Klement on Investing

Klement on Investing provides insights on global financial markets, combining empirical data analysis with an exploration of human behavior in economics, investment strategies, and the impacts of geopolitical tensions and policy decisions on markets. It challenges conventional wisdom and promotes understanding of complex financial dynamics.

Financial Markets Human Behavior in Economics Investment Strategies Geopolitical Tensions Policy and Economic Impact Market Analysis Inflation and Deflation Commodity Prices Supply Chain Vulnerabilities Investor Psychology

The hottest Substack posts of Klement on Investing

And their main takeaways

It’s a good thing to have several suppliers

1 implied HN point • 26 Jun 25
💰 Finance Investing Economics Trade Market Analysis Inflation
  1. Having many suppliers is important for businesses. It helps keep prices lower because they can compare options more easily.
  2. If companies rely on just one supplier, they might save money at first but face risks later, especially if there are problems like tariffs.
  3. Countries with diverse supply chains can handle trade issues better. For instance, if the US and EU have a trade dispute, the EU might face less inflation due to their varied suppliers.

Investment heuristics cage match

2 implied HN points • 25 Jun 25
💰 Finance Investing Behavioral Finance Market Analysis Trading Strategies Heuristics
  1. Many investors, both retail and institutional, often rely on simple rules of thumb to make investment decisions. While some of these rules can be useful, others are not effective at all.
  2. Retail investors tend to use a variety of heuristics more frequently than chance, especially those influenced by social factors like peer behavior. This includes strategies like buying stocks from industries where they've previously profited.
  3. Institutional investors, on the other hand, use heuristics less often, but still show a reliance on social influences. Interestingly, their use of heuristics generally leads to better outcomes compared to retail investors.

When looking at private investments, the past is prologue

2 implied HN points • 24 Jun 25
💰 Finance Investing Private Equity Valuation Market Analysis Risk management
  1. Private investments seem safer because they offer smooth returns, but their true risks might be hidden. Investors need to be careful and look beyond the surface when evaluating these assets.
  2. The way private equity funds show their investment valuations can be misleading. If they only show positive changes and hide the bad news, it can trick investors about how healthy the investments really are.
  3. Small changes in investment valuations can signal much bigger problems later on. Investors should pay attention to valuation updates to predict possible losses in the future.

Green investing with a vengeance

2 implied HN points • 23 Jun 25
💰 Finance Investment ESG Market Trends Political Impact Consumer behavior
  1. After the last election, Republicans cut back on their green investments significantly, while Democrats tended to invest a bit more in green funds.
  2. Overall, green fund investments dropped by about 2.9% after the election, but this varied among different groups of investors.
  3. Some people invested more in green funds not because they thought they would do better, but to show their commitment to green investing, even as a way to oppose Trump's policies.

STFU

4 implied HN points • 20 Jun 25
😂 Humor Social Commentary Anecdotes Data Analysis Gender differences
  1. On average, women speak more words per day than men. Women use about 13,349 words while men use around 11,950 words daily.
  2. As people age, how much they talk can change. Younger men and women talk similarly, but older men often become more talkative than older women.
  3. Some people barely talk, while others can speak a ton, like 50,000 words a day. It's interesting to see such a big range in how much different people communicate.
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Four minutes

3 implied HN points • 19 Jun 25
💰 Finance Investing Market Trends Consumer behavior Portfolio Management Risk management
  1. Many retail investors focus on just a few stocks, creating a big risk in their portfolios. This makes their investments less diversified and potentially more risky.
  2. Research shows that retail investors often spend very little time figuring out which stocks to buy or sell. On average, they only spend about 20 minutes looking into a stock before making a decision.
  3. The most common research method for these investors is to check short-term price movements rather than doing deep analysis. This can lead to making decisions based on trends instead of solid information.

Exactly how damaging is fiscal policy uncertainty?

2 implied HN points • 18 Jun 25
💰 Finance Investment Economic Policy Market Trends Government debt Fiscal policy
  1. Fiscal policy uncertainty can harm economic activity by making businesses hesitant to invest. When companies can't predict future costs or regulations, they cut back on spending and projects.
  2. Research shows that a small increase in fiscal policy uncertainty can lead to significant slowdowns in industrial production and stock market performance. This lingering uncertainty can last for months and hurt overall growth.
  3. Increased uncertainty can also raise the borrowing costs for governments. Higher interest payments can lead to billions more in expenses, which can impact public services and budgets.

Casting doubt on risk preferences

2 implied HN points • 17 Jun 25
💰 Finance Investing Risk management Behavioral Finance Economic Theory
  1. A recent study shows that how we measure risk preferences might not be accurate. People might choose safer options because they find complex math hard, not just because they're afraid of taking risks.
  2. Participants in the study reacted similarly whether faced with risky choices or complex ones. This raises doubts about whether traditional risk assessments truly reflect someone's risk tolerance.
  3. The results suggest that some risk assessments might actually measure how much people dislike complicated decisions instead of their real risk attitudes. We need to rethink how we evaluate risk preferences.

Repost: Armed conflict investor survival guide

3 implied HN points • 13 Jun 25
💰 Finance Investing Market Analysis Geopolitics Economic Trends Risk management
  1. Don't panic during geopolitical crises. Most of these events don't affect the stock market in the long run, so it's usually better to stay calm and not sell off shares quickly.
  2. Evaluate the situation carefully by asking key questions about the impact on infrastructure, inflation, and interest rates before making any investment decisions.
  3. In many cases, the smart move is to buy risky assets when they dip, especially if there’s no long-term effect on the economy. Short-term panic selling can create good buying opportunities.

Longer, then faster

3 implied HN points • 10 Jun 25
💰 Finance Investing Economics Debt
  1. The proposed One Big Beautiful Bill Act could increase the US deficit by $2.4 trillion over the next ten years. This could lead to higher interest rates on government bonds, which makes borrowing more expensive.
  2. With rising debt, long-term Treasury yields are likely to go up significantly. As the debt burden increases, investors in the bond market might react quickly, which can lead to sharp changes in interest rates.
  3. The impact of increasing debt might not be felt right away, but it can snowball quickly. It's important to keep an eye on these trends because economic changes can happen faster than expected.

Popes are good for business

2 implied HN points • 13 Jun 25
💼 Business Trade Economics International Cultural impact Investment
  1. Pope John Paul II traveled to many countries, visiting 129 in total, which is more than all the previous popes combined. His trips brought attention to smaller and developing nations.
  2. Visits from the pope seem to boost trade for the countries he visits. This is especially true for poorer nations, which can get international focus during his trips.
  3. Countries with a large Catholic population see an even bigger increase in trade after a papal visit. The pope acts like a powerful trade ambassador when he travels.

Removing crash risk from the carry trade

2 implied HN points • 12 Jun 25
💰 Finance Investing Trading Risk management Economic Policy International Markets
  1. The carry trade borrows money from low-interest currencies and invests in high-interest ones, but it can be risky. Many investors fear a market crash when doing this.
  2. Recent research suggests that focusing on currencies from countries with high debt might reduce crash risks. This means there are strategies, like the debtor carry, that could help avoid big losses.
  3. Using a debtor carry strategy can provide similar long-term returns to traditional carry trades but with less risk. This is a useful approach for investors in international bonds or multi-asset portfolios.

Companies don’t wait for tariffs to come into effect

2 implied HN points • 11 Jun 25
💰 Finance Economics Investing Trade Inflation Pricing
  1. Companies often raise prices immediately when there are announcements of new tariffs. They do this to prepare for higher future costs even before tariffs actually take effect.
  2. Retailers have shown that price increases on imported goods tend to stay high, even if tariffs are later paused or reversed. This suggests that once prices go up, it can be hard for them to come back down.
  3. The price changes from tariffs could impact inflation in the US economy. This means the Federal Reserve may need to pay close attention to these trends to manage economic stability.

Poor regions suffer more from extreme weather

1 implied HN point • 16 Jun 25
🌞 Climate & Environment Climate change Extreme Weather Economic Impact Geography Research
  1. Poor regions are hit harder by extreme weather because they often lack the resources to recover. This is due to their location and economic status.
  2. Research shows that even in wealthier areas, like parts of Europe, countries with lower GDP are more affected by weather extremes than richer countries.
  3. A small increase in extreme weather events can significantly lower average income in struggling regions, making it important to consider these risks when investing in such areas.

Nerds have an advantage

3 implied HN points • 06 Jun 25
😂 Humor Satire Social Commentary Animal studies Investment Behavioral Science
  1. Being a nerd can give you an advantage in life and skills. Nerds tend to work smarter, making them more efficient.
  2. Chimpanzees that are skilled at cracking nuts show that experience and technical ability lead to better outcomes. This suggests that practice and learning pay off.
  3. In the long run, those who master their skills can invest time into other things like relationships and education, leading to more success overall.

Migrate to survive

2 implied HN points • 09 Jun 25
🇺🇸 U.S. Politics Immigration Economic Policy International Aid Population trends Education & Policy
  1. Many people move to developed countries seeking better jobs due to economic struggles at home. Climate change and environmental issues can make life harder, driving this migration.
  2. Higher birth rates in a country can lead to more people leaving that country, especially during tough times like famines. Emigration in the past helped countries grow faster by easing population pressures.
  3. Investing in education and foreign aid can help reduce birth rates in countries with high emigration. Better education leads to better job opportunities and lower dependence on having many children.

When brain drain kills

3 implied HN points • 04 Jun 25
🇺🇸 U.S. Politics Policy Education Healthcare Economy Immigration
  1. Brain drain happens when skilled workers, like doctors, leave their home country for better opportunities elsewhere. This can seriously affect the healthcare system in the country they leave.
  2. In Sweden, a study showed that as doctors migrated to Norway for higher wages, the number of doctors in Sweden dropped. This led to an increase in mortality rates, especially among older people who needed immediate medical care.
  3. The impact of losing skilled professionals isn’t just a problem for developing countries; even wealthy nations can suffer. The decrease in healthcare providers can lead to real deaths, revealing the serious consequences of brain drain.

The true information is in the words, not the numbers

4 implied HN points • 29 May 25
💰 Finance Investing Market Analysis Data science AI Applications
  1. Analyst recommendations are often seen as unreliable, especially when a 'Hold' is viewed like a 'Sell'. People are starting to see more value in the actual words analysts use rather than just the numbers they give.
  2. AI has been used to analyze over a million analyst reports, revealing that most discussions focus on profitability. However, during tough times, there's less talk about profitability and more on financial stability.
  3. It turns out that the specific language analysts use can help predict changes in earnings and stock prices, showing that understanding their words might be more valuable than just following their price forecasts.

Nerds are better investors

2 implied HN points • 05 Jun 25
💰 Finance Investment Data science Market Analysis Quantitative finance Portfolio Management
  1. More companies are hiring data scientists to help with investment decisions. This often leads to better returns for those companies.
  2. Hiring data scientists can help firms focus more on specific investments, which improves their insight and portfolio performance.
  3. However, too much reliance on data scientists can make the stock market less efficient, leaving room for traditional analysts to find good investment opportunities.

Getting grandpa back to work…

2 implied HN points • 02 Jun 25
💼 Business Economics Labor Market Workforce Aging Population
  1. Older workers are valuable for businesses and the economy. Keeping them in the workforce can help boost productivity and growth.
  2. The labor participation rates of older workers are higher in Spain than in the UK, showing that some countries are better at retaining older employees.
  3. Changes in unemployment benefits can motivate older workers to find jobs again, which benefits both the individuals and the economy.

The least surprising way to increase revenues when you are an influencer

2 implied HN points • 30 May 25
💼 Business Social media Influencer Marketing Revenue Generation Advertising Content creation
  1. Influencers can increase their revenue by exposing more skin in their content. It seems that posts with nudity or partial nudity get more attention and higher engagement.
  2. The trend of higher ad revenue connected to body exposure mostly applies to fitness influencers. Other categories like fashion or food see some increase, but it’s not as significant.
  3. For some areas, like music, showing nudity might even hurt engagement. It's important to know your audience and what content works best for your niche.

Tripping up sentiment indicators

2 implied HN points • 27 May 25
💰 Finance Investing Market Analysis Sentiment Analysis Financial Technology Hedge Funds
  1. Researchers found that small changes in wording can trick algorithms that analyze stock sentiment. This means that hedge funds relying on these tools could lose money if the sentiment is misjudged.
  2. The study showed that about 40% of the time, the sentiment assessment could flip from neutral to positive or negative. This shows how sensitive these algorithms are to language changes.
  3. More news is now written by AI, which can affect how algorithms react to it. If these AI-written articles aren't checked, it could lead to serious mistakes in the stock market.

Explaining overnight returns in the US

1 implied HN point • 03 Jun 25
  1. Overnight returns in the US stock market used to be higher, but that trend has faded since the pandemic. It may have been influenced by hype around certain stocks.
  2. The trading volume patterns, especially during the first and last hours of the trading day, play a big role in how stocks perform. Stocks with higher volume at the start and end tend to do better.
  3. Hype stocks, which attract a lot of attention and trading, have a different impact on the market compared to more stable stocks. This difference can explain why some markets, like in the UK or Europe, don't see the same results.

Trump tariff reprieve could create more risk in Treasury market

1 implied HN point • 29 May 25
💰 Finance Investing Markets Economics Risk management Regulations
  1. A recent court ruling said Trump overstepped his authority with tariffs. This decision might not help the Treasury market as much as people think.
  2. The news of the tariff reprieve comes with increased risk for investors. They need to be cautious moving forward.
  3. Overall, this situation shows how political decisions can impact financial markets. Keeping an eye on these changes is important for investors.

Corporate site visits are a win-win

1 implied HN point • 28 May 25
💼 Business Investing Finance Corporate Economics Market Analysis
  1. Corporate site visits help investors understand how a company works and improve trust. They can lead to more accurate forecasts and stable share prices.
  2. Aligning the company's information with investor concerns during these visits is really important. If the answers match the questions, it makes the visit more effective.
  3. Investors should take the chance to attend site visits. Even if the company can't share all the details, learning about the people and processes can help them make better investment decisions.

Philosophical economics: Shameless robber barons

12 implied HN points • 30 Jan 25
💼 Business Economics Inequality Capitalism Philosophy Market Competition
  1. Wealth inequality in America is high, but it was worse during the Gilded Age. The richest 1% owned about 35% of all assets in 2020, which is a lot, but not as much as in 1913.
  2. Top American companies today, like tech giants, make huge profits that are not normal in competitive markets. They don't face enough competition, which leads to these big profits staying high.
  3. Today’s billionaires don't seem to share the same sense of responsibility as past leaders like Rockefeller and Carnegie. Many seem more focused on personal success rather than helping society.

Let me fix those forecasts for you

7 implied HN points • 03 Jan 25
💰 Finance Investing Market Analysis Forecasting Equities Financial trends
  1. Forecasts for stock market returns are often inaccurate. For example, analysts expected the S&P 500 to rise by about 8% in 2024, but it actually rose by 23%.
  2. Historical data shows a low correlation between predicted and actual stock market returns. Over the last 20 years, the correlation for analysts' forecasts has been very weak.
  3. Using forecast errors, we can adjust predictions for the next year. For 2025, the S&P 500's return could realistically range from a 29% drop to a 47% increase.

Philosophical economics: From individualism to libertarianism

6 implied HN points • 16 Jan 25
📖 Philosophy Political theory Economic Theory Individualism Social Structures
  1. Individualism, while beneficial for starting businesses, can lead to selfishness if taken too far. A healthy balance between individual rights and community needs is important for society's well-being.
  2. Libertarianism, which promotes extreme individualism, can create dangers for society by ignoring the communal nature of humans. This can lead to inequality and a breakdown in trust among people.
  3. When business and politics prioritize profit over social responsibility, it can harm society and increase inequality. History shows that high inequality can lead to serious problems for both communities and economies.

Index funds and the rise of mega caps, redux

4 implied HN points • 13 Feb 25
💰 Finance Investing Market Analysis Portfolio Management Financial trends Economic Impact
  1. Index funds have caused a big shift in the stock market, making large companies perform better than smaller ones. This is mainly because more money flows into these large companies due to index tracking.
  2. The growth of index fund ownership in large-cap stocks has increased significantly over the years, while small-cap stocks have seen almost no indexing. This means small companies are getting less attention and investment.
  3. If the flow of money into index funds decreases or investors start pulling money out, the highly indexed large-cap stocks could actually perform worse. This creates a risk bubble that could burst for larger companies.

Philosophical economics: The golden calf of business and finance

5 implied HN points • 23 Jan 25
💰 Finance Tax policy Economic Growth Fiscal policy Investment Strategies Corporate Finance
  1. Cutting taxes isn't always the best option for improving the economy. Sometimes, raising taxes can actually help fund important things like infrastructure and education.
  2. There's a lot of disagreement about whether low taxes lead to higher profits and growth. In reality, many developed countries show no clear link between tax rates and economic growth.
  3. It's important to consider how tax money is spent. If governments invest in useful projects, they can create more value than just cutting taxes.

It's 2025 and life is still messy

6 implied HN points • 02 Jan 25
💰 Finance Investing Economics Market Trends Sustainability
  1. The author writes on various topics related to economics and finance throughout the week, with Mondays focusing on ESG and sustainability, and Fridays being more lighthearted and fun.
  2. The posts challenge common theories and emphasize understanding the real world through experimental data rather than traditional economic models.
  3. Life and financial markets are unpredictable, and it's important to embrace curiosity about how things really work instead of relying on rigid theories.

When index funds make the market riskier

4 implied HN points • 05 Feb 25
💰 Finance Investing Market risk Index funds Portfolio Management Correlations
  1. Index funds can make the stock market riskier by increasing how closely stocks move together. When more money goes into these funds, stocks often react in similar ways.
  2. The ownership of stocks by index trackers affects their risk. More index fund ownership leads to higher stock price drops during market downturns, meaning more losses for those stocks.
  3. As index funds grow, the overall market's volatility also increases, making big market drops worse than they used to be. The concern is that everyone could suffer larger losses during a major market downturn.

Capitalism creates inequality: Stone age edition

4 implied HN points • 31 Jan 25
💼 Business Economics Inequality Capitalism Finance History
  1. Wealth inequality has existed since ancient times, even as far back as the Stone Age. Early societies had low inequality, but it started to rise around 6,000 years ago.
  2. The invention of farming led to people settling down, which allowed them to store wealth in crops and livestock. This changed how wealth was accumulated and shared among people.
  3. Over time, technology and the growth of states allowed some individuals to amass even more wealth, leading to high levels of inequality that are still seen in many developed countries today.

Ambiguity is worse than risk

3 implied HN points • 19 Feb 25
💰 Finance Investing Risk management Market behavior Economic Policy
  1. Ambiguity can be more stressful than known risks. When people face uncertain situations about their jobs or income, they tend to invest less in risky assets.
  2. Financial insecurity leads to lower risk-taking in investments. People who feel financially unstable often shy away from stocks, choosing safer options like bonds.
  3. On a larger scale, countries with high financial insecurity may save less, which can worsen their economic situation. Improving financial security could help boost savings and reduce deficits.

California’s electricity conundrum

4 implied HN points • 27 Jan 25
🌞 Climate & Environment Renewable Energy Natural resources Environmental Policy Climate change
  1. California has some of the highest electricity prices in the US, even though it's using more renewable energy. In 2023, its prices were about 70% higher than the national average.
  2. Several factors contribute to the high electricity costs in California, including expensive natural gas, wildfire-related expenses, and increased demand for power due to climate change.
  3. The shift to renewable energy is not the main reason for California's high prices. Other states with a lot of renewable energy actually pay less for electricity on average.

The impact of renewable energy on electricity costs

4 implied HN points • 20 Jan 25
🌞 Climate & Environment Energy Renewables Economics Policy Sustainability
  1. Renewable energy, like wind and solar, generally helps to lower electricity prices rather than raise them. In Spain, for example, these sources cut prices by up to 58% compared to using only fossil fuels.
  2. The recent energy crisis was mainly due to rising natural gas prices, not the shift to renewable energy. Without renewables, the costs and inflation would have been even worse.
  3. While renewables can be less reliable at times, investing in energy storage and other clean sources can solve the supply issues. Stopping the shift to renewables will likely lead to higher electricity bills and inflation.

Coffee makes men more sociable and women better looking

4 implied HN points • 17 Jan 25
🏥 Health & Wellness Nutrition Behavior Psychology Research
  1. Caffeinated coffee helps men be more social and motivated. When they drink decaf, they tend to hang out less and could get into more fights.
  2. Women don't gain weight differently based on their coffee type, but decaf coffee affects their motivation. Drinking decaf could make them less inclined to take care of themselves.
  3. Research shows caffeine affects behavior and motivation. But the studies used mice, as ethical concerns would prevent testing humans in such a way.

Political stability is necessary to attract investments

3 implied HN points • 06 Feb 25
💰 Finance Investing Economic Policy Market Trends Foreign Investment Risk Assessment
  1. Political stability makes a country more attractive for investments. When governments are stable, investors feel more secure putting their money there.
  2. Economic Policy Uncertainty can hurt investment. High levels of uncertainty about policies lead to lower returns and make investors hesitant.
  3. Recent research shows a drop in foreign investments during times of high policy uncertainty. Countries like the UK saw many foreign investors pull out after political events like Brexit.

If you get a takeover offer, fight

3 implied HN points • 04 Feb 25
💼 Business Investing Mergers Acquisitions Finance Market Analysis
  1. If a company gets a takeover offer, they should consider negotiating instead of accepting it right away. There's a good chance they can get a better deal.
  2. Research shows that most takeover deals do not fail and often result in the target company receiving more favorable terms. About 80% of modified deals end up giving more money to the selling company.
  3. Overall, companies approached for a takeover have a 94% chance of either keeping the original offer or getting a better one by negotiating.