Topley’s Top Ten – October 1, 2019

Author

Matt Topley
October 01, 2019

1.Eurozone Stocks -20% in U.S. Dollar Terms Over 18 Months.

TheJPMorgan analysts point out the eurozone stocks are underowned, after stockshave dropped 20% in U.S. dollar terms over the past 18 months.

Why JPMorgan says it’s time to switch to Europe stocksfrom U.S.By Steve Goldstein

2.Value Vs. Growth…. Value ETF See Positive Flows

For example,the biggest value ETF in the market, the Vanguard ValueETF (VTV) saw $64 million in net inflows in the last week.The Vanguard Growth ETF (VUG), meanwhile,saw $12 million in net outflows at the same time. These flows came hand in handwith VTV’s outperformance for the week:

A pair of pure style strategies from Invesco saw similar action:the InvescoS&P 500 Pure Value ETF (RPV) gathered $40 million,while the Invesco S&P 500 Pure Growth ETF (RPG) losta net of $6 million.

Thesefunds, which fish for the top-third highest value stocks in the S&P 500 andtop third highest growth-y stocks in the broader index, respectively, offerperhaps a purer exposure to these styles. And in the past week, theirperformance disparity was even wider. There is almost 6 percentagepoints between their returns, with value at the lead:

Value ETFDemand & Returns Grow-Cinthia Murphy

3.The U.S. is 60% of the World’s Exchange Reserves…Down but Still Dominant…

Total global foreign exchange reserves in all currencies ticked up1.1% from the first quarter, to $11.7 trillion. US-dollar-denominated exchangereserves rose only 0.7% to $6.79 trillion, and their share of total globalforeign exchange reserves fell to 61.63%, down from 61.86% in the priorquarter. And this has been going on for years in baby steps:

US Dollar Status as Global Reserve CurrencySlides

by Wolf Richter • Sep30, 2019 • 22 Comments • Email to afriend

4.Recent Dollar vs. Euro Chart.

U.S. Stocks Rise to Cap Volatile Quarter–S&P500 turns in best performance in the first three quarters of a year since 1997

5.News Headlines are Volatile But the Stock Market Volatility Sideways with Occasional Spikes.

2017-2019 stock market volatility

6.Updated Sector Leadership Quilt.

From Ben Carlson Blog–https://awealthofcommonsense.com/

Found at Abnormal Returns.   www.abnormalreturns.com

7.Bond Flows Still to Longer Duration

Ned Davis Research www.ndr.com

8.Scott Galloway on WeWork–WeWTF, Part Deux

@profgalloway So, themother of all party crashers took a dump in the We IPO punch bowl. The crasher?Math. The autopsy will show the shelving of this IPO was death by S-1. 

Thiswas a case of immunities kicking in after the requisite SEC disclosure. As thegreater fool theory has hit a wall, We will now need additional capital fromthe private markets, who are no longer under the influence. The firm will beforced to sell equity/issue debt at a price substantiallylower than they had anticipated. A price unimaginable just 30days ago. 

Wehas gone from unicorn to distressed asset in 30 days. In just seven days, Welost more value than the three biggest losers in the S&P 500 have lost inthe last year combined: Macy’s, Nektar Therapeutics, and Kraft Heinz.

So,as a distressed asset, the playbook is fairly clear:

•Bring in new management. What got We here, isn’t going to get it where it needsto go. Each layer that comes off the We onion stinks more and more. The mediahas turned its attention to the Neumanns, and it’s as if the lights have beenturned on at a cocaine-fueled party that ended several hours too late. Everyoneand everything suddenly looks bad, scary even.

•The firm needs to bust a move to break even pronto. The new CEO should be froma REIT, ideally a hospitality or commercial real estate REIT. My vote is AdamMarkman, CFO of Equity Commonwealth — Sam Zell’s firm.

•Shed/close all non-core businesses. WeGrow and WeLive are vanity projects. Assomeone close to the firm told me yesterday, they distract Mr. Neumann from thecore business, where he was wreaking havoc. A $13 million investmentin a firm that makes wave pools to indulge Adam’s passion for surfing. Really?Really?

•Raise money after an adult conversation with SoftBank (“You f*cked up, youtrusted us. Do you want to participate in the next round or get washedout?”)

•Focus on margin expansion vs. growth. We has a differentiated product in themarketplace, and should command a premium.

•Lay off all employees not directly tied to managing the core business. Repriceoptions for remaining employees, as the current options are now worthless andmost execs will begin looking for other jobs. The most talented (the ones withthe most options) will be the first to leave if they aren’t given substantialeconomics for staying in Saigon as the North Vietnamese roll into town.

•3-5 new independent directors. Boards have their own dynamic, irrespective ofthe qualities of the individuals. The members of this board have formidableexperience/CVs. Lew Frankfort (Director) is a first-ballot Hall of Fame retailexec, and he doesn’t strike me as the type of guy who’d be bullied by the CEO,or anybody else for that matter. Again, I just can’t figure out what the f*ckhappened here. Who is the head of the audit committee, and was he (they wereall dudes until last week) the one passing out MDMA before each audit meeting?Or, as a private firm, did they even have audit committee meetings? This is aboard that approved a $13 million acquisition of a wave pool company. Or didthey?

Thedirectors enabled an information pyramid scheme and indulged Adam, in exchangefor hoping they could create enough valuation momentum, via nine rounds, tocarry their shares to an exit in the public markets. 

•SoftBank was reportedly considering propping up the IPO with $750 million inshare purchases at the offering price. If that’s the case, shouldn’t they wantto invest billions more at the now low-low 80%-off price? Or were they simplylooking to pump and dump?

Theabove likely won’t happen. Why? As I said two weeks ago,the lines between vision, bullsh*t, and fraud are pretty narrow. I can’t wrapmy head around what’s gone on here. Something is wrong. Something stinks.Something … Just. Doesn’t. Add. Up.

9.Sold Out Video Game Wars…Professional ESports Stadiums Coming to Your Town.

Comcast Spectator

10.When You Lose Momentum, You Become Vulnerable to Distraction

Constantmotion is crucial to making progress

 By  Thomas Oppong, Founder of Alltopstartups

Courtesyof GaudiLab/Shutterstock

Momentum has a psychological effect.

It’s crucial to growth and gettingthings done. Like pushing a sledge down a snowy hill, creating momentum makesgoal achievement and behavioural change easier and quicker.

“Fast starts are never as important as acultural hook, consistently showing up and committing to a process, says SethGodin.

Momentum is just like Newton’s First Law of Motion — anobject at rest stays at rest and an object in motion stays in motion with thesame speed and in the same direction unless acted upon by an unbalanced force.

In other words, it’s a lot less work tokeep moving once you have some momentum than it is to start moving from a deadstop.

To leverage momentum, Jerry Seinfeldrecommends you use a physical calendar, where you mark off each day when you’vedone your most important task: “After a few days you’ll have a chain. Just keepat it and the chain will grow longer every day. You’ll like seeing that chain,especially when you get a few weeks under your belt. Your only job next is tonot break the chain,” he says.

By creating and riding on momentum,create a new behaviour pattern. The more momentum you have, the more things youget done. It’s like habit or success stacking, the energy of momentum alwaysfeeds on itself.

This principle holds true in almostevery pursuit — academics, business, relationships, self-improvement, etc.Actions create momentum, and momentum creates results.

Momentum is motion — progress towards agoal.

It’s a simple idea, but a very powerfulforce that can help you finish what you start. It’s like a domino effect whereone success follows another.

When you are in motion, things happeneffortlessly and growth comes quickly. Little victories lead to big victories.Small wins create a snowball effect which leads to bigger accomplishments.

When you’ve built and created momentum,you don’t need to reinvent the wheel to get into motion. Your next actionshappen with little effort. It’s like compound interest — if you put money in aninvestment account and it starts to generate interest, you create momentumautomatically. Those gains from the compound interest will produce gains oftheir own and so on.

When you start a new exercise routineand keep pushing yourself every day to get better, you create and ride onmomentum.

Identifyyour focus and create a growth plan

The biggest challenge we face related tofocus is not just distractions, but it’s our lack of clarity. Many people gothrough life looking through a foggy and fuzzy lens. They don’t clarity. Whenyou are certain about your next steps, it’s easier to get started and createmomentum.

To grow or get more things done, first,get focused.

For meaningful productivity, you need astrong bias toward action that keeps you on track to doing your best work dayin and day out. Resistance to doing work that matters will come from within andwithout.

Make an actionable growth plan. Identifythe destination you seek, then identify the necessary steps to bring thatdestination into reality. Think things through in the smallest detail. It’s oneof the best ways to create the change you want. Change is challenging, but itbeats stagnation and regression.

When you are in motion towards somethingmeaningful, you improve your chances of growing your skills, knowledge andgetting results.

Think through where you want to landtomorrow. Growth just doesn’t happen; nor does success. Both need focus, adecision, a plan, action and a continual commitment with little or nodistractions.

Smalldistractions can have big consequences

How often do you feel frustrated at theend of the day because your most important tasks are still not done?

Losing momentum slows progress. Everyday, you face the “villains” of life and work that can overtake your energy andinitiatives. They forge roadblocks and make you detour down a path of shallowwork.

According to Udemy’s survey, nearly 3 out of 4 workers (70 percent) admit they feeldistracted when they’re on the job, with 16 percent asserting that they’realmost always distracted. The problem is biggest for Millennials and Gen Zers,with 74 percent reporting feeling distracted.

Don’t underestimate even the smallestdistractions. Even as a simple phone call can be the bigger diversion.

“Working with 95 volunteers,psychologists Jeff Moher and Joo-Hyun Song at Brown University, along withBrian Anderson at Johns Hopkins University, found that subtle distractorschange what we are doing more than obvious ones. But they do not have the sameeffect on what we see,” writes Diana Kwon of The Scientific American.

People experience distractionsdifferently. Some people can deal with them better than others. Two people willreact to a distraction in their immediate environment differently.

Distractions can compromise youreffectiveness at work. Your brain requires a significant amount of metabolicresources to process information and perform complicated tasks.

Every time you switch your focus to anew task or stop what you’re doing to take in the distracting element, you losea portion of that energy.

You lose momentum in the process. Ittakes even more energy to reach the same level of attentiveness andintellectual capacity you were using before.

By allowing occasional distractions tointerrupt your work, you use more brainpower, get tired easily and lose focus.

While building momentum can carry youtowards your goals, losing it can be costly to your energy. When you stopperforming an action and then start it again, you basically start at thebeginning and need to build up the habit again.

While the downside of losing momentum maynot be immediately visible, you can be sure that eventually, it will catch upwith you at some point in the day.

To perform at your peak, take control ofyour momentum, and plan your breaks according to allow you to resume at yourown pace. Proactively carve out a block of time to rest, recharge and get backto doing what you do best.

Keeping your momentum going can be achallenge – especially when you feel that you don’t need to continue pursuingan action since you already become proficient in it.

The minute that you lose momentum, youlose the thread. You become extremely vulnerable to distraction— you coulddoubt the possibility of success, other people’s demands creep in, vying foryour attention and focus.

You start to generate other new ideasthat may seem more worthy of execution, tempting you to move onto the next bigthing without ever finishing what you’ve started.

If you can keep moving on your tasksevery day, it’s infinitely easier to stay focused, make and feel progress, andblast through the roadblocks that inevitably come up.

“When it comes to momentum, frequency ofexecution is perhaps more important than the duration ofexecution. Even if you’re working on your project for just an hour a daythat’s enough to keep your objectives and recent activities top of mind. Then,when you sit down to work on it again, you can slip quickly back into theflow,” says Jocelyn K. Glei of 99U.

Consistent execution is paramount toyour progress — it keeps your head clear and focused; it rewards you with aconstant feeling of progress; and, most importantly, it keeps the ball movingforward.

If you get to the end the day feelinglike you didn’t accomplish anything, try treating those less important tasks asdistractions. Focus on a few things you can get done that move you closer toyour work goals.

If you want to get in shape, writeconsistently, make great art, eat better, or anything else, build momentum andwatch out for distractions.

Workflows, habits, and routines candegrade over time, evaluate them monthly or quarterly to get rid of unseendistractions. Build a system to block out distractions.

Work consistently and put the odds inyour favour. Show up every day and you will build enough momentum to buildbetter habits or improve how you work. When it comes to performance, the key isto get moving and keep moving.

Originally published on Medium.

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