Tuesday, January 22, 2019

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Putting in the reps (Link)
There’s no singular path to success in any endeavor so my advice to anyone looking to further themselves is to put in the reps, even when they seem meaningless.
- If you want to become a writer, start writing every single day, even if it’s terrible.
- If you want to become a better investor, start reading about the markets, and put some actual money to work.
- If you want to work in a specific company, start out as an unpaid intern or figure out how to provide value to someone who already works there.
- If you want to become an entrepreneur, quit reading hashtags on Instagram and actually try to start a business or sell a product.
- If you want to become something or someone you have to put in the reps.
There are no shortcuts...

Interview with Bob Rodriguez, the former CEO of First Pacific Advisors (Link) 
Q: In my Jan. 30, 2018, interview with you, you called the stock market “Alice in Wonderland” populated by a host of irrational “Mad Hatters.” Are they still in the Rabbit Hole?

A:The equity market was delusional and still is. All the excitement from the Trump tax cut has been washed away. And where did the corporate tax cuts go? Stock buybacks and dividends. Capital spending hasn’t occurred, which means that productivity is unlikely to improve appreciably. We’re substituting labor for capital. That’s part of the reason for lower unemployment rates.

Risk is where you're not looking (Link)
To date, the increase in supply of corporate bonds has partially been soaked up by the increase in corporate bond exchange traded funds (ETFs). Such passive funds have grown from an immaterial amount in 2008 to $600 billion today. A relevant trait of most such funds is that they transact indiscriminately with frequent, ratable purchases and sales – a function of ETF inflows or outflows, respectively – that can drive bond prices to both new highs and new lows. In a downturn, passive investment vehicles could be forced to indiscriminately sell those investment grade bonds that the ratings agencies have downgraded to junk. Given the huge size of the BBB market, downgrades could incite a large volume of selling that could then infiltrate the rest of the market and quite possibly exacerbate the negative price action. There is no bond exchange, unlike the many exchanges for stocks, so matching buyers and sellers of bonds isn’t always an easy task. Trading desks of investment banks used to facilitate markets by assuming risk and holding bonds on their balance sheets. Such market making represented about 10% of the overall corporate bond market a decade ago, but today, trading desks hold less than 1% of total corporate bonds in inventory.