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

Facial Plastic Surgery Alert

2 implied HN points • 02 Feb 24
🏥 Health & Wellness Weight Loss Healthy Lifestyle
  1. Ozempic and Wegovy are drugs that help with weight loss and have various health benefits, but they can cause a side effect called 'Ozempic face.'
  2. The 'Ozempic face' side effect includes sagging skin, wrinkles, and a more aged appearance on the face due to the loss of body fat caused by the drugs.
  3. Some patients opt for cosmetic facelifts and fillers from plastic surgeons to address the 'Ozempic face' side effect.

You hit my soft spot…

1 implied HN point • 07 Mar 24
💰 Finance Investing Funds Market Analysis
  1. Active fund management may have an advantage in less efficient markets like UK small- and mid-caps.
  2. Due to reduced research and liquidity, UK small- and mid-caps have become under-researched and may present opportunities for generating alpha.
  3. Shares in UK small- and mid-caps sometimes follow macro trends over fundamentals, but a shift can lead to significant outperformance.

Fiscal rules are good rules

2 implied HN points • 01 Feb 24
💰 Finance Monetary Policy
  1. Fiscal rules can help keep government spending in check and reduce borrowing costs for countries and states
  2. Strict fiscal rules can eliminate political business cycles where deficits grow before elections
  3. Countries with strict fiscal rules tend to have stronger long-term GDP growth compared to those with lax rules

The very real effects of consumers’ hopes

1 implied HN point • 06 Mar 24
💰 Finance Consumer behavior Economic Indicators
  1. Consumer sentiment surveys are essential indicators for future consumption, but some specific questions like the outlook on major purchases can predict consumption better than headline figures.
  2. Consumers tend to be overly optimistic about their future family finances compared to the overall economy, which can impact future consumption growth.
  3. The level of ex ante optimism, comparing expectations for family finances and the economy, can be a powerful predictor of future consumption growth, while ex post optimism influences savings ratios and credit usage.

Post-earnings announcement drift is not just for equities

1 implied HN point • 29 Feb 24
💰 Finance Investing Bonds Market Performance Strategies
  1. Post-earnings announcement drift exists for both stocks and corporate bonds, not just equities. This phenomenon occurs when stock or bond prices do not react as expected to earnings data, presenting an investment opportunity.
  2. Investors can exploit post-earnings announcement drift by buying stocks or bonds with positive earnings surprises that are undervalued and selling those with negative surprises that are overvalued.
  3. Implementing a long-short strategy based on post-earnings announcement drift for corporate bonds can result in significant annual returns and alpha, outperforming other bond investment strategies.
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Sustainability helps you reduce costs

1 implied HN point • 12 Feb 24
💼 Business Sustainability Cost reduction
  1. Sustainability can help companies reduce costs by attracting skilled employees who value non-wage benefits like ESG criteria.
  2. Younger generations like Millennials and Gen Z prioritize softer criteria like a company's sustainability when looking for jobs, not just salary or career opportunities.
  3. Companies offering sustainability credentials, like being a certified B Corp, can attract more applicants, especially those with higher education and skills.

What happens if China sneezes?

1 implied HN point • 08 Feb 24
💰 Finance Global Markets Commodities
  1. Commodity prices are sensitive to both Chinese and US macro developments, with oil reacting similarly to both.
  2. Global equities are less sensitive to Chinese shocks compared to US shocks, needing a larger Chinese shock to create a similar reaction.
  3. While the impact on global equities from the Chinese economy might be smaller than a US recession, a large enough shock from China could still derail global equity markets.

Against Cassandras

6 implied HN points • 21 Jun 23
💰 Finance Investing Stock Markets
  1. Many independent forecasters make doom-and-gloom predictions to stand out.
  2. Doom-and-gloom events historically have occurred about once every 40 years.
  3. People tend to forget that major catastrophes are rare and dramatic behavioral changes often precede them.

Improving valuations through better governance

0 implied HN points • 19 Feb 24
💼 Business Governance Valuation Liquidity Corporate Governance
  1. Improving share liquidity may not be the best way to increase company valuations. Focus on improving corporate governance instead.
  2. Increasing share liquidity by reducing the bid-ask spread can lead to a significant increase in company valuation, compared to measures like larger boards or institutional ownership.
  3. Improving corporate governance, measured by indices like ISS Board Quality scores, can have a more significant impact on increasing company valuations than just focusing on liquidity.