MARKET WATCH
Happy Halloween! Fortunately, October hasn't been the scariest of months, but a lot has happened.
Global markets traded higher this month with emerging markets leading the way, rising four per cent.
As to be expected, not all securities had a great October. While moving higher than previous months, gold was only up about one per cent, as it continues to trade around the technically important $1,500-point.
On the negative side, REITs were slightly lower than September and Canadian energy companies gave up much of their gains from last month, trading about seven per cent lower.
Ten days ago, Canada's federal election returned Justin Trudeau's Liberal Party to power, albeit with a minority government. Interestingly, the Conservatives won the popular vote by about 240,000, and the Liberals failed to win a seat in Manitoba, Saskatchewan or Alberta, and only won 11 seats in B.C.
Minority governments often fail to last the full four years. Should the Conservatives choose a more socially moderate leader, the Liberals could be vulnerable amidst an early election. Knowing this, Prime Minister Trudeau and Finance Minister Bill Morneau wasted little time assuring the public the Trans Canada pipeline (from Alberta to B.C.) will be built - potentially good news for Canadian energy companies over the mid- to long-term.
In other news, the U.S.-China trade war continues. With these two countries comprising 40 per cent of the global economy, the sooner it ends the better for everyone. Lately, the Trump administration has made statements indicating an agreement, or at least part of one, is close at hand. However, given this administration's challenged history with the truth, I suggest not taking its statement to the bank. Should it be true, however, it will be the best economic news we've had in some time.
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THE DAY YOU BECAME A BETTER THINKER
Lately I've been spending a lot of time thinking about thinking, particularly about how to become a better thinker. So much so, that I've decided to dedicate my first blog post in some time to the subject. In my latest post, I outline a simple concept that will improve your thought processes and decision-making.
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IN THE REVIEW QUEUE
I first read
The Great Gatsby
more than two decades ago. I was underwhelmed. On my wife's recommendation, I read it again recently, and quite enjoyed it. I can't say what had put me off years ago, but this time I enjoyed reading about the roaring '20s, the interesting characters, and the brilliant word-smithing.
21 Lessons for the 21st Century
by Yuval Noah Harari:
Yuval Noah Harari is the author of a book I consider one of the most important of the last decade or two -
Sapiens
. While Sapiens delves into the history of our species, 21 Lessons is about where we are now, and the forces affecting our world today. Overall, it's a decent read. But, while some chapters, like those on work, education, and science fiction were thought-provoking, others felt largely unnecessary. If you haven't read Sapiens, I would advise you do that before 21 Lessons - perhaps even twice.
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LONG THINGS THAT AREN'T BOOKS
The Story of Us
by Tim Urban (Wait But Why):
Last newsletter
, I mentioned that Wait but Why was back and starting a new blog series. I also mentioned it was going to be big. I'm starting to think that was an understatement. Since that time, two more blog posts have been released, both taking over an hour to get through! I've read shorter books than this series, and creator Tim Urban is still posting new ones. Oh yeah, it's also damn good!
The Thinking Ladder (Chapter 7)
is about how people filter their beliefs. Optimally, Urban writes, we should think like a scientist. This happens when people actively look to find out what is right, as opposed to trying to be right. The other extreme is thinking like a zealot. This is when we know what we know, and no amount of research or evidence could possibly change our minds, and people that disagree with us are 100 per cent wrong. Appropriately, "The Thinking Ladder" leads into the next chapter, which is...
Idea Labs and Echo Chambers (Chapter 8)
. Chapter 8 takes the concepts of the scientist and zealot from the individual to the group level. Idea labs are Nirvana-type cultures where everyone is focused on learning and discovering. They encourage disagreement and debate - considered a means to improve thinking and results. Echo chambers, on the other hand, are cultures where like-minded people cluster. They can provide the illusion of diverse thought, which, in turn, further convinces zealots of their correctness and inoculates them against differing ideas.
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ARTICLES AND BLOGS
The Understory
by Robert McFarlane:
I was fascinated to learn that trees and fungi are often connected to a massive underground physical network, referred to as the
wood wide web
. As interesting as the article was, most of what I found of value was in the first section. If you are pressed for time, I'd recommend only reading that part.
Mysterious
by Howard Marks:
In his latest newsletter, Howard Marks delves into the murky topic of negative interest rates. For those who haven't followed the story, $17 trillion of the world's institutional debt, it hasn't affected small investors yet, is providing a guaranteed negative return when held to maturity. You read that correctly, large investors are willingly taking a guaranteed loss. Marks gives his opinions as to why this might be the case, what it might mean for today's investors, and what it might mean for the future. This is the best piece I've read on negative interest rates.
Beware the Man of One Study
by Scott Alexander:
A thoughtful article that cautions against using one or even a couple of studies as evidence for an argument's validity. Alexander cleverly uses the debate around minimum wage to show how frequently studies can contradict each other. In other words, it's often hard to know anything for sure, particularly in fields like the humanities and social sciences.
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PODCASTS AND VISUALS
When Meritocracy Wins, Everybody Loses
on The Ezra Klein Show:
An interesting conversation about meritocracy. I disagree with the host and guest's summation: that meritocracy has been mostly bad for society, but they bring up a number of important issues that highly driven professionals may want to consider.
The World's Most Powerful Reserve Currencies
by Visual Capitalist:
A great infographic illustrating how the U.S. dollar dominates all other currencies combined. I was very surprised to see that the loonie ranked fifth in the world's reserve currency - albeit, at less than two per cent in total.
Stormscapes 4
by Nicolaus Wegner:
Stunning time-lapse footage of an epic storm on the Northern high plains.
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SELECTED INSIGHTS
"Having good health isn't everything, but not having it is.
Having money isn't everything, but not having it is.
You don't need 6-pack abs or a million dollars to be happy, but it is worth learning the fundamentals of fitness and finance.
They bring a margin of safety."
- James Clear
"Today, large numbers of bonds - the vast majority being government bonds from Europe and Japan - carry negative yields to maturity. They constitute roughly two-thirds of the bonds in Europe and 25-30% of all the investment-grade debt in the world. A few corporate bonds also offer negative yields, however, and there's even a handful of negative-rate high yield bonds (the ultimate oxymoron)."
- Howard Marks
"The whole problem with the world is that fools and fanatics are always so certain of themselves and wise people so full of doubts."
- Bertrand Russell
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HAPPY HALLOWEEN!
 Whether you have little ones trick-or-treating, are attending parties of your own, or plan to buckle down with some horror flicks tonight, have an appropriately ghoulish and ghastly Halloween night!
You never know, perhaps your abode will turn into an impromptu bash:
https://www.youtube.com/watch?v=AxcM3nCsglA
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The views of the author do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd. Member-Canadian Investor Protection Fund.
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