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About This Blog
An investment blog chronicling a slow-moving turtle's attempt at gaining financial independence. Mostly contrarian investing with value-investing tilt and influenced by macroeconomics. Feel free to visit my non-investment blog describing my life and thoughts.
- Sivaram Velauthapillai
20-Year Real Return vs 10-Year P/E Ratio
Note that returns are real returns and one should add an inflation (say 3%) to get nominal. I think I've beaten the 10-year p/e to death but this chart is more visually obvious than some other data I have posted in the past.
(source: "File:Price-Earnings Ratios as a Predictor of Twenty-Year Returns (Shiller Data).png," Wikipedia.org. Downloaded on Apr 29 2012. Original data from Robert Shiller)Tags: market valuation, Sunday Spectacle
Sunday, April 22, 2012 6 comments ++[ CLICK TO COMMENT ]++
The Ever-Rising Executive Compensation
I've been thinking about writing about the controversy over the rising executive compensation in North America. Here are some graphics that frame the current situation (chart data up to mid-decade).
I actually don't think rising executive compensation is as big of an issue as it seems. The rising discrepancy in wealth is caused by society starting to reward talent—not just in business but also in sports, media, and so forth. As you'll note in one of the charts below, a lot of the increase in compensation is from bonuses and equity-linked compensation. Base salaries of executives haven't gone up much; the issue, thus, is whether the "bonus" is deserved. So far, shareholders and owners seem to be satisfied with management performance and are willing to award large discretionary bonuses.
Structure of Executive Compensation
(source: "Executive Compensation: A New Solution to an Old Problem," FTI Journal, Issue 2 - April 2010.)
Average Worker Compensation
Average Worker Compensation
(source: "In the money," The Economist. January 18, 2007)
The Cynics Might Say...
(source: Dilbert - November 30, 2003)
Thursday, April 19, 2012 4 comments ++[ CLICK TO COMMENT ]++
(Image source: Vator News)
Some of you may have heard of Peter Thiel; most probably have not.
Peter Thiel is a successful Silicon Valley entrepreneur and venture capitalist, who is famous for being a founder of PayPal and being the first outside investor in Facebook. He is somewhat controversial in that he is a libertarian and is influenced by Austrian Economics and has some extreme views (I actually share a lot of the libertarian views but I'm more of a liberal-libertarian and think that pure-libertarians sometimes forget that humans have a heart). If you find him interesting, you may want read this excellent New Yorker profile by George Packer from November of last year. I don't use this word on too many people but he is a brilliant man who seems quite innovative in his thinking.
Blake Masters has been writing up the notes from a Computer Science course on entrepreneurship being taught by Peter Thiel. The notes were taken by him (@bgmasters) along with some notes by @erikpavia and @danrthompson. Anyone interested in history of technology, entrepreneurship, business, or technology investing, will find it worthwhile to read the lectures (so far four of them and accessible here.)
Like anyone tackling complex topics, not everyone will agree with Peter Thiel—either because of his econopolitical stance or his attempt to simplify complex issues. For instance, Thiel has suggested (in other speeches) that the benefits from the development of the Internet, not to mention tools like Twitter, are over-rated but I disagree with that. Nevertheless, even if one doesn't agree with someone, they can gain great insight from contrary views.
I think Peter Thiel's comments on what makes great technology companies quite insightful to investors and other readers of this blog. I thought I would highlight those comments (from lecture 3). Note that the quoted text is transcribed comments and it may not reflect actual comments by Peter Thiel. Also, do note that Thiel's comments about what makes a company great are from the perspective of an owner or an entrepreneur, and this may or may not be the same as what makes a company great for employees, government, or society.
NOTE: Bolds within quotation are by me, but existing emphasis is underlined and bolded. Furthermore, I am not quoting in sequence!!
(source: "Peter Thiel’s CS183: Startup - Class 3 Notes Essay," Blake Masters blog. April 12, 2012. Content from lecture, "CS183: Startup—Notes Essay—April 9—Value Systems.")
Tags: insightful, investment strategy, Peter Thiel, technology
Sunday, April 15, 2012 2 comments ++[ CLICK TO COMMENT ]++Tags: Google, insightful, Sunday Spectacle
Tuesday, April 10, 2012 8 comments ++[ CLICK TO COMMENT ]++
Extracted from an infographic produced by US Census Bureau is the following graphic depicting employment by industry (Canada should be somewhat similar, especially for Ontario and Quebec):
The graphic illustrates how the employment landscape has changed over 60 years. Do keep in mind that the graphic illustrates employment rather than GDP (or economic output). Manufacturing contributes more to output (and wealth) than, say, agriculture or primary resources (like mining). Taxes paid by manufacturing businesses and manufacturing workers was likely far higher than agricultural workers/industry. So, manufacturing was actually way more dominant in 1940 than the chart illustrates.
Nevertheless, if we ignore wealth contribution, employment is very important and a key facet of society. A society with high unemployment is a dysfunctional society in my opinion. So, the chart above is quite important.
Sunday, April 8, 2012 0 comments ++[ CLICK TO COMMENT ]++
(click on image for a larger picture)
(source: DesignandGeography.com. Image downloaded on Apr 8 2012 3:25 AM from "Mapping the US Housing Bubble: 2000-2010," VisualizingEconomics.com)Tags: real estate, Sunday Spectacle
Sunday, April 1, 2012 2 comments ++[ CLICK TO COMMENT ]++
(click on image for larger image)
(source: "On Wall Street today, news of lower interest rates sent the stock market …" Cartoon by Robert Mankoff for The New Yorker. Item #: 8641612. Cartoon can be purchased at the official store, The Cartoon Bank.)Tags: humour, Sunday Spectacle