Friday, February 8, 2019

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.

Good Morning! Here is what piqued our curiosity this week:

1. Shopping malls aren't dead yet (Link)
71% of people with household incomes under $50,000 prefer to buy things in a physical store, compared with 54% of people with household incomes of $100,000 or more.  Price matters to consumers.  For 39% of people, price beats out quality, uniqueness, sustainability and convenience as the factor that contributes the most to their purchasing decisions.

2. The death of clothing (Link)
Who needs fashion these days when you can express yourself through social media? Why buy that pricey new dress when you could fund a weekend getaway instead? Apparel has simply lost its appeal. Apparel is being displaced by travel, eating out and activities—what’s routinely lumped together as “experiences”—which have grown to 18 percent of purchases. Technology alone, including data charges and media content, accounts for 3.4 percent of spending. That now tops all clothing and footwear expenditures.

3. The benchmarks we choose determine whether we win or lose (Link)
We tend to measure ourselves against our latest peak or valley. If we have a recent downturn, we’re sad – even if we are doing better overall. A recent uptick creates happiness, even if our trendlines are down overall. It’s better to think of ourselves as a long-hold happiness stock. This helps us get a 10,000-foot view of how we are doing over the long run. Otherwise, we watch the stock ticker go up and down, and our happiness goes up and down with it. This ticker-watching causes us to pick unproductive benchmarks. Instead of measuring ourselves against our progress toward a goal, looking toward a long-term horizon, the ticker is all we can see.

4. Superstocks (Link)  
A study has shown that between 1926 and 2016, around $35 trillion of wealth was created by 25’300 stocks listed in the US. Yet a tiny group of 90 stocks (just 0.3% of the total) collectively generated over half of the stock market’s net gains over the 90-year period. Digging deeper, just five firms (namely Exxon Mobil, Apple, Microsoft, GE and IBM) accounted for as much as 10% of the total wealth creation, each generating over half a trillion dollars in shareholder wealth.

5. How retail investor behaviour changed when a major mutual fund platform in China upgraded their smartphone app to allow instant trading from anywhere. (Link)
“Going mobile” raises investor attention and trading volume through aggravating investors’ over-confidence and self-control problems. The mobile app significantly boosts flow volatility and makes investor flow more sensitive to short-term fund returns and market sentiment. As a result, fund performance suffers due to heightened liquidity costs. The funds more exposed to the shock see a greater decline in abnormal returns, attributed to incremental fund flows through the trading app.


Saying goodbye to Heather with delicious hot chocolate as she goes on maternity leave!