When investing is hardest
Last night I ran across this piece by Ben Inker of GMO, and it struck me that what he’s saying is much like what I’ve been saying, except he says it better. It’s an implicit case for the more advanced versions of the Financology Model Portfolios. He adds additional insight with his classification of bubbles, explaining how the current bubble is very different from those in 2007 and 2021, but very much like the bubble of the late 1990s. This is fortunate for us, because this kind of bubble can be efficiently dealt with via more surgical modifications to how we might invest normally, as opposed to abandoning the whole enterprise and just retreating to one risky asset like cash. Without further ado, here it is:
https://www.advisorperspectives.com/commentaries/2025/11/24/probably-bubble-plenty-else-invest
Hopefully without doing excessive violence to Inker’s analysis, it boils down to keep your distance from the bubble assets. In this case, it’s mostly US stocks, and more especially supercap growth. In particular, stay away from where all the excitement is, artificial intelligence and related jazz like quantum computing, etc. To put it in inclusive rather than exclusive terms, global value. The news is good: you don’t have to completely forget the normal rules of diversifaction; along with the other major asset clssses, you can and should own stocks.
How do the Model Portfolios fit in? They’re basically designed to cover the global market portfolio … stocks, bonds, commodities, except to specifically isolate and underweight overvalued bubble assets. As opposed to starting with nothing and specifically adding desirable assets, we start with everything and specifically subtract the bad stuff. So it retains as much of the benefit of diversification as possible while sidestepping the bubble.
Inker specifically includes international small caps and emerging markets, along with anything “deep value”. Notice our 20:20:30:30 flagship Model Portfolio includes ETFs specifically dedicated to international small caps – VSS – and emerging markets – VWO, along with international (XS) value funds IGRO, SCHY, VYMI. It is underweight US stocks, but includes a swath of quality and value ETFs – DRGO, SCHD, VYM, VFQY, VFVA. Collectively, these ten funds, along with REET, cover virtually the entire world stock market except for the pricy bubbly stuff.
It also includes the cap weighted global index fund VT, so it does include an allocation to virtually everything, including the questionable supercap growth. Dial in more or less according to how much exposure you want, proportionally reducing or increasing the other eleven equity funds. Invest normally while taking control of your bubble risk.
Nvidia’s Business Is Booming. Its Stock Is Falling. What Gives?
It’s the old Bill Clinton problem. It depends on what “is” is. The apparent paradox lies in the sloppy use of the word “is”.
Let’s correct these statements. We only know with certainty that Nvidia’s business has been booming. We know that its stock has been falling. What “is” is is but a fleeting moment between past and future.
What the stock has been doing is reflecting investors’ past assessment of the future. Saying “is” muddies the distinction between two very different things. When you stop playing fast and loose with verb tense, paradox dissolves into clarity.
Readers: This kind of prose is ubiquitous in the financial media. Fuzzy wording and fuzzy thinking go hand in hand.
Read critically!
Using Tensors in Machine Learning: A Complete Guide
Overwhelmed by inscrutable tech talk surrounding artificial intelligence? This article, while highly technical, explains the essence of how modern AI works. At its core, it turns on mathematical objects called tensors, also used in fundamental physics. Tensors are multidimensional arrays of numbers. As mathematical entities, they lend themselves to digital processing. This article explains how things like images, videos, words, sentences, and other data are transformed into tensors that can be mathematically manipulated in digital space.
Silver having another BIG day………i wonder if Solid state battery might require a lot?
We see soon………
Mike
Hi Ho Silver!
Little silver (platinum) up big too. Both nearly 6%.
Breathtaking gains in the silver mining fund SLVP. I’m not really big into mining stocks (when I want metal I buy metal), but bought some shares when they’d been given up for dead in October 2023. Up three and a half times in a scant two years. The gold mining fund RING almost as much.
BTW I see a lot of commentary in the media claiming that gold and silver mining stocks are cheap. They are not. The “cheap” claims are based on comparing the historical price of the stocks with the historical price of the metal. That’s irrelevant. The rub is that as a group these stocks yield a fraction of a percent – price to dividend ratios over 100 – and in spite of huge gains in metals prices, dividends have gone about nowhere in years. Show me the money. No dividend growth means there’s no sign of improvement. They were cheap when I bought them back in October 2023 and February 2024, but with prices 3-4 times higher for the same dead dividend, they are, contrary to bullish claims, not anymore. They’re the hard asset crowd’s answer to high flying tech stocks.
A bullish view on a metal is never sufficient reason to buy the stock of a related mining business. When you buy a metal, you get metal. When you buy stock. you get a share of ownership in a business, whose value depends on a lot of other things besides the value of the metal. Whenever you see exhortations to buy mining stock as a “leveraged play” on a metal, you’re seeing a woefully incomplete case.
If you like the metal, buy the metal. If you like the business, buy the business. But don’t buy either one just because you like the other.
I swear if I hear the words Black Friday one more time I’m gonna scream.
SCREEEAAM
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Gen mike Flynn has just called for the arrest of the “Green Goblin” & mates in Ukraine………..a clear sign of which way its going.
Mike
Gold clinches fourth straight monthly gain, closes in on record high as markets solidify rate cut bets
“Over the next couple of years, I think we’ll substantially be cutting, and maybe cutting out completely … income tax,” Trump said. “We could be almost completely cutting it because the money we’re taking in is going to be so large.”
That will be right after I have a chat about it with the folks in the flying saucer that just landed in my yard.
It would take a spending restraint miracle too. Even then it only might work if corporate taxes are raised, but Mr Trump’s last corporate tax move was to cut. SS taxes would also probably have to go up. Tariffs alone aren’t gonna do it.