Elon Musk believes SpaceX should be able to land humans on Mars in 2025.
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Source: Elon Musk: SpaceX could soon take humans to Mars
I rarely share letters we write to IMA’s clients, but I decided to share this “Value Investor’s Manifesto” I wrote for our clients in July. It should be a helpful tool to frame recent volatility in an appropriate perspective. It’s just eight pages long, but it’s probably one of the most important pieces of writing I have done in a long, long time. Here is the first part, the introduction.
By Vitaliy Katsenelson, CFA
The relationship between a client and a money manager is like a marriage: even if you’re married to the right person, it’s just a matter of time before your relationship will hit hard times that test the strength of your marriage. After all, life is not linear, it’s full of ups and downs. The downs will ultimately test a couple’s commitment to one another.
Just like life, stock returns are anything but linear. Over the last one hundred-plus years, stocks returned about 11% a year on average. But if you were to look at stock market returns on an annual basis, they were usually anything but 11%. This 11% average is the culmination of a very combustible mixture of numbers that individually bear very little resemblance to the average they result in.
Side effects of nonlinearity of stock behavior clearly show up in investor returns. The financial services market research firm DALBAR studied historical returns of mutual funds and actual (realized) returns of investors who invested in those mutual funds. DALBAR’s findings were stunning. For decades fund investors had significantly underperformed the mutual funds they invested in, not by a percent or two but by a mile, capturing only a small fraction of the returns of those mutual funds.
For a civilian (nonprofessional) investor, understanding the investment process of a fund manager is usually difficult. Often, performance is the only thing investors can judge objectively, so recent performance overshadows all other metrics. Investors compare the most recent returns of their favorite new mutual fund versus the returns of the one they’re holding. If the new mutual fund has done better recently, they’ll sell the old one and buy the new one. This often results in buying high and selling low.
Any money manager, whether he is managing separate accounts or a mutual fund, will go through stretches where he looks smarter or dumber than he really is, though his IQ hasn’t actually changed.
When we look smarter than we are, we’re not worried about what clients think of us (though we try to temper their expectations of our future brilliance). At that point our biggest concern is our own self-perception: we don’t want success to go to our heads and result in overconfidence.
On the flip side, it’s just a matter of time before we look dumber than we are, and that’s when our relationship with a client gets tested. Especially if it’s a very new relationship and the client hasn’t had a chance to experience our brilliance.
Historically, value investing (owning undervalued companies) has done significantly better than other strategies. Paradoxically, the …read more
Source: Manifesto – The Values of Value Investing
By Tyler Durden
Submitted by Nick Cunningham of OilPrice.com
Is OPEC About To Surprise The Oil markets?
A day before the OPEC summit kicks off, top officials from the oil cartel say that the markets are moving in the right direction, a sign of confidence that suggests little could emerge from this week’s meeting.
Few expected the June 2 meeting to result in some sort of agreement on supply cuts or even a production freeze, given the enmity between several of the group’s top members. The collapse of the Doha summit in April, a meeting that only sought to implement a very modest freeze deal, suggests that any cooperation is almost certainly off the table.
However, even since April the chances of a deal have narrowed. That is because oil prices have continued to climb, trading just below $50 per barrel on the eve of the semi-annual OPEC meeting in Vienna.
“From the beginning of the year until now, the market has been correcting itself upward,” U.A.E. oil minister Suhail Al Mazrouei told reporters from Vienna on May 31. “The market will fix itself to a price that is fair to the consumers and to the producers.” Oil prices have moved up nearly 90 percent since the February lows of $27 per barrel. This extraordinary rally has taken the pressure off of OPEC to take coordinated action on cutting or freezing output.
Nevertheless, it might still be a bit early for OPEC to claim victory. The major supply outages in Canada and Nigeria helped to push up crude oil prices over the past month. Canadian oil producers, led by Suncor Energy, are getting back to work. The prospect of a return in large sources of supply has halted the price rally just short of $50 per barrel.
“I think the market trends are better now” Emmanuel Ibe Kachikwu, Nigeria’s oil minister said in Vienna. Oil prices are moving “in the right direction” but he said that he thinks “it needs more acceleration of the pace.” While he may want prices to rise faster, OPEC members appears unwilling to cooperate in order to make that happen.
Instead, the goals for the OPEC meeting are much more modest: to patch up broken relationships and cobble together some sort of foundation for cooperation. All eyes will be on Saudi Arabia’s new oil minister Khalid al-Falih, who replaced the well respected and long-time former minister Ali al-Naimi. Mr. Naimi worked well with the group, even though Saudi Arabia has competing and sometimes hostile relations with other members (namely, Iran). Bloomberg reports that al-Falih comes to the meeting with the goal of mending fences with its fellow OPEC members, hoping to restore trust after Saudi Arabia killed off the Doha deal. Saudi Arabia wants to reassure OPEC that it will not flood the market, and may even be open to reinstating production targets.
It is hard to see how OPEC could agree on such an outcome, unless the production targets were substantially higher than the previous ones. Several OPEC members, including Saudi Arabia, …read more
Source: Is OPEC About To Surprise The Oil markets?
By Tyler Durden
Submitted by Joseph Jankowski of PlanetFreeWill
Video From UCLA Shows How Vulnerable Students Are In A Gun Free Zone Lockdown
A campus shooting on Wednesday at the University of California left two men dead in a murder-suicided that sent thousands of students looking for safety and locking themselves down in classrooms.
UCLA is a gun free zone that prohibits students from carrying a gun within 1,000 feet of school grounds under Penal Code 626.9 PC, also known as California’s Gun-Free School Zone Act.
UCLA’s campus policy also, “Prohibits the transportation and possession of firearms and other dangerous weapons on the grounds of UCLA campus, off-campus buildings owned or operated by the University, areas adjacent to University Property or to activities of or programs conducted by the University, whether on or off University Property.”
What this means is that students have little way of defending themselves from a gunman who is seeking to do harm.
In this footage obtained by RT, you can see how students have nothing else to do for their safety but to lock themselves into a classroom and wait for the situation to be defused.
If a determined gunman wanted to barge into the classroom where the students in the video above were hiding, it’s very possible that he could have done so if he had enough time.
As you can see, all the students can do is to sit still and wait, in hopes they do not become targets.
UCLA’s gun policy and the state of California’s penal code establishing gun free zones did absolutely nothing to prevent the man who committed the horrific act on Wednesday from bringing his gun on campus.
Last October the state of California passed a bill that bans concealed handguns on campus.
What this video shows is that the states regulations are putting students in a terribly vulnerable position that could allow a determined gunman to do more damage then he otherwise would be able to do if students and faculty had sufficient means of self-defense.
We all know that Criminals do not obey the law.
Source: Video From UCLA Shows How Vulnerable Students Are In A Gun Free Zone Lockdown
By Tyler Durden
The last time China set up an air defense identification zone, or ADIZ, was in late 2013, when tensions with Japan had escalated so far, many were speculating if the two nations would not engage in limited warfare. Back then, China set up its first ADIZ in the East China Sea in November 2013 to cover the Diaoyu Islands, which Japan calls the Senkakus. Both countries claim the uninhabited outcrops but Tokyo controls them. The ADIZ triggered a backlash from Japan, South Korea and the US.
While the confrontation between Japan and China subsided, it was promptly replaced by another geopolitical tension, this time a few thousand kilometers to the Southwest, in the South China Sea, where tensions between China and neighbours Vietnam, Malaysia, Brunei and the Philippines have risen since Beijing ?embarked on major land reclamation work on disputed islands and reefs in the area. In recent months, the US has also gotten involved by sailing ships through contested wates, much to China’s anger; most recently a US spy plane was intercepted by two Chinese fighter jets over the area.
Which is probably why, as the SCMP reported yesterday, China is preparing another air defence identification zone, this time in the South China Sea, two years after it announced a similar one in the East China Sea. According to the SCMP, one source said the timing of any declaration would ?depend on security conditions in the region, particularly the United States’ military presence and diplomatic ties with neighbouring countries.
However, should the US continue engaging in what Beijing views as provocations, China will have no choice but to escalate: “If the US military keeps making provocative moves to challenge China’s sovereignty in the region, it will give Beijing a good opportunity to declare an ADIZ in the South China Sea,” the source said.
The revelation came ahead of the Shangri-La Dialogue in Singapore, a security forum attended by defense officials from various nations, including Admiral Sun ?Jianguo and US Secretary of ?Defence Ash Carter. Disputes in the South China Sea are expected to head the agenda of the three-day event, which starts on Friday. Top Chinese and US officials will also meet next week for their annual strategic and economic dialogue in Beijing.
As the SCMP adds, in a written response to the South China Morning Post on the zone, the defense ministry said it was “the right of a sovereign state” to designate an ADIZ.
“Regarding when to declare such a zone, it will depend on whether China is facing security threats from the air, and what the level of the air safety threat is,” the statement said. What the statement was envisioning was more incidents such as this one profiled two weeks ago when as we reported “Chinese Fighter Jets Fly Within 50 Feet Of US Spy Plane Near China.”
A report in Canada-based Kanwa Defence Review said Beijing had defined the area of the ADIZ in the South China Sea, and the timing of the announcement would be …read more
Source: Beijing Ready To Impose Air Defence Identification Zone To Thwart US "Provocation"
By Tyler Durden
With regulators and local authorities unable or unwilling to crack down on the unprecedented housing bubble in select Canadian cities, increasingly used by Chinese oligarchs to park hot cash offshore, the local banks are starting to take action into their own hands. Case in point, Bank of Nova Scotia has decided to ease off on mortgage lending in Vancouver and Toronto due to soaring prices, Chief Executive Officer Brian Porter said.
“We’re a little concerned about housing prices in the greater Vancouver area and Toronto,” Porter, 58, said Tuesday in an interview on Bloomberg TV Canada. “We just took our foot off the gas the last couple quarters in terms of mortgage growth for the reasons I cited, in terms of Vancouver and Toronto.”
Nationwide home sales in April jumped 10.3 percent from a year earlier, the most activity for that month and the second-highest level ever, according to the Canadian Real Estate Association. In Vancouver, prices rallied 25 percent in the month to an average of C$844,800 ($643,000) and sales climbed 15 percent. Toronto prices jumped 13 percent to C$614,700 and sales rose 7 percent, the association said.
The dramatic rebound in Canadian real estate, driven almost entirely by foreign money is shown below.
Then again, while Porter did tacitly admit that soaring housing prices are a threat, he also added that “generally, Canadians have a strong ability to self regulate and they’ve demonstrated that before.”
That may be in doubt, because none other than the OECD itself rang a alarm bells over the frothy nature of the Toronto and Vancouver housing markets and high levels of consumer debt. “Very low borrowing rates have encouraged household credit growth and underpinned rapidly rising housing prices, particularly in Vancouver and Toronto, which together are a third of the Canadian housing market,” the Organization for Economic Co-operation and Development warned again today in its latest outlook quoted by the Globe and Mail.
“In relation to household incomes, both house prices and household debt are high,” it added, throwing more fuel on the fire for those who are fretting over bubble fears. “Macroprudential measures have strengthened recently but should be tightened further and targeted regionally.”
But the loudest warning was the OECD’s assessment of a “disorderly housing market correction,” notably in Toronto and Vancouver, as the biggest threat to Canada’s economy.“ This would damp residential investment and private consumption, and could threaten financial stability.”
The G&M adds that the group didn’t suggest specific measures, but states that “both Ottawa and British Columbia have acted.”
Which we find odd because also today the same Globe and Mail wrote an article explaining that the top bureaucrat overseeing the real estate sector in B.C., Carolyn Rogers admits she did not realize how wildly speculative Vancouver’s market had become until an explosion of public outrage earlier this year.
Rogers is B.C.’s superintendent of real estate, a job she has held since 2010. Now, she sees houses trading like hot commodities – and it worries her. Ms. Rogers says hearing how buyers …read more
Source: OECD Warns Of "Disorderly Housing Market Correction" In Canada
By Tyler Durden
Seemingly missed by the mainstream media on Monday, Chinese equity futures crashed over 12.5% – the biggest drop since 1995 – only to soar back to unchanged within seconds. This was not a 'fat-finger' trade, and as one trader noted, “liquidity in the market is really thin right now,” which is borne out by the evidence. Thanks to government rules disabling “hedging” accounts from holding more than 10 contracts a day, volume (and liquidity) has become practically non-existent since September and so the 12.5% flash crash was driven by just 3 trades totalling just 646 contracts which means a mere $92 million sell order collapsed Chinese equity markets by the most on record.
A shocking move…
But when we zoom in it is apparent that just 3 trades were responsible for the plunge – the initial 398 contract sell, followed by a 107 contract order and a 141 sell all at 22:42:10
As background, we note that a hedging account is a designation for investors who use futures to offset risks from their holdings in the stock market. Such accounts are exempt from limits on opening more than 10 contracts in a day, according to CFFEX rules announced in September… so this could only be a hedging account.
In other words just 646 contracts – or 'hedging' around $92 million notional – managed to crash the Chinese futures market by the most on record.
And here is why… Chinese policy makers restricted activity in the futures market last year because selling the contracts is one of the easiest ways for investors to make large wagers against stocks. Volume shrank by more than 90 percent from its peak after officials raised margin requirements, tightened position limits and started a police probe into bearish wagers.
Yes that is the real volume chart.
Some international traders with negative views on Chinese stocks have shifted their wagers to offshore markets. As we noted previously, short interest in Chinese ETFs is now at record highs…
Which could be why Chinese stocks are stubbornly ignoring the collapse of the currency…
As Bloomberg notyes, while sudden price swings are hardly unique to Chinese exchanges, the country’s markets have come under increased scrutiny in recent months as MSCI Inc. considers adding mainland shares to its international indexes. Recent measures to curb trading halts and clarify beneficial ownership rules have improved the country’s odds of inclusion to 70 percent, Goldman Sachs Group Inc. analysts wrote in a report on Tuesday, which was one of the factors behind the market’s rally. MSCI will announce its decision next month… and we are sure a record intra day crash in prices will have no impact on the political decision to bring Chinese equity volatility into the world's biggest benchmarks.
Sony Pictures TV chairman Steve Mosko is leaving the studio after 24 years. …read more
Source: Sony Pictures TV chairman Steve Mosko bolts
It is not easy to be single in America today. If you are a man, it can be exceedingly difficult to find a good woman to marry. If you are a woman, it is literally a miracle if you can find a good man to marry. So is it just our imaginations, or has the process of finding a mate become much more challenging in recent years? Well, it is a fact that fewer people are getting married these days. For the first time in our history, there are more single adults in our country than married adults, and Time Magazine says that 25 percent of Millennials will never get married even once in their entire lifetimes. And of course those that do get married are taking far longer to do so than previous generations. Just recently, I wrote about how the average American woman is getting married 7.0 years later than she did in 1956, and the average American man is getting married 6.7 years later than he did back at that time.
So why is this happening?
Why has finding love become so challenging?
Below, I would like to share 8 reasons why it has become so hard to find someone decent to marry…
#1 The Me-Centered Society
We live in a “me-centered” society in which tens of millions of us are literally in love with ourselves. When pleasing self becomes the highest priority, that doesn’t leave a lot of room for the kind of self-sacrificial love that marriage requires. An astounding 24 billion “selfies” were uploaded to Google last year, and that says a whole lot about where we are at as a nation. So many of us are inclined to stay with our “partners” for only as long as they make us happy, and the instant that ends many of us wish to dispose of them. And that is a lot easier to do if you are “living together” instead of being legally married.
#2 It Has Become Much More Difficult To Find Someone With Good Values
The moral collapse of America is something that I write about extensively. As a society, we have rejected the values of previous generations, and today most people generally do whatever they feel like doing. But this can become a major problem when you are looking for someone “that shares your values” to get married to. According to the Pew Research Center, more than half of all Americans that belong to the “Silent Generation” attend religious services weekly, but less than 30 percent of all Millennials do. With each passing generation, we have become less Christian, less “conservative”, and less moral. Unfortunately for young single adults, these trends do not seem likely to change in a major way any time soon.
#3 A Lot Of Young Adults Are Obsessed With Money And Materialism
A lot of single people these days will not date someone unless that individual has “good prospects” for the future. In fact, one survey found that 75 percent …read more
Source: 8 Reasons Why It Is So Hard To Find Someone Decent To Marry
New federal law prohibits rental cars companies from renting out cars that had been recalled before they are repaired.
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Source: Rental companies now must repair recalled cars
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