Sunday Night Links

• Figure 2 shows the rolling 12-month performance of the Long-Term Reversal factor in the US. This compares the returns of the best- and worst-performing stocks of the previous five years, excluding returns to 1-year Momentum, and thus isolating the extent to which longer-term trends are changing. A high reading means that a reversal is underway and previous losers are performing strongly. Conversely, a low reading means that previous trends are continuing. While we are not yet at all-time highs for the factor, investors have experienced the biggest overall swing in the data set. In the space of a year (highlighted in Figure 2), the dominance once enjoyed by mega-cap tech and Growth stocks has almost entirely reversed, with previous losers approaching the outperformance they enjoyed when the tech bubble burst in 2001. [Man Institute]
• Once the fertility transition to controlled fertility occurs in a population, its fertility generally continues to decline until it is below replacement. The benefits of the new pattern are increased material wealth per person, a reduction in disease, starvation, and genocide, and upward social mobility. The main drawback is the onset of a dysgenic phase that may end civilization as we know it. [Sarah Perry]
• For example, natural resource equities did well during the Great Depression between 1929 and 1943 – a period typically associated with extreme deflation. The stock market crash of 1929 saw the S&P 500 fall over 80% by 1932. Gold meanwhile remained flat until 1934 when President Roosevelt raised its price from $20.67 to $35 per ounce. Natural resource related equities (other than gold stocks) fell too but they rebounded much more quickly. Between 1929 and 1943, the US had experienced more than a full decade of deflation with the CPI falling by 5% in aggregate. In 1943, the S&P 500 still remained some 60% below its 1929 peak. Over that period, the price of gold rose by 70% while oil stocks advanced 30%, mining stocks rose 12% and agricultural stocks advanced 45%. The decade normally associated with economic depression and deflation was actually very good for natural resource investments – both on an absolute and a relative basis. [Goehring & Rozencwajg]
  
• In an era when a small number of people lived past sixty-five, society could easily support them for the very few years they survived beyond that point. Now that citizens are routinely living two decades longer, it is simply not mathematically possible, let alone politically feasible, to expect each worker to support 0.67 retirees, no matter how many coconuts, dollar bills, stock certificates, or Krugerrands they save up in the meantime. It is also not reasonable to expect productive younger individuals to support large numbers of healthy older non-workers. As Arnott and Casscells succinctly conclude, what we have is not a savings crisis, but rather a demographic crisis. We will not be rescued by increased voluntary or enforced savings. The idea of investing Social Security funds in stocks, so fondly embraced by right-wing think tanks, is a prescription for capital-market instability. [William J. Bernstein]
• I pulled up a recent case. U.S. App. No. 16/824,815 focusing on a vehicle heads-up display owned by Visteon.  A third party (James D. Busch) submitted his own published patent application (US Pub. No. 20180217429) as prior art and included a 30-page “concise description of relevance.”   At that point, the examiner issued an anticipation rejection and the patentee abandoned.  Note here that Busch is both a prolific inventor and a patent attorney.  He has an interesting article suggesting that patentees may want to use 3rd party submissions in order to seed forward citations of your patent. [Dennis Crouch]
• U.S. distillate demand in 2021 has been running at about 5% above pre-pandemic levels, putting inventories at 15% less than the five-year moving average, according to U.S. Energy Information Administration data. U.S. East Coast stockpiles are at their lowest since April 2020. When inventories are low, refiners generally respond by ramping up output. However, global refining capacity shrank by more than 2 million barrels per day during the pandemic, while U.S. refining capacity last year fell 4.5% to 18.1 million barrels per day, according to federal data. U.S. refiners are still running plants at lower rates than the five-year average to avoid producing too much jet fuel, where demand still lags 2019 levels. "We actually don't see a clear path in the near future to be able to restock diesel inventories," said Gary Simmons, chief commercial officer at Valero, during the company's earnings call last week. [Laura Sanicola]
• The site Know Your Meme has an amazingly detailed history of the term wordcel. Apparently it was coined on 4chan’s /pol/ message board, and the Twitter user roon just popularized it. It’s an interesting phenomenon that /pol/, which is WAY outside the Overton Window, has such a short pipeline into semi-mainstream political discourse. All of the smarter-than-average, very online pundits and anons operate in a milieu in which their lives can be wrecked if they say something politically incorrect. And yet, all of these people are now intimately familiar with tons of hatefacts and dissident right arguments; they’re exposed to them constantly in the recesses of Twitter and comment sections. This was not true twenty years ago, and it is true now despite the post-2016 bannings. Today I also noticed Andreessen, a big-time Silicon Valley name, follows and retweets Zero HP Lovecraft, who is basically a full-blown Alt Right account. This situation doesn’t seem sustainable. I have no idea what will happen, but the mainstream’s hold may be more tenuous than we realize. [Sailer]