What we're about

“There are two kinds of people who lose money: those who know nothing and those who know everything." - Henry Kaufman

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens, and not one person in a million will detect the theft.”--John Maynard Keynes

“The eyes of other people are the eyes that can financially ruin us. If everyone was blind but myself, I should want neither fine clothes, fine houses, nor fine furniture. ”--Benjamin Franklin

"I can calculate the motions of the heavenly bodies, but not the madness of people". -Sir Isaac Newton after losing a fortune in the South Sea Company

Our book club involves reading a chosen investment or economics book before each meeting in order to learn, discuss and debate the content of what was read.

Please note this Meetup is definitely not about "get rich quick schemes" or selling any type of financial services. Skepticism, curiosity, independent thinking and openness to learning new ideas is what this group is all about. There is no such thing as a panacea for all economic ills, as there are no magic formulas for investment success. But there are many ways to improve.

Here are some of the investment topics we will discuss:

Investment approaches that have generated high returns in the past. Various investment valuation methods. Why is it so hard to beat indexes? Does the past performance of various investment approaches mean similar returns in the future?

Why is it so foolhardy to trust many in the investment industry with your wealth? Could it be that many in the industry are sales-driven strivers,hyper-competitive advancers, joiners and cheerleaders who are prone to herd together to market the latest of investment manias to their clients? As Maynard Keynes once said: "Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

And why do many investment retirement goals become less ambitious as time goes by? A quote from Confucius may help in addressing this question: "When it is obvious that the goals cannot be reached, then don't adjust the goals, adjust the action steps.”

The following are investment quotes from authors of books that we will read and discuss:

"If you don't know who you are, the stock market is an expensive place to find out" - George Goodman aka Adam Smith .

“Large amounts of money aren’t made by buying what everybody likes. They’re made by buying what everybody underestimates”.—Howard Marks

"Risk means more things can happen than will happen" - Elroy Dimson

“The desire to get rich fast is pretty dangerous. Buy a great stock at a not so high price, then patiently sit on your ass and wait”. —Charlie Munger

“Time is the friend of the wonderful business, the enemy of the mediocre” —Warren Buffett

"The stock market is filled with individuals who know the price of everything, but the value of nothing." - Phillip Fisher paraphrasing Oscar Wilde's definition of a cynic

Bottom Line: Knowledge in the field of investments helps, but it is certainly not everything. Without a self-controlled temperament an investor can become his or her own worst enemy. In the words of Charlie Munger: "Warren Buffett and I aren't prodigies. We can't play chess blindfolded or be concert pianists. But our investment results are prodigious, because we have a temperamental advantage that more than compensates for a lack of IQ points."

Also this group is for avid readers of economics books and here are just a few of the topics we will be discussing:

Global asset price inflation (at a more local level look at Toronto house prices these past few decades)

Growing income and wealth inequality. As Warren Buffett recently wrote: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

How the politics of populism (resentment, paranoia and self righteousness) is affecting our economy.

An unsustainable trend of many economies growing at the slow pace of a tortoise and debts are growing at the swift pace of a hare.

The diminishing role of global and free market competition and the increasing role of trade barriers, sanctions, and national security considerations (especially in the USA)

Will robots and AI take away most of our jobs? Will the majority become a reluctant and stress-fully bored leisure class? Or will there not be enough robots to steal our stressful jobs and the dream of unlimited leisure remains nothing more then wishful thinking.

Here are two economics quotes from authors of books that we will be reading and discussing:

"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.--Thomas Sowell

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat

And here are three quotes from neither an investor nor an economist, but are included here because they convey some wisdom about wealth.

“A wise person should have money in their head, but not in their heart.” -Jonathan Swift

"In a country well governed and not corrupt, poverty is something to be upset about. In a country badly governed and corrupt, wealth is something to be ashamed about."--Confucius

“The secret of happiness, you see, is not found in seeking more, but in developing the capacity to enjoy less.”--Socrates

Those of you who find the above three quotes as being too idealistic may find the following quote far more pleasing:

“There is nothing so disturbing to one’s well-being and judgement as to see a friend get rich”-Charles Kindleberger

I look forward to having some very interesting discussions and debates with fellow members.

Tarek El Dewy, CFA

Upcoming events (5)

Musings on Markets by Damodaran http://aswathdamodaran.blogspot.com/

Finance Professor Damodaran at NYU is often referred to as the Dean of Valuation. We will be discussing his latest posts on COVID 19 and investing. http://aswathdamodaran.blogspot.com/ Has traditional value investing lost its mojo? Recently Damodaran called value investing a lazy approach that worked well in another century. Just look at the subpar returns of many value investors this past decade. According to Damodaran traditional value investing involves convincing oneself that you are right and the rest of the world is wrong. “I think book value has completely lost its meaning. Value investing is not just buying low P/E and price-to-book stocks. I describe valuation as a craft. The Covid-19 crisis has humbled me further. There is so much to learn,” he said. In investing humility is required. We will be discussing his blog posts from: June 4th,2020 A Do-It -Yourself S&P 500 Valuation May 13th, 2020 A Crisis Test - Value vs Growth, Active vs Passive, Small Cap vs Large! April 24th, 2020 Mayhem with Multiples April 8th, 2020 The Price of Risk March 31st, 2020 Back to Basics March 23rd, 2020 Investing in a Post-virus Economy March 21st, 2020 Debt Delusions and Reality Profitability, Returns and the value of Growth March 16, 2020 Pricing or Value? Trading or Investing? *********INFORMATION ON HOW TO ATTEND******************** In order to attend you will need to download a free Zoom app at https://zoom.us/download . Please check your email on the same day before this meeting and you will find a password in which you can access this meeting on the Zoom link on the right hand side of this page.

Applied Value Investing by Joseph Calandro

Online event

Applied Value Investing: The Practical Application of Benjamin Graham and Warren Buffett's Valuation Principles to Acquisitions, Catastrophe Pricing and Business Execution "This thought-provoking work takes value investing to the next level.-- Seth A. Klarman, President, Baupost Group, L.L.C.,Lead Editor of Graham and Dodd’sSecurity Analysis, 6th Ed. "Applied Value Investing is the most important business book of our time." --Dr. John J. Sviokla, Vice Chairman, Diamond Management & TechnologyConsultants, and former Associate Professor, Harvard Business School "A must-read for all Graham and Dodd followers, and valuation practitioners."--Patrick Terrion, Principal, Founders Capital Management, and author of The Company You Keep "Applied Value Investing takes the same time-proven approach Graham introduced with David Dodd in their 1934 masterpiece, Security Analysis, and extends it in a variety of unique and practical ways including mergers and acquisitions, alternative investments,and financial strategy. https://www.amazon.ca/Applied-Value-Investing-Application-Acquisitions/dp/0071628185

Narrative Economics by Robert Schiller

Toronto

Narrative Economics: How Ideas Go Viral and Influence Economic Events by Robert Schiller From Nobel Prize winning economist and New York Times bestselling author Robert Shiller, a new way to think about how popular stories help drive economic events In a world in which internet troll farms attempt to influence foreign elections, can we afford to ignore the power of viral stories to affect economies? In this groundbreaking book, Nobel Prizeâ€"winning economist and New York Times bestselling author Robert Shiller offers a new way to think about the economy and economic change. Using a rich array of historical examples and data, Shiller argues that studying popular stories that affect individual and collective economic behaviorâ€"what he calls "narrative economics"â€"has the potential to vastly improve our ability to predict, prepare for, and lessen the damage of financial crises, recessions, depressions, and other major economic events. Spread through the public in the form of popular stories, ideas can go viral and move marketsâ€"whether it's the belief that tech stocks can only go up, that housing prices never fall, or that some firms are too big to fail. Whether true or false, stories like theseâ€"transmitted by word of mouth, by the news media, and increasingly by social mediaâ€"drive the economy by driving our decisions about how and where to invest, how much to spend and save, and more. But despite the obvious importance of such stories, most economists have paid little attention to them. Narrative Economics sets out to change that by laying the foundation for a way of understanding how stories help propel economic events that have had led to war, mass unemployment, and increased inequality. The stories people tellâ€"about economic confidence or panic, housing booms, the American dream, or Bitcoin affect economic outcomes. Narrative Economics explains how we can begin to take these stories seriously. The result may be Robert Shiller's most important book to date. Many economists argue that the US housing market and economy are still on solid foundations, but ignore Shiller’s warnings at your peril. He rarely gets it wrong. "---Tom Rees, The Telegraph "The book is . . . good fun to read. It is full of amusing and apposite quotations, and interesting detail."---Charles Goodhart, Central Banking Journal "Provocative . . . . Especially timely in the current social media-obsessed era, because narratives―both real and false―can spread globally with just a few swipes, affecting not just economic activity, but ultimately the balance of geopolitical power."---Matt Schifrin, Forbes " Shiller has none of the salesman-like bluster of the stock pickers clamouring for attention on business TV news . . . . As it is, he has only 40-odd years of being freakishly right about things. It will have to do. "---David Morris, Financial News "Shiller argues forcefully."---Chris Johns, Irish Times "A magisterial account . . . . In some ways . . . a bigger challenge to the foundations of economics than behavioral economics."---Steve Denning, Forbes "An engaging scholarly study of the stories we tell about economic events―stories that go viral, for better or worse . . . . Of immense value to economists and policymakers working on the behavioral side of the field." (Kirkus Reviews *********INFORMATION FOR ATTENDEES******************** In order to attend you will need to download a free Zoom app at https://zoom.us/download . Please check your email on the same day before this meeting and you will find a password in which you can access this meeting on the Zoom link on the right hand side of this page https://www.amazon.ca/Narrative-Economics-Influence-Economic-Events/dp/0691182299/ref=asc_df_0691182299/?tag=googleshopc0c-20&linkCode=df0&hvadid=335174802933&hvpos=1o1&hvnetw=g&hvrand=15515080614814376022&hvpone=&hvptwo=&hvqmt=&hvdev=t&hvdvcmdl=&hvlocint=&hvlocphy=9000930&hvtargid=pla-699399447999&psc=1

The Dao of Capital: Austrian Investing in a Distorted World by Mark Spitznagel

The Dao of Capital: Austrian Investing in a Distorted World by Mark Spitznagel The author of this book runs a Black Swan hedge fund that made a 4,144% return this last quarter (March 31, 2020). Mark Spitznagel also made hefty returns during the market downturns of 2000 and 2008. He is a protege of Nassim Taleb and remains very pessimistic on what the future holds for markets. https://markets.businessinsider.com/news/stocks/black-swan-fund-universa-investments-4000-percent-return-hedging-coronavirus-2020-4-1029076165 As today's preeminent doomsday investor Mark Spitznagel describes his Daoist and roundabout investment approach, “one gains by losing and loses by gaining.” This is Austrian Investing, an archetypal, counterintuitive, and proven approach, gleaned from the 150-year-old Austrian School of economics, that is both timeless and exceedingly timely. In The Dao of Capital, hedge fund manager and tail-hedging pioneer Mark Spitznagel—with one of the top returns on capital of the financial crisis, as well as over a career—takes us on a gripping, circuitous journey from the Chicago trading pits, over the coniferous boreal forests and canonical strategists from Warring States China to Napoleonic Europe to burgeoning industrial America, to the great economic thinkers of late 19th century Austria. We arrive at his central investment methodology of Austrian Investing, where victory comes not from waging the immediate decisive battle, but rather from the roundabout approach of seeking the intermediate positional advantage (what he calls shi), of aiming at the indirect means rather than directly at the ends. The monumental challenge is in seeing time differently, in a whole new intertemporal dimension, one that is so contrary to our wiring. Spitznagel is the first to condense the theories of Ludwig von Mises and his Austrian School of economics into a cohesive and—as Spitznagel has shown—highly effective investment methodology. From identifying the monetary distortions and non-randomness of stock market routs (Spitznagel's bread and butter) to scorned highly-productive assets, in Ron Paul's words from the foreword, Spitznagel “brings Austrian economics from the ivory tower to the investment portfolio.” The Dao of Capital provides a rare and accessible look through the lens of one of today's great investors to discover a profound harmony with the market process—a harmony that is so essential today. "Spitznagel has written an essential new book. Indeed, might be one of the most important books of the year, or any year for that matter." —Forbes This is a beautifully crafted book, one I can recommend to readers of all political/economic persuasions… it is impossible not to be shaped by its carefully presented history and logic." —Seeking Alpha "A fascinating and radical break from the investment dogma of the past several decades" —Fortune "While The Dao of Capital makes for demanding reading, it repays the effort as a heady historical and intellectual feast." —Barron's "A great writer that has a clear and consistent understanding of the market process, the dangers of government intervention, and the benefits of Austrian economics." —Ludwig von Mises Institute "Spitznagel could simply have written that investors need patience and must avoid the temptation of the quick profit; that building a successful strategy, and life, involves a longer-term approach foregoing instant gratification; that establishing a solid foundation while appearing not to create progress puts you in position for much greater success later on. He did not do that. Instead, he takes you on a tour of history and nature that illuminates these long held truths. In the end his message is simple, but by providing the historical underpinnings he brings them to life in a much more vibrant way." —Futures Magazine Among the "12 Books That Every Investor Should Read... deeply informative and will leave an impact on you." —Business Insider

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