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[unable to retrieve full-text content]If you think obtaining funding is you’re biggest priority, think again
What a year it’s been! In 2017 it was market heaven for most investors.
The S&P 500 (SPY) not just delivered more than double its historical return of 9.2%, but did so with a peak decline (from all-time highs) of just 3%. That’s compared to the average intra-year peak decline of 13.8% since 1980. It was one of the best years ever, with the lowest volatility in over half a century.
Well, volatility came roaring back with a vengeance in 2018, with the stock market experiencing not just one, but two corrections. In fact, here’s how the S&P 500, Dow Jones Industrial Average (DIA), Nasdaq (QQQ), and Russell 2000 (IWM) fared by their December 24th lows (so far).
The Nasdaq and Russell 2000 (small caps) were both firmly in bear markets, while the Dow and S&P came within a stone’s throw of ending the longest bull market in US history (technically, it’s still alive).
What’s more, all four major indexes are now negative for the year, which means stocks are set for their worst performance since 2008.
(Source: Wealth Of Common Sense)
But my point here isn’t to point out what a crummy year it’s been for stock investors, but rather to point out three valuable lessons we need to learn from this crazy year. Lessons that can help us not just become better investors over time, but most importantly maximize the chances of achieving our long-term financial dreams.
1. Markets Can Be Far More Volatile Than You Expect
If it feels like this has been an especially volatile time for stocks, that’s because it has been. In fact two weeks ago we had the worst week for the market since 2008, and are currently on track for the worst December since 1931 (at the peak of the Great Depression).
But the thing about volatility is that it doesn’t just come and go over time. Since 1958 market volatility has been cyclical, but trending steadily higher.
S&P 500 Trailing 12-Month Daily Return Volatility
(Source: Ploutos Research)
As Blackstone’s Byron Wien explains, this is largely a function of both the increased popularity of passive investing as well as computerized trading (which is how passive funds invest their funds).
Recent research suggests that 60%-90% of daily equity trading is now performed by algorithmic trading, up from 25% in 2004. Meanwhile, passive exchange-traded funds have directed trillions of dollars into equity markets since 2009, and the percent of the U.S. equity market share captured by passive strategies has increased from 26% at the start of 2009 to 47% as of 3Q’18. All of these trends are likely to increase volatility moving forward.” – Byron Wien (emphasis added)
In addition to market cap weighted index funds causing periods of blind selling regardless of valuations and fundamentals, you also have robo trading programs that are designed to purely sell, or even short stocks, based on certain technical indicators (which also ignore valuations and fundamentals).
As Benjamin Graham, Buffett’s mentor and the father of modern value investing, famously said:
“In the short run, the market is like a voting machine – tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine – assessing the substance of a company.”
As December has shown us, even high-quality companies, with excellent fundamentals and strong growing cash flow, can become deeply unpopular with the market at times of extreme fear. And thanks to nearly half the market being invested in ETFs, and up to 90% of daily trading being run by computer (including based on headlines and even Trump tweets), the market can become incredibly stupid in the short-term, resulting in stock prices becoming completely disconnected from either their fundamentals or the fundamentals of the economy or overall corporate earnings.
As Albert Einstein said, “Two things are infinite, the universe and human stupidity, and I am not yet completely sure about the universe.” Well, this is also true of the market. When investors get scared enough, then the potent combination of blind ETF induced selling and computerized trading can lead to some truly shocking sharp and short-term declines.
Harvard finance professor Xavier Gabaix’s 2005 study Institutional Investors and Stock Market Volatility looked at the October 19th, 1987 (Black Monday) 22.6% stock market decline (the worst in US history). That kind of decline under standard probability theory should occur once every 4.6 billion years. However, the world is far more complex than standard deviation curves would have you believe (Black Monday was a 20 standard deviation event which is essentially impossible).
That’s why the Harvard study concluded that a Black Monday style crash (largely driven by computer trading) is actually likely to occur, on average, once every 104 years. Now that doesn’t mean that such a crash necessarily will occur with predictable frequency. As Mark Hulbert, the author of the Hulbert Financial Digest explains:
“Note carefully that this doesn’t mean a crash this big will occur every 104 years. This instead will be their average frequency over long periods. So it’s possible that we will not experience another 1987-magnitude crash in our lifetimes – or that another will occur today.” – Mark Hulbert
But while a 20+% one day crash (that plunges us instantly into a bear market) are extremely rare (but far more likely than most investors realize), severe 10% daily drops are to be expected, per Professor Gabaix, about every 13 years.
(Source: Market Watch)
5% market declines are likely to occur 61 times per century, or on average once every 1.6 years. As Hulbert points out, the last 5% one-day market decline was in August 2011, and the last 10% market decline was over 30 years ago. Thus we’re actually overdue for a single-day stock market decline that would instantly put us into a correction (or possibly a bear market).
But it’s not just wild one-day broad market declines that have investors spooked these days. Another lesson from 2018 is that even when the S&P 500 isn’t in a bear market, your portfolio might be.
2. Your Portfolio Isn’t The Stock Market And The Market Isn’t Your Portfolio
While the stock market never officially entered a bear market (defined as S&P 500 closing down 20% or more below its all-time high), on December 20th 60% of the S&P 500 companies were in one (a figure that rose to about 66% by December 24).
What’s more as far as quarters go, as of December 21st, the S&P was having its 14th worst quarter ever. On December 24th, the biggest Christmas Eve drop in history, the quarterly performance of the S&P 500 became the 9th worst ever.
S&P 500 Worst Quarters
(Source: Wealth Of Common Sense) – data as of Dec 23rd
But as bad as Q4 has been for the broader market, as we’ve just seen, individual stocks often faired far worse. On December 21st, the Russell 2000 (small caps) was suffering its fourth-worst quarter since its inception in 1979.
Russell 2000 Worst Quarters
(Source: Wealth Of Common Sense)
When the market appears to have bottomed December 24th (yet to be determined), it became the 3rd worst quarter ever for US small caps. The point is that, depending on what you actually own, even standard corrections can be far more painful at the individual level.
Which brings us to the most important lesson of all from this memorable 2018.
3. If Your Portfolio Has A Critical Point Of Failure, It Will Eventually Fail Critically
Let me be very clear that I am NOT trying to scare anyone out of long-term investing. That’s because the current economic and earnings fundamentals are still pointing to positive growth over the next year or two, and today’s valuations are extremely attractive.
(Source: FactSet Research)
For example, right now most analysts expect about 8% EPS growth for the S&P 500 next year. Even energy stocks, despite the fastest oil crash in decades (43% in two months), are expected to generate nearly double-digit earnings growth.
Today the S&P 500’s forward PE ratio is just 14.2, and most sectors are historically undervalued, especially compared to a year ago.
(Source: Fortune Financial Advisors)
What do today’s historically attractive valuations mean in terms of future returns? Well, over the short-term (1-year), it’s hard to know. But historically a forward PE of 14.2 has resulted in about 17% 12-month returns. But over the long-term (five years) total returns become far more predictable and today’s valuations point to roughly 15% returns.
Don’t trust forward PEs? Well, then let’s use trailing earnings. The S&P 500’s TTM PE is currently 19.1. The market’s 20-year average TTM PE is 19.4, which means that earnings growth next year should drive at least modest returns, even if stocks remain just fairly valued. And keep in mind that the stock market is actually one never-ending cycle of alternating greed and fear. This is why just as stocks tend to overshoot to the downside (as they just did), they also overshoot to the upside.
That’s why since 1926 the average 12-month post-correction rally (from the low) has been 34% (not counting dividends). In today’s market that would equate to a 36% total return for stocks by the end of 2019 (from December 24th close). Of course, that is merely a historical average. Historical data only shows what stocks are likely to do, and is not a guarantee of what they will do (no one can make such guarantees).
But remember those scary quarterly declines for both the S&P 500 and Russell 2000? Well, here’s the good news. After such a major shellacking, stocks almost always rally strong and hard in both the short- and long-term.
(Source: Wealth Of Common Sense)
With the exception of 2001 (9/11) and 2002 (tech bubble bursting), even small-cap stocks have never followed such a miserable quarter with a negative 12-month total return. And over three and five years periods following such quarters, negative returns have literally never happened. That’s not to say that such a thing is impossible, just highly improbable unless you get a perfect storm of events occurring. One possible catalyst for stocks to still be down in 12 months might be the US defaulting on its debt during a failed debt ceiling showdown which Goldman Sachs (GS) has warned is coming between August and October of next year.
But barring an extremely stupid and catastrophic blunder by our government, stocks are likely to be up in a year, potentially a lot, thanks to today’s highly attractive valuations.
But wait a second?! Didn’t I just warn investors that Wall Street, due to the infinite stupidity of investors and the dominance of trading by computers, can be crazy volatile? Didn’t I point out that we’re overdue for not just a 5% single market decline but even a 10% single day bloodbath? Indeed I did.
The final lesson of 2018 isn’t that investors can, or should, attempt to avoid volatility, but rather safeguard their portfolios against it.
Believe it or not, stocks haven’t been the best-performing asset class in history despite gut-wrenching volatility but because of it. That’s because most of the market’s returns come from just a handful of its best single day gains, which are almost all clustered during times of peak downside volatility.
Missing just the market’s best 30 days over the past 20 years would mean that an investor in the S&P 500 would have given up all positive total returns. Miss just 50 of the best days and over 20 years, your portfolio would have declined by 60%. For context, the peak decline during the Great Recession was just 57%.
What this effectively means is that good market timing is essentially impossible, and one of the most destructive things you can try with your portfolio. Literally, billion-dollar hedge funds and large investment banks (like Goldman) have spent fortunes on trying to perfect market timing systems, including using an army of quants and AI-driven algorithms. None has yet succeeded in mastering market timing (if it had, it would own most of the world by now).
The key to harnessing the awesome wealth-building power of the stock market is not to avoid short-term volatility, but rather to avoid a large permanent loss of capital. Or as the infinitely quotable Warren Buffett put it, the key to good investing is to remember two important rules.
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No 1.” Now as always Buffettisms need to be clarified. The greatest investor in history isn’t literally saying that you can avoid losing money on every single investment you make. Rather he means all investors need to ensure their portfolios lack a critical point of failure, which results in disastrous mistakes, like selling perfectly good investments during a bear market, at ludicrously low valuations. Or to put another way, you need to avoid being a forced seller of quality stocks during a market decline.
There are two critical points of failure for most investors. The first is the use of margin. As the Oracle of Omaha explains:
“My partner Charlie says there is only three ways a smart person can go broke: liquor, ladies and leverage…Now the truth is – the first two he just added because they started with L – it’s leverage… It is crazy in my view to borrow money on securities… It’s insane to risk what you have and need for something you don’t really need… You will not be way happier if you double your net worth.” – Warren Buffett (emphasis added)
Now I too have made the mistake of falling under the siren song of margin. In fact, that’s why for the next 15 months I’ll be unable to participate in the glorious bargains all around us because I have to eliminate my leverage to zero and start building up cash reserves. I’m very fortunate that my dangerous dabbling with leverage isn’t likely to actually force me to realize terrible losses on otherwise great stocks. My best friend wasn’t so lucky. In the last 2 weeks, margin calls have forced him to realize losses that wiped out two years’ worth of gains. The price I’m paying for my mistake is missed opportunity. His is being forced to lock in catastrophic paper losses on perfectly good and ridiculously undervalued blue-chip dividend growth stocks.
While margin isn’t necessarily of the devil, Buffett’s warning against it (which I now heartily endorse and will personally live by going forward) pertains to the vast majority of people. Remember that leverage amplifies not just losses and gains, but emotions. And it’s emotions, particularly severe fear during downturns, that is the greatest single enemy of most investors.
Which brings me to the biggest point of failure for most people (even those who wisely avoid margin). That would be the wrong asset allocation.
Since the first rule of investing is to avoid a permanent loss of capital, you need to be able to avoid panic selling even when stocks fall to shockingly low levels (and with sometimes terrifying speed). This is where the right capital allocation comes in. Asset allocation simply means your portfolio’s mix of cash/bonds/stocks.
The right asset allocation is essential to being able to emotionally and financially endure the market’s inevitable future declines. The right asset allocation will differ for everyone based on your risk tolerances, goals, time horizon, portfolio size, income, savings rate, etc. You can talk to a certified financial planner (a fee-only Fiduciary that can’t peddle you expensive mutual funds they get kickbacks on is best) to determine the right asset allocation for you.
Note that your asset allocation will change over time, and might require periodic portfolio rebalancing (as stocks and bonds in it rise and fall and your life circumstances change).
Here’s an example of the standard asset allocation Schwab recommends for the typical retiree. Those are some good overall asset allocation recommendations, but here’s the most important thing to remember during corrections and bear markets.
Cash is king. Or more specifically, cash is what pays the bills during retirement (and allows you to buy quality stocks at fire-sale prices). Since the average bear market lasts for three years (before stocks are back to all-time highs), you want to have three years’ worth of cash available to supplement social security and any pension you may have. What if the bear market is more severe and longer than average?
(Source: Moon Capital Management)
That’s certainly possible. The longest recovery time (from the bear market low to fresh all-time highs) was 69 months or nearly six years. This is where bonds come in. Not just do they provide income, but due to falling interest rates and a flight to safety, bonds tend to rise during a bear market.
So if you are tapped out on cash equivalents (like Treasury notes and money market accounts), you will likely be able to sell bonds at a profit to cover your expenses. And since cash doesn’t decline in value, and bonds tend to rise during a big decline, your cash/bond allocation will help decrease your overall portfolio’s decline, making it easier to avoid panic selling your stocks (emotional point of failure).
For most people being 100% in stocks is a bad idea. Unless your portfolio is large enough to live entirely off safe and growing dividends during retirement (the goal of my new Deep Value Dividend Growth Portfolio), you will need some cash and bonds to be able to take full advantage of the wealth-building power of stocks. Remember the best stock investing strategy on earth is useless if you can’t emotionally or financially stick to it through the entire market cycle.
During corrections (or possibly a non-recessionary bear market) like this, peak market declines and recovery times are shorter than during a typical bear market. So use how you’re feeling now to test your risk tolerance and determine if your asset allocation is actually right for you.
If you’re losing sleep now, when stocks appear to have bottomed after merely a 19.8% decline, you’ll want to make sure that you are less exposed to stocks when the real bear market finally arrives. That can help you avoid emotions (or financial necessity) being your critical point of failure, no matter how unpredictable or crazy the infinitely irrational (in the short-term) and increasingly computer-driven market becomes.
Bottom Line: A Crazy 2018 Serves To Teach Valuable Lessons For 2019 And Far Beyond
I’ve been investing since the age of nine (23 years). And I’ve been a professional analyst/investment writer for four. Yet 2018 has still been eye-opening for me, highlighting the fact that the only predictable thing about Wall Street is its unpredictability.
Don’t let 2017’s freakishly small drawdown fool you. Volatility is not just normal, but has been gradually rising over time, thanks to the growing popularity of ETFs and computerized trading. In the future, we can expect not just similar volatility, but possibly some REALLY wild short-term swings, including a 10% single-day market flash crash that’s now historically overdue.
And while the media may fixate on the broader market (S&P 500 most of all), the fact is that even a moderate downturn, like this correction, can translate into a bear market for even high-quality stocks (including blue-chips and dividend aristocrats and kings) and individual investor portfolios.
But don’t let high volatility and the occasional bear market scare you away from the most time-tested and effective way of building long-term wealth ever discovered. The market’s great historical returns are not despite volatility, but a direct result of the very same short-term gut-wrenching declines investors so fear and hate.
That’s why the most important lesson from this wild 2018 is that risk management isn’t just important, it’s the most critical part of your long-term investing plan. The best investing strategy in the world will prove utterly useless if your emotions or finances don’t allow you to stick with it long enough to work.
Investors need to make sure their asset allocation is right for them. This means holding the right mix of cash/bonds/stocks to both meet their long-term financial goals, BUT also stay calm during the inevitable correction and bear market. And if you want to use margin, just remember to use it with EXTREME caution because it’s a powerful tool that can both greatly increase wealth and also destroy it with alarming speed and violence.
Ultimately the goal of every investor must be to build a bunker portfolio that is based on the motto “hope for the best, but plan for the worst”. While it’s popular to speculate about what will happen in the next quarter or year in terms of the economy or corporate earnings, the fact is that no one knows what craziness the market will bring in the short-term.
So rather than obsess over market timing (historically impossible even for the largest financial institutions) and trying to avoid short-term volatility, investors need to be prepared not just to survive whatever Wall Street throws at you but actually profit from it. Remember that every crisis is also an opportunity, and fortune favors the prepared mind.
If you are careful in how you construct your portfolio, then you can benefit from the fact that bull markets make you money, but in the long-term, it’s bear markets that make your rich.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Need a Cyber Monday jolt? Time published its best Inventions of 2018 last week. While this is not a gift list per say, you can draw inspiration from this collection of innovations, which I have organized into three categories for the office, relaxation and night riders (for all of you cyclists out there). Let’s start with the richest price tag and work our way down.
Open-office plans are all the rage today, but several studies have shown that they lead to distractions and sick days for workers. Help your employees find privacy with this soundproof phone booth by ROOM ($ 3,495). Zenbooth offers a slightly larger model with an even steeper price tag.
Want supplies in a flash? Zipline made history by launching the first commercial drone service in Rwanda, expediting the delivery of blood and medical supplies to remote areas. This year, the California startup unveiled a new version of its craft that carries up to 3.85 lb. at 80 m.p.h. for up to 100 miles per round-trip. They also streamlined their launch and recovery process, enabling Zips to make 500 deliveries per day. While Zipline will continue serving rural communities in Africa, the startup has broad ambitions. Zipline started testing emergency medical-supply delivery in the U.S. and will begin regular service in North Carolina in early 2019.
When it comes to safety, StrongArm Tech’s Fuse Risk Management Platform, helps employers protect vulnerable workers–and, by extension, their own bottom lines. On-the-job injuries and accidents cost U.S. companies some $ 59.9 billion per year. Since debuting in April, Fuse has been used by more than 10,000 workers, including those from 10 Fortune 100 companies.
With a cold Thanksgiving in the northeast, weighted blankets were a hot topic around our dinner table. Gravity has sold $ 18 million worth of it’s weighted blankets ($ 249 each), which are available in 15, 20 or 25 pound varieties. Many swear by the therapeutic benefits, and they are certainly a fad on Instagram.
Bose Sleepbuds ($ 250), are designed specifically to enhance your slumber. They are small enough to fit inside the ear without bothering your face or your pillow, and light enough to feel weightless. Their silicone tips are said to stay in place, even if you toss and turn. Users choose from a preset menu of 10 soothing sounds, such as ocean waves, warm static or rustling leaves.
When you are ready to wake up, Philips’ Somneo ($ 199) is designed to simulate a natural sunrise every morning–along with soothing audio that gently rises in volume–to provide a less jarring wakeup experience. If you can get this to work with the sleepbuds that would be brilliant. When it’s time for bed, the Somneo can simulate a sunset, as well, dimming the lights until you are fast asleep.
Nocturnal athletes can now glow in the dark with this Solar Charged Jacket ($ 350) from Vollebak. The jacket’s phosphorescent membrane absorbs light during the day and releases “kryptonite green energy” after sunset. Part of the jacket’s appeal, of course, is novelty: because it can absorb light from almost any source, but more importantly from a safety standpoint, it allows runners and bikers to be visible after dark. If you get stranded, rescuers can spot you.
Cyclists will also love the story of Eu-wen Ding, a business-school student living in Boston who was looking for a better way to ride. “All I wanted to do was get from point A to B without dying,” said Ding. Eventually, that goal led to the creation of Lumos Kickstart Helmet ($ 180), whose LED lights not only increase a cyclist’s visibility but also blink to indicate a left or right turn. Riders can trigger the signal by clicking a wireless remote mounted to their handlebars or by syncing the helmet with their Apple Watch and making a hand signal. The Lumos launched in 2017 after a Kickstarter raise, and became the first light-up helmet sold in the Apple Store.
Beyond these examples, the full list of inventions encompasses breakthrough products for fashionistas, new parents and even environmentalists. Enjoy.
Halloween is one of my favorite holidays. I loved dressing up as a child and getting candy with my best friend. As I got older, I loved going to bars with friends in costumes. Now, as the father of a nearly teenage son, it’s different. Watching your kids get ready for Halloween can shed light on your own goals.
I’m surrounded by friends and clients making their dreams come true. They’re making big moves in all parts of their lives. I see what it takes to get what they want most. I’m in the trenches with entrepreneurs and leaders achieving amazing things. We talk about their strategies, team development and mindset.
The most innovative and impactful leaders think differently. Last week, I saw trick-or-treaters using smart strategies to load their bags with candy. Three of their approaches apply to your business, too:
1. Break the rules.
I loved talking to my son about his strategy to get the most candy. He wanted to create a reversible costume, with a ninja on one side and a ghost on the other. He saw the benefit of hitting each house twice. We talked about it for weeks. Let me be clear: I thought this was a terrible idea. However, I played along to encourage his creativity.
When was the last time you really thought about a new way to achieve your goals? The most comfortable strategies are the ones you’ve already used. You don’t try new strategies until you get frustrated enough to ditch your old ways.
While interviewing Mike Landman, CEO of RippleIT, I noticed how he thinks differently than his peers. His IT services business has become highly focused on digital agencies–a “niche-ing” strategy that’s not common in service businesses. He chose this approach to create client specific solutions that created more efficient results. The tactic took the company to No. 3013 on this year’s Inc. 5000 list of fastest-growing companies in America.
A kid is willing to break rules to achieve his goals. I’m not suggesting you do anything illegal — I’m asking you to think about the rules you’ve accepted as fact. Much of our growth comes from being willing to look beyond the status quo.
2. Increase your focus.
It takes starting early and having a clear plan to haul in as much candy as my son did. He put in effort to collect what appears to be 11.2 pounds of candy.
I watched him construct and navigate his plan. He sharpened his focus as the night wore on. He started leaving his bag with me as he ran up driveways, jumping bushes to get to doors. I haven’t seen him put that much focus into anything before. He had one goal, and he was willing to do the work to achieve it.
As for you, you’re working hard — you’re probably swimming in work. I’m not here to tell you to work your face off in service of your company’s growth. I’m encouraging you to streamline your thinking to increase your focus.
Focus has become more important than intelligence. I find that my most impactful days start with a 90-minute session of work on the single most important project I have.
Many leaders just want to do more things, but the solution isn’t to do more. Look for ways to streamline your work to meet your primary goal for now.
3. Give up.
The morning after Halloween, I told my son that I wouldn’t eat any of his candy. I don’t say that because I respect his candy; I’m a firm believer in the “parent tax,” and if I wanted it, I would eat it.
I know my body, however, and eating crap makes me feel terrible. While I want the delicious taste of candy, I don’t want the feeling that follows — and that becomes my primary goal.
A significant aspect of a leader’s success is a willingness to give up what she wants right now to get what she wants most. We’re so emotionally connected to “easy” that we let the hard stuff scare us.
I’ve had numerous clients give up checking email throughout the day. Giving up the need to check and respond at all moments of the day has created more intention toward their current work.
You can have most of the things you want, but you can’t have them all right now. You have to decide what’s most important and begin working on that. If you want something badly enough, you’re willing to give up what’s keeping you from getting there.
If you’re willing to commit to what you really want, giving up what’s keeping you stuck is easy. You don’t get what you deserve. You get what you work for — just like trick-or-treaters.
For the third year running KU Leuven tops Reuters ranking of Europe’s most innovative universities, a list that identifies and ranks the educational institutions doing the most to advance science, invent new technologies and power new markets and industries. A Dutch-speaking school based in Belgium’s Flanders region KU Leuven was founded in 1425 by Pope Martin V and continually produces a high volume of influential inventions. Patents filed by KU scientists are frequently cited by other researchers in academia and in private industry. That’s one of the key criteria in Reuters’ ranking, which was compiled in partnership with Clarivate Analytics, and is based on proprietary data and analysis of patent filings and research paper citations.
Overall, the most elite ranks of Europe’s Most Innovative Universities have held steady from last year, with the UK’s Imperial College London (#2) and University of Cambridge (#3) holding onto their top spots for the third straight year. Other leading institutions simply traded a few spaces, like the Federal Polytechnic School of Lausanne (#4, up one), University of Erlangen Nuremberg (#5, up one), and the Technical University of Munich (#6, down two). The remainder of the universities in the top 10 moved up from the teens: The University of Manchester (#7, up nine), University of Munich (#8, up four), Technical University of Denmark (#9, up five), and ETH Zurich (#10, up one).
But even though the usual suspects continue to dominate Europe’s Most Innovative Universities, political uncertainty may be causing a big swing in where innovation happens. The trend is most clear if you consider the sum of changes in rank for each country’s institutions: The 23 German universities on this year’s list cumulatively rose 23 spots, more than any other country. Switzerland was second, with five universities up a total of 8 spots. And in contrast, the list’s 21 UK-based universities dropped a cumulative 35 spots.
Why is this shift occurring? The United Kingdom’s “Brexit” from the European Union is almost a year away, but Europe’s scientific community may already be leaving the UK in favor of research institutions on the continent. A February 2018 study published by the UK-based Centre for Global Higher Education reports that many German academics view Brexit as an “advantage,” and hope to use it to attract UK researchers to German universities; in turn, UK academics report that their own postdocs aren’t seeking positions in the UK and are looking at the EU or United States instead. And as Brexit actually unfolds, it could get worse: A November 2017 study performed by the School of International Futures for the UK’s Royal Society describes a possible post-secession United Kingdom where universities compete for a shrinking pool of skilled workers, projects that used to receive EU funding wither, researchers receive fewer invites to join consortia and attend conferences, and overseas collaboration is limited. Similarly, EU-based businesses that fund research at universities may prefer to keep their investments within the region in order to avoid the tax and regulatory headaches of working with post-Brexit UK institutions.
The government of Germany has also established itself as notably pro-science, increasing federal research budgets and encouraging growth in emerging industries such as renewable energy. (German Chancellor Angela Merkel actually holds a doctorate in quantum chemistry, and worked as a research scientist before she entered politics.) According to a 2017 analysis published in the science journal “Nature,” researchers are “flocking to the country,” in part due to the country’s €4.6-billion “Excellence Initiative,” which has helped to attract at least 4,000 foreign scientists to Germany since 2005. And in 2016, the German Research Foundation (Deutsche Forschungsgemeinschaft, or DFG), the country’s main funding agency, allocated a record €2.9 billion in grants, posting a success rate for individual grant proposals higher than comparable UK rates.
This year’s university ranking also shows how smaller countries can have an outsized presence in the world of innovation. Belgium has seven schools on the list, but with a population of only 11 million people, it can boast more top 100 innovative universities per capita than any other country in Europe. On the same per capita basis, the second most innovative country on the list is Switzerland, followed by Denmark, the Netherlands, and the Republic of Ireland. And some large countries underperform despite bigger populations and economies. Russia is Europe’s most populous country and boasts the region’s fifth largest economy, yet none of its universities count among the top 100.
To compile the ranking of Europe’s most innovative universities, Clarivate Analytics (formerly the Intellectual Property & Science business of Thomson Reuters) began by identifying more than 600 global organizations that published the most articles in academic journals, including educational institutions, nonprofit charities, and government-funded institutions. That list was reduced to institutions that filed at least 50 patents with the World Intellectual Property Organization in the period between 2011 and 2016. Then they evaluated each candidate on 10 different metrics, focusing on academic papers (which indicate basic research) and patent filings (which point to an institution’s ability to apply research and commercialize its discoveries). Finally, they trimmed the list so that it only included European universities, and then ranked them based on their performance.
Of course, the relative ranking of any university does not provide a complete picture of whether its researchers are doing important, innovative work. Since the ranking measures innovation on an institutional level, it may overlook particularly innovative departments or programs: a university might rank low for overall innovation but still operate one of the world’s most innovative oncology research centers, for instance. And it’s important to remember that whether a university ranks at the top or the bottom of the list, it’s still within the top 100 on the continent: All of these universities produce original research, create useful technology and stimulate the global economy.
To see the full methodology, click here.
(Editing by Arlyn Gajilan and Alessandra Rafferty)
Atlanta is the smartest show on television. I’m unoriginal in that sentiment—for the entirety of its first season, which emerged in 2016 with the marvel and depth of an art-house indie film, it was regarded as such—but that doesn’t make it any less genuine, or true. Depending on how you color it, that view does present its creator-star Donald Glover with a high-stakes dilemma for the second season: How do you reinvent the most inventive show currently on TV?
In the lead-up to last year’s Emmy Awards—where Glover won for Outstanding Directing and Outstanding Lead Actor in a Comedy Series—I wrote about Atlanta‘s expanding narrative parameters. For the whole of its first 10 episodes, Glover introduced viewers to a universe that was familiar to some, and imaginatively new to others. There was a cultural knowingness alive in his telling; one that, until its debut, had never been granted room on TV (partially due to the racial and gender conservatism Hollywood refuses to assess properly, even now). But, ultimately, a magician has only so many tricks and trap doors at his disposal.
Looking back, it seems ridiculous to think that a series of such tender truths could ever fail in a climate besieged by such baroque distortions and deliberate misbeliefs. Yet, even Glover was prepared for the show to do just that. Thankfully, powerfully, it did the opposite. The TV landscape benefitted from Atlanta’s refusal to be made small and indistinguishable from its contemporaries.
During its 15-month sabbatical—remember, the Season 1 finale aired two Novembers ago—fans wondered if Glover could deliver magic once again. Would he be more daring in Season 2? What unpaved direction would he take us in? Would black Justin Bieber reappear like a unicorn in the forest of our tangled lives?
Reinvention, like all good TV, is predicated on risk. And with the second season, Glover has gambled on one of the riskiest propositions an auteur can: shrinking the expanse of his show and turning the camera to the prejudices and motivations of its audience.
It’s still TV’s most self-defined and self-propelled series, but the Atlanta that returned earlier this month, officially styled as Atlanta Robbin’ Season, is fueled by a new narrative structure altogether. If the first season blurred the lines between the bizarre and the real, the second suggests that the ravine between life and death for black people—at the bottom looking up, just trying to get by—is moored by a grim, mundane fate.
For starters, there’s less episodic dissonance this season, which gives the series more of a backbone and traditional arc for its 11 episodes. It’s also thick with plot, and threaded together by a heavy presence of violence that hangs overhead, the kind of violence that unveils itself in upheavals large and small. “Robbin’ season. Christmas approaches and everybody gotta eat… Or be eaten,” Darius (Lakeith Stanfield) and Earn (Glover) observe in the debut episode (“Alligator Man”). They’ve caught sight of a lifeless body surrounded by police. Nearby another man sits with his wrists tightly handcuffed. There’s terror and desperation in the air, and they know it well.
But the failure is ours when we register brutality and dread as exceptional when really they are constants for people who have nothing and are often forced to impose those realities on the people and communities around them. Glover doesn’t want us to unsee what’s right in front of our eyes. Life unfolds this way, in wrinkles and creases, in beginnings and bloody ends, a scorched harvest with no guarantee that the rain will replenish the land, with no sure bet that the land itself won’t also betray you. Glover’s weaponized Atlanta against its residents. The violence needn’t always be physical, though. There’s a deadlier violence that presents itself socially, through slow-moving gentrification, or psychologically, through subtle racist remarks made by people who don’t realize they’re making subtle racist remarks. All of it compounds, and eventually someone cracks.
Early on, we see Alfred, aka Paper Boi (a moon-eyed Brian Tyree Henry), grappling with newfound local fame. It’s not exactly how he envisioned rap life—having to show face at an out-of-touch streaming company modeled in the vision of Spotify (where one white executive jests: “Everyone calls me 35 Savage”); or being robbed at gunpoint during a drug transaction by a dealer who tells him he can recoup lost funds through his on-the-rise rap career (it’s financially stalled, but the dealer doesn’t know that). The mundane darkness of the season begins to jell more visibly in tonight’s third episode (“Money Bag Shawty”), when Earn encounters a series of repeated defeats (that is, more than his usual share per episode). It’s date night with Van (Zazie Beetz) and he’s finally got some money, but the thing is, life’s still out to flatten him. He quickly learns that money is of no value if people refuse to extend trust, or are clouded by racist beliefs. At the strip club, Al clarifies: “Money is an idea. There’s a reason that a white guy dressed like you can walk into a bank and get a loan and you can’t even spend a hundred dollar bill.”
The season is not without flash and levity. Darius’s philosophical neurosis is even more endearing this time around. Upon first meeting Al’s father Willy (played with dynamism and bite by comedian Katt Williams), he offers: “I would say ‘nice to meet you,’ but I don’t believe in time as a concept. So I’ll just say we always met.” There’s also a young, crosstown rapper who’s more performance art and business acumen than actual skill (although the former may be the only skill that matters in the music industry at the moment). “And we drink Yoo-hoo like it’s dirty Sprite,” he gleefully raps in a commercial for Yoo-hoo, a living parody of art that’s been made fruitless by capitalist ambitions.
In a passing scene from episode two (“Sportin’ Waves”), one of the show’s central questions begins to reveal itself. Walking through the mall, speaking about the animated dark comedy BoJack Horseman, Tracy (Khris Davis) says to Earn: “Don’t get me wrong it’s a funny show, but the way they dive into depression, especially after what he did to her daughter, I was like, ‘Can I even feel bad for this horse anymore?’” That question also extends to Glover’s universe. Should we sympathize with Earn and Alfred? As observers, even if you’re from Atlanta, we watch the show from the outside, its moments so distinctively hyper-specific that everyone plays the role of spectator in most scenarios. The result of that positioning allows Glover to test the elasticity of human empathy—he’s not telling us what to feel, but I do believe he is challenging the motivations behind our compassion and concern for each character. It’s not that we’re wrong in feeling the way we do, it’s the reason behind our sentiments that Glover is poking at, and curious about. Why do you feel what you feel? Where did that come from? How did that come to be? Which gets at perhaps the show’s most important question: How do people come to know themselves? In Atlanta, it’s violently, unavoidably simple. By understanding that life can be a blade.
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Video: Barcelona: Bye Microsoft, hola Linux
LinuxQuestions, one of the largest internet Linux groups with 550,000 members, has just posted the results from its latest survey of desktop Linux users. With approximately 10,000 voters in the survey, the desktop Linux distribution pick was: Ubuntu.
While Ubuntu has long a been popular Linux distro, it hasn’t been flying as high as it once was. Now it seems to be gathering more fans again. For years, people never warmed up to Ubuntu’s default Unity desktop. Then, in April 2017, Ubuntu returned to GNOME for its default desktop. It appears this move has brought back some old friends and added some new ones.
An experienced Linux user who voted for it said, “I had to pick Ubuntu over my oldest favorite, Fedora. [That’s] Simply based on how quick and easy I can get Ubuntu set up after a clean install, so easy with the way they have it set up these days.”
http://www.zdnet.com/article/the-most-popular-linux-desktop-programs-are/, followed closely by antiX. With either of these, you can run a high-quality Linux on PCs powered by processors as old as 1999’s Pentium III.
If you want to buy a computer with pre-installed Linux, the Linux Questions crew’s favorite vendor by far was System76. Numerous other computer companies offer Linux on their PCs. These include both big names like Dell and dedicated small Linux shops such as ZaReason, Penguin Computing, and Emperor Linux.
Many first choices weren’t too surprising. For example, Linux users have long stayed loyal to the Firefox web browser, and they’re still big fans. Firefox beat out Google Chrome by a five-to-one margin. And, as always, the VLC media player is far more popular than any other Linux media player.
For email clients, Mozilla Thunderbird remains on top. That’s a bit surprising given how Thunderbird’s development has been stuck in neutral for some time now.
There was, however, one big surprise. For the best video messaging application the winner was… Microsoft Skype. Now, Skype’s been available on Linux for almost a decade, and recently, Canonical made it easier than ever to install Skype on Linux. But, still, Skype on Linux?
Jeremy Garcia, founder of LinuxQuestions, thought the result might have come about because: “Video Messaging Application was a new category this year and participation was extremely low. Additionally, Secure Messaging Application was broken out into a separate category that had higher participation and resulted in a tie between Signal and Telegram.”
Of course, it’s also possible that even passionate Linux people can like a Microsoft product. After all, Microsoft now supports multiple Linux distributions on its Azure cloud.
For those that follow me regularly, you will know that I have been tracking a set up for the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX), which I analyze as a proxy for the metals mining market. I believe that the GDX can outperform the general equity market once we confirm a long term break out has begun, and I still think we can see it in occur in 2018. But, after last week’s break down below the December 2017 low, the set up will have to be resurrected first in the coming months.
I am not sure what more there is to say. We have had several break-out set ups break down in the GDX over the last year. Yet, all the market has done is consolidate sideways for an entire year. Clearly, this is not something I would have or could have expected. Moreover, we still have a 5-wave structure off the 2015 lows, which still keeps us in a longer term bullish perspective.
Since the GDX is a composition of a whole host of mining stocks, I think I have to resolve myself to understanding that the weaker stocks have certainly been a strong drag on the overall fund. So, until the weaker stocks prove they have a bottom in place, it seems quite clear that the GDX will continue to frustrate us.
With that being said, the miners we are holding in our EWT Miners Portfolio are presenting as exceptionally strong, especially relative to the GDX as a whole. Many of them seem as ready to break out similarly to the manner in which GLD seems poised to break out. Yet, when I go back to look at stocks like ABX, it seems quite clear why the GDX has been underperforming.
As you can see from the attached ABX chart, it has followed through down to lower lows in this current pullback. When I highlighted this chart a few months ago to our members of my The Market Pinball Service, I noted this lower low potential, and the ABX is now fulfilling that potential. But, as I also noted in those updates, the long-term potential being presented by this chart is quite strong. As you can see, the positive divergences evident on this chart as the market has dropped down to just below its .618 retracement of its 2016 rally is quite stark. This is often a precursor to a strong reversal which will likely kick off the larger degree 3rd wave which has failed to take hold over the last year.
Within the micro count of ABX, it would seem we are completing the wave v of (C) of y of ii. But, within wave v, we may still see another 4-5 structure before this completes its downside. That means that the 14 region is going to be the resistance over which it will have to rally in impulsive fashion to begin to signal that this wave ii has finally completed. Should that occur, we may see the ABX catch up quite quickly to the rest of the complex behind which it has been lagging.
So, in order to align the GDX chart with the ABX chart, I have to consider any bounce below the 22-22.66 region as being a 4th wave bounce, similar to the potential we see in the ABX. It will take an impulsive rally through the 22.66 region to suggest that the lows have been struck in the GDX, assuming the ABX is also impulsively rallying through its 14 region. Again, we will have to start seeing the laggards in this complex catch up and potentially even outperform to signal that a true low has been struck.
But, in conclusion, even though the GDX technically broke its recent (1)(2) structure, the metals charts still give me reason to remain bullish in the larger degree. As I noted to my subscribers, the short-term indications in my 144-minute silver chart suggest it is trying to bottom out, while the longer-term structure in ABX suggests it should also catch up to the rest of the market, which would allow the GDX to finally break out when the ABX is finally able to complete its longer-term pullback. Until such time, it seems the market is trying to teach us a lesson in patience, such as that exhibited by the biblical figure Job.
Lastly, it seems that Seeking Alpha has changed the way they tag articles. So, while my articles used to be sent out as an email to those that follow the metals complex, they are now only being sent out to those that have chosen to “follow” me. So, if you would like notification as to when my articles are published, please hit the button at the top to “follow” me. Thank you.
The Market Pinball Wizard
I would like to invite you all to come join us in our relatively new service entitled The Market Pinball Wizard, which has recently moved up to the 7th largest service in the Seeking Alpha Marketplace offerings of 159 services.
Within The Market Pinball Wizard service, I provide several formal updates a week on the metals complex, as well as a directional bias on the S&P 500 every day and weekly USD and USO analysis. We also host one live webinar a week to go deeper into the charts. I also provide updates throughout the day in our chat room within the service, as well as answer questions.
In fact, many of our members have noted how accurate our work has been, as one of our members just posted:
“I have to admit that for a time, I thought that you were in the know, but not anymore. I think you HAVE A REAL SYSTEM WITH AN ACCURACY I HAVE NEVER SEEN BEFORE.”
And, lastly, we provide a library of webinars for you to learn our Fibonacci Pinball method because we want you to learn our system so you can learn to fish on your own, rather than having others provide you the fish:
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Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I significantly reduced my hedges, and only hold an appropriate amount for portfolio insurance at this time.
1. Don’t complain.
Instead, model the ability to pick yourself up in the face of setbacks. According to Stephanie Marston, psychotherapist, consultant and co-author of Type R: Transformative Resilience for Thriving in a Turbulent World, children learn resilience when they see their parents being agents of change instead of passive complainers.
2. Let kids climb trees and handle sharp objects.
According to a study published in Evolutionary Psychology, risky play–the kind where someone actually could get hurt–is good for kids. Researchers suggest that the fear kids experience when climbing at great heights, being near a cliff or handling a knife keeps them alert and careful and teaches them how to cope with potentially dangerous situations. And over time, mastering such scary situations has an “anti-phobic” effect which results in lower levels of anxiety overall.
3. Limit the use of electronic media, especially in the evening.
Researchers analyzed the sleep quality of 530 German three-year-olds and found that the kids who consumed higher amounts of electronic media had more problems with sleep, including resistance going to sleep, sleep anxiety and sleepiness during the day. Plus, other researchers have found that the brains of little kids can be permanently altered when they spend too much time using tablets and smartphones. Specifically, the development of certain abilities is impeded, including focus and attention, vocabulary, and social skills.The American Academy of Pediatrics (AAP) says children younger than 18 months should have no screen time at all, other than video-chatting. For kids ages two to five, it recommends limiting screen time to one hour a day. For older kids, it’s a matter of making sure media doesn’t take the place of adequate sleep, exercise, and social interaction. The AAP also says parents should make the dinner table, the car, and bedrooms media-free zones.
4. Read to them.
Researchers at the New York University School of Medicine have found that babies whose parents read to them have better language, literacy, and early reading skills four years later before starting elementary school. And kids who like books when they’re little grow into people who read for fun later on, which has its own set of benefits. That’s according to Dr. Alice Sullivan, who uses the British Cohort Study to track various aspects of 17,000 people in the U.K. “We compared children from the same social backgrounds who achieved similar tested abilities at ages five and 10, and discovered that those who frequently read books at age 10 and more than once a week when they were 16 had higher test results than those who read less,” she writes for The Guardian. “In other words, reading for pleasure was linked to greater intellectual progress, in vocabulary, spelling, and mathematics.”
5. Make them work.
In a 2015 TED Talk, Julie Lythcott-Haims, author of How to Raise an Adult and the former dean of freshman at Stanford University, cites the Harvard Grant Study, which found that the participants who achieved the greatest professional success did chores as a child.
6. Let them fail.
According to Dr. Stephanie O’Leary, a clinical psychologist specializing in neuropsychology and author of Parenting in the Real World: The Rules Have Changed, failure is good for kids on several levels. First, experiencing failure helps your kids learn to cope, a valuable life skill. It also provides them with the experience which helps them to relate to peers in a genuine way. Being challenged also instills the need for hard work and sustained efforts, and also demonstrates that these traits are valuable even without the blue ribbon, gold star, or top score. Over time, children who have experienced defeat build resilience and are more willing to attempt difficult tasks and activities because they are not afraid to fail. And, rescuing children sends the message that you don’t trust them. “Your willingness to see your child struggle communicates that you believe they are capable and that they can handle any outcome, even a negative one,” she says.
7. Be a role model for fitness.
High achieving adults consistently make exercise a priority and if you want your children to grow up fit and active, you need to practice doing it yourself. Researchers at the University of California conducted a study which found that girls who perceived their parents exercised at least three times a week were about 50 percent more active than girls with sedentary parents.
8. Don’t tell them they can grow up to be anything they want.
According a survey of 400 teenagers, conducted by market research agency C+R Research, young Americans aren’t interested in doing the work that will need to be done in the years to come. Instead, they aspire to be musicians, athletes, or video game designers, even though these kinds of jobs only comprise 1 percent of American occupations. In reality, jobs in health care or in construction trades will be golden in future decades. Why not steer them into well-paying professions in which there will be a huge shortage of workers?
Have you considered starting a mobile app? Or does your company already have one in progress? There are thousands of successful mobile apps on the market, but tens of thousands of failed starts to balance them out. Building a mobile app isn’t a get-rich-quick-scheme; instead, it’s a trial by fire that only a small percentage of candidates survive.
Survival and Failure
Of all paid apps, about 90 percent are downloaded less than 500 times per day, earning less than $ 1,250 per day. Considering the high upkeep costs of applications, that can hardly be considered a success.
In the words of Shmuel Aber, “with over a million apps on the market, consumers have lots of choices, and they won’t download or pay for your app unless you’re truly exceptional. There are a lot of moving parts to the average consumer’s decision, so you need an in-depth understanding of the market if you want to survive.”
So what are the main reasons most mobile apps fail?
These are some of the most influential factors driving mobile app death:
1. Improper audience targeting. According to Andrew Daniels, “Apps will often fail because they’re not meeting the needs of the target audience or because they’ve not researched simple things like the most used devices of the target audience. If your customers are predominantly Android users and your app is only on iOS or vice versa, you have an immediate problem. We also sometimes have businesses come to us with an idea for an application concept, but no real data suggesting whether the market needs or wants it or whether anything like it is already available.” You need to define your target audience, and be sure they’re going to use and enjoy your app. Research is your greatest asset here.
2. Poor user interfaces. According to Britt Armour, “There are a lot of components involved in building an app that offers a great user experience, but at the basest level, your app needs to be intuitive. If a user struggles to perform basic functions on your app and can’t figure out core functionalities easily, the result is very poor usability.” Your app design should make the app so approachable, even a novice could figure it out.
3. High levels of competition. The app market is saturated, so even if you have an original idea, you’ll likely face significant competition from at least two or three other companies. If you’re caught unprepared by a dominant competitor, you might not be able to survive. You can gain an advantage by reducing your prices, offering better functionality, or avoiding competition entirely by focusing on a different niche.
4. A lack of a marketing strategy. In the words of Juned Ahmed, “These days, by building a great app you have just done half the work. Until you market the app and make it discoverable to the audience, the whole effort will not get its due. Many mobile apps do not make enough to sustain as a business principally because of a poor or half-hearted marketing strategy. Just writing a great App Store description is not enough.” Make sure you work with a professional and diversify your tactics.
5. No brand consistency. Without a consistent brand, you’ll struggle to increase your customer retention. You’ll need to start with solid brand guidelines outlining the character, image, and voice of your company, and make sure those standards are enforced on all platforms.
6. Lackluster support and follow-up. If a user has an issue with the app, who are they going to turn to? If you don’t offer solid customer service, or follow up with your customers to make sure they’re having a good experience, your app could fail. Fortunately, this is one problem that doesn’t take much investment to solve; just listen to your customers and give them what they’re asking for.
7. A poor monetization strategy. There are many ways to monetize an app, whether it’s through a paid download, paid extra content, or displayed ads. If you choose the wrong strategy, or implement it inefficiently, you might cut your revenue stream in half. Look to your competitors, and don’t be too greedy with your profits initially, or you could scare away potential customers.
8. No plan to scale. In the words of Artem Petrov, “Mobile app development failures aren’t something the top players on the market have no idea about. The successful developers gather data, make well-informed decisions and adapt their apps, while others just wait for downloads… and fail.” If you want to be successful long-term, you need some plan to improve your app over time, and grow your user base. If you stand still for too long, a competitor will easily be able to improve upon what you’ve built, and poach your users away from you. Keep your app updated, and aim to keep expanding.
It’s certainly possible to make a mobile app successful, even in a market as diverse and competitive as this one. But if you’re going to survive, you first need to learn from the failures of the untold thousands of apps that came before you. Do your research, plan everything you can, and tread carefully, especially in your first few months of operation.