Week of 9/30/2020

Next week we will have an interesting talk about investing in an election year with a great speaker, Mark Seaman from the Capital Group. Capital Group is the parent company of American Funds. Mark is an equity investment director at Capital Group. He has 26 years of investment industry experience and has been with the firm for 14 years. Earlier in his career at Capital, Mark managed the Advisory Resources Group interacting with research analysts and broker dealers. Prior to joining Capital, he was director of mutual fund research, director of alternative investments and director of non-proprietary fund distribution at Legg Mason Wood Walker. He holds a bachelor’s degree in finance from the University of Maryland. He also holds the Chartered Financial Analyst® designation and is a member of the Baltimore Security Analysts Society. Mark is based in Washington, D.C. We will send out the link and other details in a separate email later this week. Please let us know if you have any specific questions for Mark.  We hope you enjoy this week’s letter.

We learned: a great story about the bridges depicted on Euro banknotes. When the notes were being designed, the European Central Bank didn’t want to play favorites with which of the 12 participating countries got their bridges on the notes, of which there are 7. One Dutch town then built each of the bridges to claim them for the Netherlands. More on this funny story here. We think: this Twitter thread about pro golfer Bryson De Chambeau is fascinating and would interest even non-golfers. He has taken a very clinical look at every part of his game and it has paid off. We think: we (humans generally) often overestimate our grasp of data and the pandemic is no different in this regard than any other event. How well do you know the time path of deaths around the world from COVID? Test yourself and tell us how you did. We scored an 85%. We've been: observing rising government debt and thought we’d share these interesting facts Only 5 of the last 60 fiscal years have resulted in a surplus, the most recent taking place in 2001 (Office of Management & Budget). At the current average interest rate on government debt (1.795%) the government can borrow 29.9% more today than it did 5 years ago and have the same out-of-pocket interest expense (U.S. Department of the Treasury). We recommend: this mesmerizing piece of chocolate artistry. We found the level of detail in this chocolate telescope so impressive.

Q: Is there anything I can do to be in the market but avoid market risk. A: The rules for investment success have not changed- if you plant wheat, you won’t reap oats. Risk and return continue to be partners. Occasionally, investment firms will introduce products that promise the ability to move in and out of the market or that can avoid major downturns. In practice they rarely deliver on that promise. Our associate Cale shared a cautionary tale about several large pensions that saw one of their investments lose almost everything in the rapid COVID-19 decline earlier this year.

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