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Week #38: Japan's Nikkei Breaks Out; Ace Your Investments; “As Comical as GameStop”
Defying Death: Tudor-Jones Tackles Druckenmiller
Today at a Glance:
· One Market: Japan Breaks Out📈
· One Philosophy: Ace Your Investments🎾
· One Crash: “As Comical as GameStop”🤡
· One Silicon Valley Trend: Defying Death💀
· Two Traders Talk: Tudor-Jones Tackles
Japan Breaks Out🇯🇵
The sun is rising again over the Land of the Rising Sun. After taking a breather over the past few months, the Nikkei 225, Japan's benchmark index, looks ready to break out to new highs once more.📈
Here are three telltale signs.
✅On Friday, over 60% of the Nikkei's member stocks closed at 4-week highs, the highest percentage in two years. History shows that when this many stocks hit new monthly highs, the index's upward momentum continues. In the past, the Nikkei closed higher a month later in 20 out of 22 similar cases.
✅The broader Topix index, covering over 2000 Japanese stocks, also shows robust market breadth. The number of Topix stocks hitting 52-week highs just reached its highest level since 2017. Readings above 10% typically deliver healthy annualized returns.
✅The WisdomTree Japan Hedged ETF (DXJ), which offers a way to play Japanese stocks while neutralizing currency swings, saw a spike in 6-month relative highs versus the S&P 500. Over the last three weeks, it matched the second-highest level ever.
With breadth and momentum aligning, the Land of the Rising Sun looks poised to continue its ascent.
Ace Your Investments
In his seminal 1975 article, "The Loser's Game," Charles Ellis makes a compelling case that for most people, investing is a loser's game.😥
This perspective remains as relevant today as when Ellis first put pen to paper.
Three core arguments cement his thesis.
🎾First, Ellis draws a parallel between amateur tennis and amateur investing. In tennis, amateurs win, not by hitting winners. Instead, they avoid unforced errors. Likewise, average investors lack the skills to consistently "hit winners" and generate alpha. Their best bet is to remain invested in low-cost index funds.
As Ellis writes:
"The amateur doesn't have to hit winners to win, and that's a good thing, because he or she generally is incapable of doing so dependably."
🎾Second, generating alpha requires a rare mix of talent, resources, and determination. Predicting market movements is difficult. Only a few investors can make more money on the upside and limit their downside. For most, matching the market is the best achievable outcome. Beating the market is a fool's errand.
🎾Finally, investors generate alpha either by reducing risk or boosting returns. Very few can accomplish both. Investors must understand their risk preferences in making this tradeoff. There is no universally "correct" method -- only the approach best matched to one's unique investing profile.
Ellis' central lesson? Minimize errors, understand your limits, and buy index funds.
Vietnamese Meme Stock🇻🇳
“This is ...as comical as GameStop,” Matt Simpson, Wealthspring Capital
Vietnamese EV manufacturer and SPAC VinFast’s spectacular rise and fall is a cautionary tale for average investors.
Here are three factors that fueled the Vietnamese automaker's dramatic implosion.
🚗First, VinFast's valuation hit stratospheric levels despite barely producing any vehicles. Its shares briefly topped $190 billion. That was twice the combined worth of Detroit stalwarts Ford and GM. Like GameStop, VinFast’s crash back to earth was inevitable.
🚗Second, VinFast exploited the quirks of the SPAC structure itself. SPACs expand early access to unproven startups. This stoked excitement among amateur investors. Shares swung violently as investors feverishly flipped the tiny float.
🚗Finally, VinFast relied more on ambitious projections than on tangible results. SPAC deals permit rosy forecasts pre-merger. VinFast's soaring $190 billion value vastly outpaced business prospects. Its meteoric rise and subsequent nosedive was textbook hype over substance.
VinFast’s saga lays bare the precarious nature of unfettered speculation. Lofty dreams, limited liquidity, and inflated growth assumptions plant the seeds for an epic crash.
One Silicon Valley Trend
Defying Death 👴🏻
Tech entrepreneur Bryan Johnson gets monthly blood plasma transfusions from his teenage son.🩸
Doctors have told Johnson that he has the heart of a 37-year-old and the lungs of someone aged 18. That follows the transfusions and adherence to a strict health regime.
Oh, and the $2 million Johnson spends every year on research.💰💰💰
Silicon Valley's race for immortality may seem fantastical. But behind the hype lie enticing investment prospects.
Ambrosia- a tech startup, already has hundreds of clients. It charges $8,000 for plasma transfusions to prevent aging.
As tech billionaires pump fortunes into anti-aging research, savvy investors should pay attention.
Other longevity plays are in the pipeline.
🩸First, Google's Calico and other ventures developing AI and nanotechnology for life extension are attracting significant funding. Alphabet alone has invested over $1 billion. These technologies could yield breakthroughs against cellular aging and diseases. Investors who identify the most promising startups early could profit handsomely.
🩸Second, consumer genetics companies like 23andMe now offer tests to measure biological age. As testing goes mainstream, the market for genetics-based longevity products could surpass $610 million by 2025. The right bets in this niche could generate returns.
🩸Finally, asset managers are launching funds focused on the longevity sector. One returned 17% annually over five years. That's good but not eye-popping. But the demographics of an aging population make longevity big business. This emerging fund niche allows investors to capitalize on anti-aging fever through diversified portfolios.
Behind Silicon Valley's fixation with living forever lies real investment potential.
Anti-aging crazes may come and go. But humanity's quest for longevity across technology, healthcare, and research will remain.
Betting on defying Death could provide healthy returns.
Two Traders Talk
Tudor Jones Tackles Druckenmiller
Paul Tudor Jones(net worth:💰8.1 billion ) and Stanley Druckenmiller (net worth: 💰6.2 billion)are two of the greatest traders in history.
Tudor Jones famously generated five consecutive 100% + years early in his career.
Stan Druckenmiller was George Soros's chief investment officer.
He was behind Soros’ most famous trade: shorting the British pound on September 16th, 1992, making over a billion dollars in a single day. 💰💰💰
I recently came across a video where Paul Tudor Jones interviewed Stan Druckenmiller from 2016 or so. Druckenmiller's modesty in the face of his remarkable success as an investor is quite impressive. It is well worth watching.