This edition of Market Factors starts with the top investment ideas from Barry Ritholtz’s How Not to Invest and moves on to detail the ongoing bull market in copper. The Diversion covers the complete list of alt-rock one-hit wonders and we have Quick Hits as always.
Education
A list for wiser investing
Ritholtz Wealth Management founder Barry Ritholtz was kind enough to send me a copy of his new book How Not to Invest – with a pleasant note and everything – but I’ve been ungrateful so far and haven’t read it. Thankfully, the author provided a summary of the book’s top ten concepts to celebrate the release of the paperback edition.
For idea one, the book warns investors to avoid the oceans of easily available bad advice from overconfident pundits. Mr. Ritholtz is bemused about how so much wrong advice can continue to exist.
The second idea – that investors shouldn’t follow their investments hour by hour on business channels – is related to the first. The author believes this leads to over-thinking about funds we won’t tap for decades in many cases. He urges readers to schedule investment media consumption in a way that best suits their needs in the long term.
The third concept is humility. Mr. Ritholtz argues that investing involves making decisions based on probabilities backed by incomplete information. It requires the admission that we know very little about the future and to protect assets accordingly.
The book, for idea number four, urges investors to acquaint themselves with the simple math concepts that protect against destructive psychological tendencies. His example was the extreme profitability of compounding and how this knowledge might stop investors from panic selling.
The acceptance of volatility is concept five. The way valuation levels wax and wane through a market cycle is cited along with changes in sentiment. Mr. Ritholtz writes, “Markets possess a duality of rationality and emotion [but] once we understand this, volatility and drawdowns become easier to accept.”
Lesson six is a reminder of something we all know but conveniently forget when in a gambling mood: stock picking does not work. The bulk of market returns come from one per cent of stocks that no one has proven capable of consistently identifying. Indexing is best for virtually all investors.
Mr. Ritholtz calls concept seven Avoidable Mistakes. This involves failure to recognize the correct risk-reward profile of an investment and, for instance, making a big bet on a single stock. In other words, don’t do things we already know we shouldn’t do.
Idea eight warns against making emotional decisions. Investors should not mix politics and investing in his mind, nor ignore the profitable mundane in favour of the riskier outliers. Investors should be less confident during market rallies and less fearful during periods of volatility.
Lesson nine is called Cognitive Deficits. This is a broad category covering the numerous ways human psychology is unfit for investors. We get misled by narratives, overconfident sales people, fear, herd thinking and many other traits better suited to surviving on the savannah than organizing a retirement portfolio.
Idea ten is actually 11 ideas all wrapped up under the heading Good Advice. These are avoid mistakes, recognize your advantages, stick to a plan, use indexing, own bonds for diversification, remember tax implications, act in a way that minimizes future regret as much as possible, be skeptical of most experts, maximize spending for happiness, understand what is in your control and finally, and most importantly, get rich.
Metals
Record copper prices ahead
Scotiabank strategist Hugo Ste-Marie’s bullish view on copper continues to pay off and he took a bit of a victory lap in a Monday research report called “Copper: Record High Closing Could Be Coming Today”. The commodity price is up roughly 14 per cent quarter to date and supply concerns should support further gains. Both Freeport-McMoran (FCX-N) and Ivanhoe Mines (IVN-T) announced delays in major projects that will exacerbate a tight market. Chilean production hit a nine-year low in February.
Scotiabank mining analyst Orest Wowkodaw has “outperform” ratings on Lundin Mining Corp. (LUN-T), ERO Copper Corp. (ERO-T), Capstone copper Corp. (CS-T) and First Quantum Minerals Ltd. (FM-T).
Scooby-Doo and ShaggyCourtesy Warner Home Video via REUTERS
Diversions
The 1980s rocked
Alan Cross’s 50 all-time alt-rock one-hit wonders list is focused on 1980s alternative music, which is convenient because so am I. The full list was finally posted this week, providing a delightful trip down memory lane.
GO! by Tones on Tail topped the list in terms of importance and I support that placement. The song was made popular in the movie Career Opportunities written by John Hughes. 3 Strange Days by School of Fish, The Future’s So Bright I Had to Wear Shades by Timbuk 3, Tenpole Tudor’s Swords of a Thousand Men and Birds Fly (Whisper to a Scream) by Icicle Works rounded out the top five.
There are a lot of selections I remember well from the olde tymes – Mexican Radio by Wall of Voodoo, Pump up the Volume by M/A/R/R/S, Turning Japanese by The Vapors, Scooby Snacks by Fun Lovin’ Criminals, and Butterfly by Crazy Town just to name a few.
Many of the songs on the list are obscure - some of them even were at the time, and rarely heard now. In cases like Spirit in the Sky by Doctor and the Medics this is a good thing. There are other tracks like Got You by The Flys, Kon Kan’s I Beg Your Pardon, Possum Kingdom by Toadies, A Girl Like You by Edwyn Collins and Closing Time by Semisonic that I hadn’t heard in 30 years. Some of them sent me into such a strong nostalgic fugue state that I could smell things from 1986.
The essentials
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Globe Investor highlights
Norman Rothery takes a fresh look at his index-beating ‘perch portfolio’: dividend stocks going for bargain prices
Tim Shufelt shares some thoughts on how to make the most of this historic bull market. Tom Bradley has some portfolio advice at this juncture as well.
Jamie McGeever on how market concentration has increasingly gone global
David Berman says investors are right to feel bullish these days on BlackBerry
Quick hits
Here’s something to worry about. Financial Times editor Robin Wigglesworth notes that recent profit results from Alphabet, Amazon and Microsoft exceeded estimates based on a vague “other income” line item on the income statement. The giant amounts of money attached to this label amounted to half of net income for Alphabet and Amazon for the previous three months. “Other income” refers to the value of each company’s holdings in private entities like OpenAI and Anthropic. More self-referential behaviour from the AI corporate community.
Datadog Inc. produces software that monitors IT system activity, notably in data centres. The company announced earnings that absolutely trounced high expectations last week with revenues climbing 32 per cent year over year. New contracts that haven’t been recognized yet (RPO – remaining performance obligations) are up 50 per cent. Citi analyst Fatima Boolami noted that the company’s “fundamental momentum is diffuse and pervasive – and thus durable.”
Citi chief U.S. equity strategist Scott Chronert likes the Nasdaq 100 as the best way for investors to gain risk-conscious exposure to the AI buildout even if the top ten constituents account for 47 per cent of market cap. He notes that profit estimates for calendar 2026 are up 20 per cent since October and Citi analysts expect improving profit margins through 2027. The forward price-to-earnings ratio of 25 times is not cheap but the PE to growth ratio is close to 20-year lows.
Read this week’s earnings and economic calendar here