Wealth Accumulated

By D J Thomas, a large-cap stock market value investor and financial writer

I work out daily

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I work out daily

Well I work out daily. I feel like I have to do it. So, either play tennis or go running or lift weights or something like that

Lauren Templeton

Emphasis mine, but Lauren’s need to workout or be active in some way everyday is strangely familiar.

I don’t actually work out daily but I would love to. My primary exercise of choice is weightlifting. The maximum amount of times per week I can lift without crossing the threshold of over-exercising is four times.

Trust me I’ve found out the hard way.

Even then I tend to only lift for a block of about six or seven weeks, then switch focus to meditating.

Just in the same way that lifting weights leads to a strong body and mind, resetting my nervous system with meditation aids clear thinking, which is what I think Lauren is getting at.

Working out daily: a behavioural finance practice

To ‘work out daily’, I pursue, art making, growing flowers and vegetables from seed, reading, praying, spending time in nature, and spending time with other men away from family commitments and financial markets.

It’s pure bliss to completely switch off from balance sheets and the global financial news flow.

Beetroot seedlings, or it could be Swiss chard

To me working out daily means taking time out for yourself every single day to do something that John Wineland describes as soul-nourishing for men:

The masculine needs four key nutrients for the nervous system to truly ground and reset. The first is time alone with no demands, which is not the same as meditation. The second is creating time to receive the gifts of the natural world. Third is time spent in depth and reflection with other men. Which is even better when there’s no demands and nature is involved…the fourth is making yourself available for the boundless energy in your feminine partner.

John Wineland

John typically works with self-identified hetro men and women, but mostly men, in the realm of love, relationships and truly connecting with the core of who you are from a masculine or feminine perspective.

Grounding your nervous system by engaging in his four key practices and meditation is the way to do it. I’ve adapted it to include lifting and suit my own wants and desires but the principle remains the same.

Working out daily is to swap a cluttered, tense, and unconscious mind and body with a calm, awakened consciousness, and relaxation. I’ve found that this state of consciousness is vital to remaining objective not only in the value investing research process but to decision-making in the remaining aspects of your daily life.

This is the essence of my behavioural finance practice.

Happiness is a warm rate rise

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Powell’s remarks yesterday on the FOMC’s anticipated decision to raise rates by 25 basis points speaks to sticky inflation and the Fed’s willingness to continue raising, even in the face of regional bank failures.

“We on the committee have a view that inflation is going to come down not so quickly”

Jerome Powell

For all the negative discourse that permeates the Twittersphere on Powell and the Fed, I actually respect the fact he has learnt his lesson from 2015 and remains steadfast in his mission to curb inflation.

So far it has worked. Slowly.

Most commentators seem to miss the fact that the regional banks that are failing decided to take on massive interest rate risk at a time when rates were near zero.

Short-sighted management of banks are to blame for this current round of failures; it was infantile to presume that interest rates would remain at zero ad infinitum.

And Powell is clear on where we go from here:

“Inflation has moderated somewhat since the middle of last year, nonetheless inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go.”

Jerome Powell

Apple’s new bank customers

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Apple (AAPL) has been a part of the Wealth Accumulated portfolio since 2nd February 2023.

At the time I had been pondering why Warren Buffett’s portfolio was made up of Apple to the tune of 40%

The most obvious answer without doing any fundamental research is that as a business, Apple is the most successful in the world.

iPhones are owned in every corner of the globe and Apple’s cash pile, famously held in off shore jurisdictions, is legendary.

Tim Cook is a well respected CEO and unless the numbers from a quick quant analysis of how the stock has performed over the last decade threw up any misgivings then there was no reason NOT to own the stock.

Apple’s banking on banking

Last month Apple launched a high yield savings account in partnership with Goldman Sachs that currently offers 4.15% on cash.

It accumulated over $1 trillion in deposits in its first four days and comes amid the continued flight out of regional banks and into the too big fail banks for depositors.

This is a smart move by Apple who can conveniently provide a way for its iPhone customers to get yield, albeit lower than other banks, in exchange the convenience and ease with which its iPhone customers can get such access.

Apple is exploiting its advantage in the banking space.

Apple’s a hold for now.

Regional banks are undervalued

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Matthew Fox of Business Insider recently posted a superb article on the reasons why the stock market bottomed in October 2022.

Interestingly he lists 6 reasons why – all valid, but for me there was only one, the first one that Matthew lists: inflation seemingly under control from the Fed’s aggressive money tightening policy.

As we continue to see the economic damage from high interest rates in the form of regional bank failures, then it would be silly not to search for value in the regional banks.

Perhaps I’ll take the lazy way out and simply purchase the regional banking spider/ETF as I’m unfamiliar with valuing banking stocks on an individual basis other than via quant methods.

But it’s clear that regional banks are suffering and will continue to suffer as the Fed continues to raise rates.

To that end, it’s inconceivable that all regional banks decided to grow aggressively when interest rates were low and take on interest rate risk such as those that have failed already.

James Montier on investment research

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I’m reading listening to The Little Book of Behavioral Investing, by James Montier choc full with numerous tidbits of practical advice for even the most seasoned of investors.

Here’s what he says in regard to investment research:

We should do our investment research when we are in a cold, rational state, and when nothing much is happening in the markets. And then pre-commit to following our own analysis and prepared action steps.

James Montier

By pre-commit, Montier is referring to what John Templeton used to do to remain faithful to his own investment research; by placing buy orders with his broker from a pre-determined list of stocks researched during a bull market.

I must admit that takes guts, especially when the market is selling off and everyone is heading for the exits.

Placing buy orders would take a lot of the sting out of the emotional turmoil involved in such a cold-blooded approach.

But if we are to learn from past masters and emulate their genius then there really is no choice.

Pre-commit, or succumb to the emotionality of the markets.