Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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Cryptoโ€™s New Clothes May Not Prove a Good Fit

By Katie Martin, Financial Times, 3/27/2024

MarketMinder’s View: Can crypto clean up nice with a new suit and tie—e.g., ETF wrappings—to expunge its Wild West reputation? Before answering (spoiler alert: no), please remember that MarketMinder doesn’t make individual security recommendations. Investment products mentioned herein serve purely to illustrate the broader point: There is nothing backing these “currencies” except some math, servers and maybe clever marketing. Which brings us to the creation of new cryptocurrency benchmark indexes, lending them a veneer of credibility. For tracking overall trends, we find this an interesting development. Yet the construction shows these tokens for what they are: speculative vehicles that lack fundamental connections to the economic or stock market cycle. As the article points out, thousands of extant crypto tokens don’t serve any role—store of value, medium of exchange and unit of account—currencies are supposed to provide. And if they trade at all, their wild swings would be antithetical to currency stability. To wit: “they have all the usual problems with crypto. Dogecoin, for example, was initially envisioned as two things: a joke and a means of payment. The former of those categories is winning. So the index creators have parked it in the games category, not the currency index. But most importantly, these indices are all over the place, with no obvious pattern. Looking at the historical performance, any one of them can be down 8 per cent one month, up 34 the next, down 0.5 the month after that and then up 16 again.” While we have nothing against crypto, and it (or its underlying technology) may yet have widespread application, we think the investment case for it remains weak. It doesn’t make sense for payments (legitimate payments, that is)—its purported use case—and if it did, then it would probably trade more like money, with attendant low returns. Furthermore, cryptocurrency supply is practically limitless, with the new ETFs adding to accessible supply. Long-term investors have far better options, in our view.


Daniel Kahneman, Who Plumbed the Psychology of Economics, Dies at 90

By Robert D. Hershey, Jr., The New York Times, 3/27/2024

MarketMinder’s View: Daniel Kahneman, a giant of behavioral economics, leaves a vast and lasting legacy for investors who heed his (and frequent collaborator Amos Tversky’s) research mapping the cognitive biases that so often lead us astray—while grounding economics in the actual ways humans behave, which aren’t always rational. “The most important of these, the behaviorists hold, is loss-aversion: Why, for example, does the loss of $100 hurt about twice as much as the gaining of $100 brings pleasure? Among its myriad implications, loss-aversion theory suggests that it is foolish to check one’s stock portfolio frequently, since the predominance of pain experienced in the stock market will most likely lead to excessive and possibly self-defeating caution.” We quibble with this last part, though, because we think Kahneman and Tversky’s findings go deeper. It isn’t that checking your portfolio frequently is necessarily a mistake. It is being aware when your cognitive biases (and emotions) may be steering you wrong, particularly at times when they are hard to resist—and acting on them can hurt you financially. Staying invested might not feel like the right thing to do when short-term volatility strikes, but it usually is the wise choice. Kahneman’s lessons—and being mindful of them—let investors loosen instinct’s grip to their benefit, a great gift to everyone who instills them.


Baltimore Bridge Port Blockade Wonโ€™t Trigger New Supply Chain Crisis, Experts Say

By David Lawder, Reuters, 3/27/2024

MarketMinder’s View: Here is how reality in the wake of tragedy—and seeming catastrophic incidents—often exceeds initially dire expectations: People adapt. Following the Port of Baltimore’s closure from a container ship’s collision with the Francis Scott Key Bridge at the harbor’s mouth, blocking it, “port officials from New York to Georgia were busy fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material. ‘We’re ready to help. We have ample capacity to absorb any surge in container traffic,’ Port of Virginia spokesperson Joe Harris told Reuters. The Norfolk-based port is expected to be a major beneficiary due to its proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.” Of course, the closure of a major East Coast port doesn’t come without costs or delays—as this article details. But keep them in perspective. Baltimore’s port outage ranks lower than disruptions from Red Sea shipping attacks, which have yet to severely impact global supply chains. As the article also notes, shippers were already rerouting more traffic to West Coast ports to bypass the Suez Canal and from reduced Panama Canal capacity due to drought.


Cryptoโ€™s New Clothes May Not Prove a Good Fit

By Katie Martin, Financial Times, 3/27/2024

MarketMinder’s View: Can crypto clean up nice with a new suit and tie—e.g., ETF wrappings—to expunge its Wild West reputation? Before answering (spoiler alert: no), please remember that MarketMinder doesn’t make individual security recommendations. Investment products mentioned herein serve purely to illustrate the broader point: There is nothing backing these “currencies” except some math, servers and maybe clever marketing. Which brings us to the creation of new cryptocurrency benchmark indexes, lending them a veneer of credibility. For tracking overall trends, we find this an interesting development. Yet the construction shows these tokens for what they are: speculative vehicles that lack fundamental connections to the economic or stock market cycle. As the article points out, thousands of extant crypto tokens don’t serve any role—store of value, medium of exchange and unit of account—currencies are supposed to provide. And if they trade at all, their wild swings would be antithetical to currency stability. To wit: “they have all the usual problems with crypto. Dogecoin, for example, was initially envisioned as two things: a joke and a means of payment. The former of those categories is winning. So the index creators have parked it in the games category, not the currency index. But most importantly, these indices are all over the place, with no obvious pattern. Looking at the historical performance, any one of them can be down 8 per cent one month, up 34 the next, down 0.5 the month after that and then up 16 again.” While we have nothing against crypto, and it (or its underlying technology) may yet have widespread application, we think the investment case for it remains weak. It doesn’t make sense for payments (legitimate payments, that is)—its purported use case—and if it did, then it would probably trade more like money, with attendant low returns. Furthermore, cryptocurrency supply is practically limitless, with the new ETFs adding to accessible supply. Long-term investors have far better options, in our view.


Daniel Kahneman, Who Plumbed the Psychology of Economics, Dies at 90

By Robert D. Hershey, Jr., The New York Times, 3/27/2024

MarketMinder’s View: Daniel Kahneman, a giant of behavioral economics, leaves a vast and lasting legacy for investors who heed his (and frequent collaborator Amos Tversky’s) research mapping the cognitive biases that so often lead us astray—while grounding economics in the actual ways humans behave, which aren’t always rational. “The most important of these, the behaviorists hold, is loss-aversion: Why, for example, does the loss of $100 hurt about twice as much as the gaining of $100 brings pleasure? Among its myriad implications, loss-aversion theory suggests that it is foolish to check one’s stock portfolio frequently, since the predominance of pain experienced in the stock market will most likely lead to excessive and possibly self-defeating caution.” We quibble with this last part, though, because we think Kahneman and Tversky’s findings go deeper. It isn’t that checking your portfolio frequently is necessarily a mistake. It is being aware when your cognitive biases (and emotions) may be steering you wrong, particularly at times when they are hard to resist—and acting on them can hurt you financially. Staying invested might not feel like the right thing to do when short-term volatility strikes, but it usually is the wise choice. Kahneman’s lessons—and being mindful of them—let investors loosen instinct’s grip to their benefit, a great gift to everyone who instills them.


Baltimore Bridge Port Blockade Wonโ€™t Trigger New Supply Chain Crisis, Experts Say

By David Lawder, Reuters, 3/27/2024

MarketMinder’s View: Here is how reality in the wake of tragedy—and seeming catastrophic incidents—often exceeds initially dire expectations: People adapt. Following the Port of Baltimore’s closure from a container ship’s collision with the Francis Scott Key Bridge at the harbor’s mouth, blocking it, “port officials from New York to Georgia were busy fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material. ‘We’re ready to help. We have ample capacity to absorb any surge in container traffic,’ Port of Virginia spokesperson Joe Harris told Reuters. The Norfolk-based port is expected to be a major beneficiary due to its proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.” Of course, the closure of a major East Coast port doesn’t come without costs or delays—as this article details. But keep them in perspective. Baltimore’s port outage ranks lower than disruptions from Red Sea shipping attacks, which have yet to severely impact global supply chains. As the article also notes, shippers were already rerouting more traffic to West Coast ports to bypass the Suez Canal and from reduced Panama Canal capacity due to drought.