Thursday, April 1, 2021

This week's interesting finds

2020 Cymbria Annual Report 

From our Cymbria Annual Report:

US purchasing managers saw prices rise at the fastest pace in a decade in March

** US MFG PMI : U.S. Manufacturing Purchasing Managers Index (PMI) 

The survey said supply chain disruptions were the main cause, and the green line below shows that supplier delivery times increased too, but the speed of the increase in input and output prices is off the charts (not literally, but getting there). 

The upturn in new business accelerated, with new export orders rising solidly. Restrictions on production, however, meant that backlogs of work were accumulated at the steepest pace since data collection began in May 2007. Although manufacturers expanded workforce numbers at a strong rate, the pace of job creation eased slightly as many firms highlighted struggles finding suitable candidates to fill vacancies. Amid substantial supplier shortages and input delays, manufacturing firms registered the fastest rise in input costs in a decade in March. At the same time, firms sought to partially pass greater input prices through to clients, with the rate of charge inflation the sharpest on record.

Reports of ongoing supply chain issues led to marked hikes in input costs across the service sector during March. The rate of input price inflation was the sharpest since data collection began in late-2009. Firms were able to partially pass higher costs through to clients, however, as selling prices rose at the fastest pace on record.

Tech Stocks vs. Bonds

Too Much, Too Soon, Too Fast 

Some things scale well. Double their size and you get double the output (or more). Other things don’t, andis it important to know which is which.

A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you try to be paid sooner. Virtually all investing mistakes are rooted in people looking at long-term market returns and saying, “That’s nice, but can I have it all faster?” Here’s how often the market generates a positive return based on holding period.

One way to think of this chart is that there’s a “most convenient” investing time horizon – probably something around ten years. That’s the period in which markets are nearly always to reward your patience. The more your time horizon compresses the more you rely on luck and tempt ruin.

Go down the list of investing blunders and I’m telling you, no less than 90% of them are caused by investors trying to compress this natural, “most convenient,” time horizon.