyst Warns Dumb Index Cash Is ‘Tail Wagging Dog’.
(Bloomberg)
While academics increasingly argue the passive revolution is a myth, there are plenty of market players who would beg to differ. Vince Deluard, the outspoken macro strategist at StoneX Financial Inc., is the latest to warn of mounting evidence that index-tracking cash is messing with the equity market, driving up valuations, disrupting returns and upending the natural order for big stocks.
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The Index Mindset.
(John Luttig)
Index funds have come to dominate public markets. But the shift towards indexing is spreading across tech, careers, and culture too – in what I call the index mindset.
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How to Invest in Compounding Machines.
(Undercover Fund Manager)
Cash + Optionality + Astute Capital Allocation = Compounding Machine
Good businesses generate lots of cash. Great businesses generate tonnes of cash, have lots of capital deployment options, and, more often than not, choose the right ones. This leads to higher future cash flows which can be reinvested, creating a virtuous circle.
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Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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The information presented in this newsletter is for educational purposes only and is not a solicitation or recommendation for any specific security, product, service, or investment strategy.
Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a qualified financial advisor, tax professional, or attorney before implementing any strategy or recommendation you may read here.