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mYCharts - April 8, 2021

Ignoring Short-term Trends with Felix Salmon

Felix Salmon Archegos Tweet

Q: Give us an overview of your background in the markets. What is your investing philosophy?

A: I’ve been writing about the markets since 1995. I started writing about bonds, which has been a great foundation for me. My investing philosophy is a very simple buy-and-hold strategy of investing in broad indices for the long run. I don’t kid myself that I’m smart enough to generate alpha, or even to identify other people who can generate alpha.

Q: You author the popular Axios Capital weekly newsletter  –  how do you determine the most important or entertaining market topics each week?

A: A lot of it is just based on what’s in the news. I’m particularly interested in zooming out to get a broader perspective on the individual events that make it into headlines; I find that the daily news cycle can often magnify relatively insignificant intraday moves while ignoring much bigger moves over months or years. Q: What should your followers and readers take away from the chart above, showing how Archegos Capital’s actions affected Discovery (DISCA) and ViacomCBS (VIAC)?

A: There’s two main things going on in that chart. First, and most obviously, the two stocks just absolutely cratered when Archegos got its margin call and its banks sold its positions. This wasn’t a function of the Viacom capital raise, since Discovery fell just as much and didn’t raise any new capital. Second, while the plunge was huge, it still wasn’t enough to fully erase the gains that the stocks have made this year alone.

Q: Do you feel the long-term fates of Discovery and ViacomCBS, which just launched the Discovery+ and Paramount+ streaming services, respectively, have been affected?

A: Probably not. Not unless Discovery was about to do its own secondary stock issuance, anyway. I’m a believer that share prices reflect corporate fundamentals, rather than driving them. (With a couple of high-profile obvious exceptions, of course, like Tesla or AMC.)

Q: In what ways does YCharts help you decide topics or components of your posts?

A: If I’m talking about something like the S&P 500 dividend yield, it’s very easy for me to chart that data and see what it’s doing in comparison to risk-free rates. Having data on hand and ready to play with is a lot easier than having to hunt it down.

Felix Salmon mYCharts

Felix Salmon, Chief Financial Correspondent at Axios, @felixsalmon

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