Key Points:
- The Buffett Indicator is a popular valuation tool that compares the total market capitalization of the stock market to the country’s GDP.
- GameStop’s short sellers may have suffered losses in the short term, but they are not defeated.
- The US stock market cap-to-GDP ratio is signaling potential bubble territory.
- The relationship between money printing and inflation is not as straightforward as it seems.
- The COVID-19 crisis has had unexpected effects on the stock market, favoring young and risk-on companies.
- Debtism, the idea of loans that are not intended to be repaid, challenges traditional notions of debt and equity.
- Cryptocurrencies like Bitcoin are not suitable for all investors but may have long-term potential.
- The relationship between interest rates and P/E ratios is more complex than commonly believed.
- Your network and connections can significantly impact your career trajectory.
- Diversification is crucial not only in investment portfolios but also in career paths.
Overview:
This article highlights the top 10 posts of 2021 on pankajsihag.com. These posts cover a range of topics, including market indicators, short selling strategies, market bubbles, inflation, the impact of the COVID-19 crisis, debtism, cryptocurrencies, interest rates, networking, and career diversification.
Detailed Analysis:
1. The Buffett Indicator Revisited: Market Cap-to-GDP and Valuations
The Buffett Indicator, which compares the total market capitalization of the stock market to the country’s GDP, is analyzed by Navin Vohra, CFA. The article explores the usefulness of this indicator as a valuation tool.
2. GameStop or: Why the Short Sellers Win
Joachim Klement, CFA, examines the GameStop short squeeze phenomenon and highlights that short sellers are not necessarily losers in the long run.
3. Beware the Bubble? The US Stock Market Cap-to-GDP Ratio
Dhruv Goyal, CFA, warns about the potential bubble in the US stock market, as indicated by the market cap-to-GDP ratio. The article emphasizes the need for caution in such market conditions.
4. Myth-Busting: Money Printing Must Create Inflation
Nicolas Rabener challenges the common belief that monetary and fiscal stimulus will inevitably lead to higher inflation. The article analyzes the data to provide a different perspective on this relationship.
5. Aswath Damodaran on the COVID Crucible: A Play in Three Acts
Aswath Damodaran’s insights on the impact of the COVID-19 crisis on the stock market, specifically the unexpected favoring of young and risk-on companies, are explored by Paul McCaffrey.
6. Capitalism Is Dead, Long Live Debtism
Sebastien Canderle discusses the modern trajectory of capitalism and questions whether loans that are neither intended nor required to be repaid should be considered debt or equity.
7. Down the Rabbit Hole: A Cryptocurrency Primer
The potential of cryptocurrencies, particularly Bitcoin, is examined by a team of contributors from PNC. The article acknowledges that cryptocurrencies are not suitable for all investors but suggests that they may have more than just speculative value.
8. Myth-Busting: Low Rates Don’t Justify High Valuations
Nicolas Rabener challenges the common assumption that lower interest rates lead to higher price-to-earnings (P/E) ratios. The article presents data that contradicts this belief.
9. “Your Network Is Your Net Worth”: Seven Tips to Propel Your Career
Eric Sim, CFA, offers valuable advice on networking and building social capital to enhance career prospects. The article emphasizes the long-term benefits of helping others in their career journeys.
10. Eric Sim, CFA: The Diversified Career Portfolio
Paul McCaffrey explores the concept of career diversification through the example of Eric Sim, CFA. The article highlights the importance of adapting and exploring diverse career paths.
Honorable Mention: A book review of “Valuation: Measuring and Managing the Value of Companies, 7th Edition” by Tim Koller, Marc Goedhart, and David Wessels was also popular among readers.
Disclaimer: The opinions expressed in these posts are those of the authors and do not constitute investment advice. The views expressed may not necessarily reflect the opinions of pankajsihag.com or the authors’ employers.
Image credit: ©Getty Images/Drew Angerer / Stringer
Professional Learning for CFA Institute Members
Some of the articles mentioned above are eligible for Professional Learning (PL) credit. CFA Institute members can easily record credits using the CFA Institute Members App, available on iOS and Android platforms.
