It has been a busy month here at Fort Pitt Capital Group. So busy, in fact, that it was difficult to sort out the stuff we wanted to share. Below are several articles we found particularly interesting.
In a fascinating memo that captures our investing approach and has become a core reading, Howard Marks shares his thought-provoking wisdom with Oaktree Capital clients. Revisiting a 2006 memo, “Dare to be great II” addresses why advisors must utilize original methods to achieve above-average results. “Since conventional behavior is sure to produce average performance, people who want to be above average cannot expect to get there by engaging in conventional behavior,” he says. “Their behavior has to be different. And in the course of trying to be different and better, they have to bear the risk of being different and worse. There is no way to strive for the former that doesn’t require bearing the risk of the latter.”
Another article of interest outlines the widening US wealth gap, which is becoming increasingly difficult to ignore. Yahoo! Finance’s “$1 trillion student loan debt widens US wealth gap” notes growing student loan debt, and laments how it sets many young people back. Reporter Carolyn Thompson says, “Graduates who can immediately begin building equity in housing or stocks and bonds get more time to see their investments grow, while indebted graduates spend years paying principal and interest on loans.”
Wayne Arnold of the Wall Street Journal addresses the deflationary forces plaguing China’s economy in a piece titled “China’s economy under mounting stress.” His basic thesis: financial power may not be enough to avoid market instability. “They are going through a painful deleveraging and credit-tightening process due to the excessive debt borrowing to stimulate the economy after the global financial crisis,” says Tan Kong Yam, an economics professor at the Nanyang Technological University in Singapore.
Lastly, Jeremy Rifkin’s New York Times article discusses the paradoxical nature of capitalism. “The rise of anti-capitalism” explains that the very nature of competitive markets is bringing costs so far down that many goods and services are easy to come by and, thus, nearly free. The growth of technology has allowed consumers to share information with ease, changing the dynamics of capitalism. “Now the phenomenon is about to affect the whole economy,” Rifkin says. “A formidable new technology infrastructure — the Internet of Things — is emerging with the potential to push much of economic life to near zero marginal cost over the course of the next two decades.”
Check back over the coming weeks for more informative reads!