Early last year when studying my portfolio I decided my two biggest positions (Apple and Google – those ready the blog won’t be surprised due to my 10 stocks for 10 years posts) continued to warrant the large portion of the portfolio they held. I also decided that I would systemically sell say 1% of Apple and 2% of Alphabet a year (the Apple dividend was also paying about 1% – actually it was more then but is much less now).
That was just a long term plan that helped me think about the long term portfolio management. But that, like all investment decision, was subject to revision. As both continued to soar I decided it made sense to sell more but maintain a similar plan, just maybe selling 2% and 4% a year (or something).
Basically I still like them as investments. I still feel

In some ways investing recently has been pretty easy, anything you have bought (almost) goes up – and usually goes up a lot. But when looking for bargains to invest in, it just keeps getting more and more difficult in my opinion.
Apple’s most recent earnings report was spectacular. However, unlike when similar things happened 8 years ago, when such great news allowed you to buy a great company cheaply even after great news now Apple went from an already pricy level and added 10% to that the next day. And it has continued to go up. Apple is by far my largest holding (given how expensive it is, a fairly crazy 25%). So I do still like the company long term, but I have been selling a bit the last year (though not nearly enough to keep it from dominating my portfolio more and more).

There are many problems with the extremely low interest rates available in decade since the too-big-to-fail financial crisis. The interest rates seem to me to be artificially sustained by massive central bank actions for 12 years now.
Extraordinarily low rates encourage businesses to borrow money, after all how hard is it to invest in something that will return the business more than a few percent a year (that they can borrow at). Along with the continued efforts by the central banks to flood the economy with money any time there is even a slowdown in growth teaches companies to not worry about building a business that can survive bad times. Just borrow and if necessary borrow more if you are having trouble then just borrow more.

USA corporate debt has increased from a bit over

The markets continue to provide difficult options to investors. In the typical market conditions of the last 50 years I think a sensible portfolio allocation was not that challenging to pick. I would choose a bit more in stocks than bonds than the commonly accepted strategy. And I would choose to put a bit more overseas and in real estate.
But if that wasn’t done and even something like 60% stocks and 40% bonds were chosen it would seem reasonable (or 60% stocks 25% bonds and 15% money market – I really prefer a substantial cushion in cash in retirement). Retirement planning is fairly complex and many adjustments are wise for an individual’s particular situation (so keep in mind this post is meant to discuss general conditions today and not suggest what is right for any specific

Tencent is one of the stocks in my 10 stocks for 10 years portfolio. In fact it is my largest holding (when you consider that Tencent shares owned by Naspers. Some others have performed better since my reboot of the portfolio in August of 2018: Apple (from 225 to 318) and Danaher (from 103 to 162) and Naspers (33 to 34, which might not seem so great but 2 spinoffs provide another 15) but I still like Tencent a great deal for the next 8 to 10 years.
Tencent has quite a few huge global businesses. One of the most promising areas is Tencent Gaming. Tencent has ownership in many of the largest computer gaming companies globally.
image by Fredrick Tendong
Tencent’s ownership share in Gaming companies
Tencent Games – Honor of Kings (Arena of Valor outside of China) and esports leagues

This post is an exploration of a specific stock Tucows (TCX). Tucows, based in Canada, has built from their domain registration business into a company with 3 businesses poised for predictable cash flow generation.
In 2012 Tucows added Ting Mobile, a business that resells access to cell phone networks (Sprint, for CDMA, and T-mobile for GSM phones).  This is not a flashy business but is a reliable cash flow generator.

In 2015 they added Ting Fiber, which builds fiber networks for small communities that have long been mistreated by incumbent Internet Service Providers (ISPs – such as Comcast and AT&T).  This business requires a large up front investment but once it is operating provides a large and reliable cash flow.
Tucows has leveraged the cash flow from the domain

This post lists the 20 publicly traded companies with the largest market capitalization as of today. Since my November 2017 list of the 20 most valuable stocks the value of 2 companies increased by more than $150 billion and 4 companies value decreased by over $100 billion.
In the 20 most valuable companies list there are 13 USA companies, 4 Chinese companies and 1 each for Korea, Netherlands and Switzerland. The remaining 15 companies with market caps above $200 billion are based in: USA 10, China 2, Switzerland 2 and Japan 1.

Company
Country
Market Capitalization
1
Amazon
USA
$802 billion
2
Microsoft
USA
$789 billion
3
Alphabet (GOOGL)
USA
$737 billion
4
Apple
USA
$720 billion
5
Berkshire Hathaway
USA
$482 billion
6
Facebook
USA
$413 billion
7
Tencent
China
$404

[unable to retrieve full-text content]The most popular posts on the Curious Cat Investing and Economics blog in 2018 (based on page views). Default Rates on Loans by Credit Score (2015) Stock Market Capitalization by Country from 2000 to 2016 (2017) Stock Market Capitalization by Country from 1990 to 2010 (2012) The 20 Most Valuable Companies in the World – […]

When 2 year US government bonds yield more than the 10 year US government bonds a recession is likely to appear soon. This chart shows why this is seen as such a reliable predictor.

The chart shows the 10 year yield minus the 2 year yield. So when the value falls below 0 that means the 2 year yield is higher. Each time that happened, since 1988, a recession has followed (the grey shaded areas in the chart).
Do note that there were very small inversions in 1998 and 2006 that did not result in a recession in the near term. Also note that in every case the yield curve was no longer inverted by the time a recession actually started.
The reason why this phenomenon is getting so much attention recently is another thing that is apparent when looking at this chart, the 2 and 10

Amazon announced they are opening major new offices in Arlington, Virginia and New York City. Each site will hold 25,000 new Amazon employees at an average salary above $150,000. Getting to that level with take many years, next year under 1,000 employees will be at each site.
I lived in Arlington for many years and own rental property there. The Amazon decision is likely to catalyze a much more rapid ascent of the technology sector in the DC area. The DC area has a strong foundation of internet technology to build upon, though many people are not aware of this. The Amazon move will likely help shift the perception of the DC area as government driven and the growth of internet technology activity in the area is likely to grow rapidly.

The 25,000 jobs (even with a greater

The stories you most frequently hear about China in Africa are
Resource extraction (oil, metals, etc.)
Infrastructure loans from China (with Chinese labor and Chinese companies doing the work) (often to aid resource extraction)
Farming exports to China
While those are happening an excellent report from McKinsey (Dance of the Lions and Dragons) provides an in depth look at a much more entrepreneurial state of affairs. While There are big government backed efforts (including those with Chinese state owned company participation) there is a large amount of small companies making entrepreneurial investments lead by Chinese entrepreneurs seeing a opening to build successful companies.

Chinese firms’ decisiveness is indicative of the relationship between the comparative advantages

I created a 10 stocks for 10 years portfolio in April of 2005 which I shared on this blog. It did very well.
Over the years I adjusted the portfolio occasionally. Unfortunately the website I used to track results stopped doing that (and it is much more difficult to track results – with dividends, stock splits, spinoff… than you might suppose). I estimate I beat the S&P 500 by maybe 300 basis points annually (for the portfolio with slight adjustment over time, which is the one I tracked).

With this post I will create a new 10 stocks for 10 years portfolio
The 10 stocks I came up with are (closing price on 22 April 2005 – % of portofilo invested):
Tencent (TCEHY) – $43 and 15% (using the USA ADR). A phenomenal company with increible global prospects for the long term. As the

Abuse of the credit system by 3rd party collection agencies (and credit reporting agencies) in the USA has been a long term problem.
An attempt to partially address some of the abuses was a change in the required reporting practices that impacted collections accounts specifically, known as the National Consumer Assistance Plan (NCAP), which rolled into effect during the second half of 2017. The plan has many components, including: (1) a requirement for more frequent, detailed, and accurate reporting of collections accounts, including reflecting when those accounts have been paid; (2) a prohibition against reporting debts that did not arise from an agreement to pay, or from, medical collections less than 180 days old; (3) the removal of collections accounts that did not arise from

Factfulness by Hans Roling (of TED talks and Gapminder charts fame) is an exceptionally good book. It provides great insight into how to think more effectively and how to understand the reality of the world we live in (versus the large distortions so common in most people’s vision of the world). You can take a quick quiz to see how well you understand the world today.
Today the people living in rich countries around the North Atlantic, who represent 11 percent of the world population, make up 60 percent of the Level 4* consumer market. Already by 2027, if incomes keep growing worldwide as they are doing now, then that figure will have shrunk to 50 percent. By 2040, 60 percent of Level 4 consumers will live outside the West.
The truth of the very widespread increase in wealth

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which reported that total household debt increased by $193 billion (1.5%) to $13.15 trillion in the fourth quarter of 2017. This report marks the fifth consecutive year of positive annual household debt growth. There were increases in mortgage, student, auto, and credit card debt (increasing by 1.6%, 1.5%, 0.7% and 3.2% respectively) and another modest decline in home equity line of credit (HELOC) balances (decreasing by 0.9%).
Outstanding consumer debt balances by type: $8.88 trillion (mortgage), $1.38 trillion (student loans), $1.22 trillion (auto), $834 billion (credit card), $444 (HELOC).

Mortgages are the largest form of household debt and their

Apple analysts are of no value to investors
When I was a reporter covering Cisco Systems Inc. in the late 1990s, it was my job to talk to several analysts a day to find out the latest bit of news that might move the networking company’s share price.

If the stock moved more than 2% on any uptick in volume, I had to write a story explaining why. After dealing with that every day for about three years, I realized the overwhelming majority of analysts had no better clue than I did about what was moving Cisco’s stock.
Most investors know this, but if you don’t remember this lesson. The “explanations” you hear from media often are just as useless as horoscopes. A bunch of meaningless words presented in the hopes you don’t realize they are empty words.
The talking heads (and writers)

The most popular posts on the Curious Cat Investing and Economics blog in 2017 (based on page views).
Default Rates on Loans by Credit Score (2015)
Top 10 Countries for Manufacturing Production in 2010: China, USA, Japan, Germany… (posted in 2011)
USA Health Care Spending 2013: $2.9 trillion $9,255 per person and 17.4% of GDP (2015) (
Manufacturing Output as a Percent of GDP by Country (1980 to 2008) (2010)
The 20 Most Valuable Companies in the World – November 2017*
Warren Buffett’s 2016 Letter to Shareholders (2017)*
The chart shows the top countries based on stock market capitalization, with data from 2000 to 2016. The chart was created by Curious Cat Investing and Economics Blog may be used with attribution. Data from the World Bank.
Stock Market Capitalization by Country

This post lists the 20 publicly traded companies with the largest market capitalization as of today. Since my May 2017 list of the 20 most valuable stocks many of the market caps have increased significantly.
In the 20 most valuable companies list there are 13 USA companies, 4 Chinese companies and 1 each for Korea, Netherlands and Switzerland. The remaining 17 companies with market caps above $200 billion are based in: USA 8, China 5, Switzerland 2, Japan 1 and Taiwan 1.

Company
Country
Market Capitalization
1
Apple
USA
$898 billion
2
Alphabet (GOOGL)
USA
$729 billion
3
Microsoft
USA
$642 billion
4
Amazon
USA
$572 billion
5
Facebook
USA
$531 billion
6
Tencent
China
$506 billion*
7
Alibaba
China
$492 billion
8
Berkshire Hathaway
USA
$451 billion
9
Johnson & Johnson
USA
$371

The USA is currently looking to pass a tax bill. Actually the Republican party has decided to not seek bipartisan solutions so it is the Republicans that are looking to change the tax policy. They wish to call it tax reform but they are reforming nearly nothing. They are mainly moving around tax breaks to different people. The main aim seems to be to reduce taxes without reducing spending which given the huge annual deficit the USA government currently runs that means really this is a plan to shift taxes to the grandchildren of people living right now.
And within lowering taxes for some people today while placing those payments onto their grandchildren there is a bit of shifting around who will pay what now. Mostly this amounts to lowering the taxes on the rich today – along

The total stock market capitalization by country gives some insight but it is also data that is a bit muddy. The data doesn’t tell you how the economies of the countries are doing as there is quite a bit of room for misinterpreting the data.
Apple, Alphabet, Intel, 3M, Abbvie… all are included in the USA market capitalization but much of their sales, earnings and employment are overseas. And USA companies have done very well in global markets so the USA totals are not just an indication how the USA has performed but includes great gains made by profiting from global growth. Also you may be surprised to learn that 26% of USA equities are owned by investors outside the USA.

The chart shows the top countries based on stock market capitalization, with data from 2000 to 2016. The chart was

The total stock market capitalization by country gives some insight but it is also data that is a bit muddy. The data doesn’t tell you how the economies of the countries are doing as there is quite a bit of room for misinterpreting the data.
Apple, Alphabet, Intel, 3M, Abbvie… all are included in the USA market capitalization but much of their sales, earnings and employment are overseas. And USA companies have done very well in global markets so the USA totals are not just an indication how the USA has performed but includes great gains made by profiting from global growth. Also you may be surprised to learn that 26% of USA equities are owned by investors outside the USA.

The chart shows the top countries based on stock market capitalization, with data from 2000 to 2016. The

The latest massive breach of USA citizen’s private information by poorly run companies once again shows how we are voting for the wrong type of people. We need to start electing people that fix problems instead of watching things burn.
It is not impossible to improve if you elect people that care about making things better. If you elect people that are driven mainly by doing favors for those giving them cash you get the system we have now.

I believe in designing systems that use markets to create the best solutions to desired outcomes (this is the basic idea of real capitalism – instead of the crony capitalism we have been infected with). Europe has much more respect for citizen’s privacy that the USA does. Europe has much more effect laws on protecting citizen’s privacy. For

The latest massive breach of USA citizen’s private information by poorly run companies once again shows how we are voting for the wrong type of people. We need to start electing people that fix problems instead of watching things burn.
It is not impossible to improve if you elect people that care about making things better. If you elect people that are driven mainly by doing favors for those giving them cash you get the system we have now.

I believe in designing systems that use markets to create the best solutions to desired outcomes (this is the basic idea of real capitalism – instead of the crony capitalism we have been infected with). Europe has much more respect for citizen’s privacy that the USA does. Europe has much more effect laws on protecting citizen’s privacy. For decades

Health Savings Accounts (HSA) allow you to save money in order to pay health expenses in a tax free account. They are similar to an IRA but are for health expenses.
Eligibility is limited to those with high deductible health care plans.

HSA funds can be saved over the years. Flexible spending accounts are somewhat similar but that money can not be rolled from one year to the next. The idea with HSA is you can save money in good years so you have money to pay health care expenses in years when you have them.
Health Savings Accounts are meant to cover deductibles, co-pays, uncovered health needs etc. that those stuck with the current USA health care system have to deal with. HSA are best used by people who are healthy, as the idea is to save up money during healthy years so

Health Savings Accounts (HSA) allow you to save money in order to pay health expenses in a tax free account. They are similar to an IRA but are for health expenses.
Eligibility is limited to those with high deductible health care plans.

HSA funds can be saved over the years. Flexible spending accounts are somewhat similar but that money can not be rolled from one year to the next. The idea with HSA is you can save money in good years so you have money to pay health care expenses in years when you have them.
Health Savings Accounts are meant to cover deductibles, co-pays, uncovered health needs etc. that those stuck with the current USA health care system have to deal with. HSA are best used by people who are healthy, as the idea is to save up money during healthy years so there is a

I have decided to wind down my investment test with LendingClub. I should end up with a investment return of about 5% annually. So it beat just leaving the money in the bank. But returns are eroding more recently and the risk does not seem worth the returns.
Early on I was a bit worried by how often the loan defaulted with only 0, 1 or 2 payments made. Sure, there are going to be some defaults and sometimes in extremely unlucky situation it might happen right away. But the amount of them seems to me to indicate LendingClub fails to do an adequate job of screening loan candidates.

Over time the rates LendingClub quoted for returns declined. The charges to investors for collecting on late loans were very high. It was common to see charges 9 to 10 times higher as the investor than were

I have decided to wind down my investment test with LendingClub. I should end up with a investment return of about 5% annually. So it beat just leaving the money in the bank. But returns are eroding more recently and the risk does not seem worth the returns.
Early on I was a bit worried by how often the loan defaulted with only 0, 1 or 2 payments made. Sure, there are going to be some defaults and sometimes in extremely unlucky situation it might happen right away. But the amount of them seems to me to indicate LendingClub fails to do an adequate job of screening loan candidates.

Over time the rates LendingClub quoted for returns declined. The charges to investors for collecting on late loans were very high. It was common to see charges 9 to 10 times higher as the investor

This post lists the 20 publicly traded companies with the largest market capitalization as of today. Since my February 2016 list of the 20 most valuable stocks many of the market caps have increased significantly.

Company
Country
Market Capitalization
1
Apple
USA
$825 billion
2
Alphabet (GOOGL)
USA
$652 billion
3
Microsoft
USA
$525 billion
4
Amazon
USA
$466 billion
5
Facebook
USA
$437 billion
6
Berkshire Hathaway
USA
$403 billion
7
Exxon Mobil
USA
$350 billion
8
Johnson & Johnson
USA
$334 billion
9
Samsung
Korea
$316 billion*
10
Tencent
China
$314 billion**
Apple gained an amazing $284 billion in market cap since my February 2016 post. Only 12 companies (including Apple) are worth more than $284 billion. Amazon soared $204 billion (a 78% increase). Alphabet (Google) gained $156

This post lists the 20 publicly traded companies with the largest market capitalization as of today. Since my February 2016 list of the 20 most valuable stocks many of the market caps have increased significantly.

Company
Country
Market Capitalization
1
Apple
USA
$825 billion
2
Alphabet (GOOGL)
USA
$652 billion
3
Microsoft
USA
$525 billion
4
Amazon
USA
$466 billion
5
Facebook
USA
$437 billion
6
Berkshire Hathaway
USA
$403 billion
7
Exxon Mobil
USA
$350 billion
8
Johnson & Johnson
USA
$334 billion
9
Samsung
Korea
$316 billion*
10
Tencent
China
$314 billion**
Apple gained an amazing $284 billion in market cap since my February 2016 post. Only 12 companies (including Apple) are worth more than $284 billion. Amazon soared $204 billion (a 78% increase). Alphabet (Google) gained $156

I have written before about one of the most important changes I believe is needed in thinking about investing over the last few decades: Historical Stock Returns.
My belief is that there has been a fundamental change in the valuation of stocks. Long term data contains a problem in that we have generally realized that stocks are more valuable than realized 100 years ago. That means a higher based PE ration is reasonable and it distorts at what level stocks should be seen as very overpriced.

It also depresses expected long term returns, see my original post for details.
Jeremy Grantham: The Rules Have Changed for Value Investors
The market was extremely well-behaved from 1935 until 2000. It was an orderly world in which to be a value manager: there was mean reversion. If a value