What We’re Reading (Week Ending 19 April 2026) - 19 Apr 2026
Reading helps us learn about the world and it is a really important aspect of investing. The late Charlie Munger even went so far as to say that “I don’t think you can get to be a really good investor over a broad range without doing a massive amount of reading.” We (the co-founders of Compounder Fund) read widely across a range of topics, including investing, business, technology, and the world in general. We want to regularly share the best articles we’ve come across recently. Here they are (for the week ending 19 April 2026):
1. A Bakery, a Fortress, and Three Fired Central Bankers – Thomas Chua
Between 1991 and 1995, Croatia fought for independence as Yugoslavia dissolved. At its core, it was a war between a Croatian state seeking independence and Serbia wanting all territories where Serbs lived to be under Serbian control. Serbs were roughly 12% of Croatia’s population, but backed by the Yugoslav army, they pushed for roughly one third of the land.
An estimated 250,000 to 300,000 Croats were expelled from their homes, their houses looted or destroyed…
…But of all the stories I heard across Croatia, the most impactful came from our guide in Trogir.
Her grandmother believed one of her sons (the tour guide’s uncle) had been killed in the war. Heartbroken, this woman, living in a rural village, took her entire life savings and set out to find her son’s body so she could bring him home for a proper burial.
She couldn’t find him.
Eventually, she walked into a bakery and asked if anyone had seen her son’s body. They said no. She placed all her life savings on the table and told them: this is yours if you can find my son’s body. Please let me know.
The people at the bakery refused the money and said they would help, but not for the money. The grandmother left it on the table regardless.
Months later, her son came home. Alive. With her life savings in his hand. The bakery had found him and passed the money back.
In the middle of a war where Croats and Serbs were killing each other, where homes were being bombed and families torn apart, the people at that bakery who helped this grieving mother find her son were Serbs.
Not everyone supports the war. There can still be kindness across enemy lines…
…The tour guides all shared something similar. The pain never fully goes away, even if their rational minds tell them to let bygones be bygones. But they all said the same thing about the next generation: the children don’t carry the same weight. And that gives them hope that pain from the war will heal…
…I sat down at a casual spot and ordered a kebab. Nothing fancy. The bill came to 300 lira. I checked the Google reviews for the same place, and photos from a few years back showed kebab prices around 25 to 35 lira. That’s not a typo. Prices here change so fast that some of the menus had white stickers plastered over the old prices, one layer on top of another. Some restaurants had just given up on the lira entirely and started quoting in euros instead.
Our tour guide shared how prices had spiralled out of control over the past few years, and how the government is almost certainly underreporting the real inflation rate. The official numbers are bad enough.
Turkey’s official annual inflation rate was around 20% in 2021. By October 2022, it had hit 85%. It’s come down since, to around 31% as of March 2026, but independent analysts believe the real numbers are significantly higher.
Meanwhile, the Turkish lira went from about 8 per US dollar in early 2021 to around 44 per dollar today. That’s over 80% of its value gone in five years…
…How did this happen? President Erdogan holds an unconventional economic belief: that high interest rates cause inflation, not the other way around. This is the opposite of mainstream economics, where central banks raise rates to cool an overheating economy. Erdogan has called himself an “enemy of interest rates” and has also cited Islamic beliefs against usury as part of his reasoning…
…Between 2019 and 2021, Erdogan fired three central bank governors in roughly two years. The most dramatic was in March 2021, when he sacked Governor Naci Agbal just two days after the bank hiked interest rates to 19% to curb inflation. Agbal had been on the job less than five months and had been winning investor confidence. His replacement did exactly what Erdogan wanted: slashed rates from 19% down to 14%. The lira lost 44% of its value in 2021 alone.
And they kept cutting. By late 2022, the central bank had pushed rates down to 9%, even as inflation was running above 80%. The lira went into freefall. Ordinary Turks watched their purchasing power evaporate.
After winning re-election in 2023, Erdogan quietly reversed course. A new economic team was brought in and interest rates were hiked aggressively, eventually reaching 50% by March 2024. It was an implicit admission that the previous policy had failed, though Erdogan has never said so publicly.
The lesson is straightforward: when the central bank loses its independence, the consequences are severe and they fall hardest on ordinary people. A president who fires central bankers for doing their job, who replaces them with loyalists willing to cut rates into the teeth of 80% inflation, isn’t just making a policy error. He’s destroying the institutional credibility that takes decades to build and years to repair.
2. The coming El Niño of 2026 – Michael Fritzell
But first, let me explain what El Niño is. It’s essentially a climate pattern that drives global temperatures to rise, leading to droughts across Asia and Africa.
In normal years, winds blow from the eastern Pacific Ocean near South America to the western Pacific Ocean near Asia. These winds push warm water towards Asia. In normal years, this warm water causes clouds to form and rain to fall in Asia.
And since the warm water moves away from South America, the remaining water close to South America tends to be cool.
The so-called El Niño weather cycle disrupts this pattern. Instead of winds moving west, the warm water stays in the middle of the Pacific, or even moves east.
This causes:
- Less rainfall in Asia, leading to droughts in Australia, Southeast Asia and even parts of Africa
- More rainfall in the Southern United States and South America, leading to flooding in those regions…
- …The US National Oceanic and Atmospheric Administration gives a 61% chance of El Niño emerging by July 2026.
- Roughly half of the team at the European Centre for Medium-Range Weather Forecasts expect temperatures in the main El Niño region in the Pacific Ocean to exceed 2.5 degrees Celsius above the seasonal average by October 2026. Making it one of the most intense El Niños of the past century..
…First, droughts will negatively impact palm oil yields for Malaysian and Indonesian plantation companies, perhaps by as much as 10-20%. That’s how much output was impacted by the unusually strong El Niño of 1997…
…Droughts in Asia tend to reduce hydroelectric output, boosting the demand for coal in India and Indonesia. So coal prices could be heading higher, all else equal. And Indonesian coal miners stand to benefit…
…There have been a few instances, such as 2017, when key weather agencies forecasted an El Niño, yet none materialised.
However, I think there’s an asymmetry here, given that investors are not yet prepared for the potential of a super-El Niño, which could rival the one we saw in 1997.
3. China shock 2.0: the flood of high-tech goods that will change the world – Ryan McMorrow, Sam Fleming, Peter Foster, and Joe Leahy
Twenty years ago the global economy was shaken by a first “China shock” as a wave of low-cost goods destroyed the business models of manufacturers in advanced economies, displacing millions of workers and feeding discontent that fuelled populist politicians including US President Donald Trump.
Now a second shock is under way — one that is even more threatening to China’s trading partners: an assault on high-end manufacturing.
Vicious domestic competition, coupled with vast industrial scale, ample pools of engineering talent and some of the highest subsidies in the world, has generated world-beating Chinese champions in EVs, solar panels, batteries, wind turbines and a lengthening list of advanced manufacturing sectors…
…After racking up a record trade surplus in goods that surpassed $1tn in 2025, China boosted exports by nearly 15 per cent year on year in the first three months of 2026…
…BYD, the world’s largest EV maker, saw its average selling price per car fall from Rmb143,100 in 2021 to Rmb119,223 last year. Nio, one of China’s premium EV brands, has lowered the price of its flagship ES8 SUV by about 20 per cent since its 2018 debut, despite packing much more technology into the car.
Chief executive William Li says cutting costs has been a focus as they have redesigned the car. “For the first-generation ES8, the vehicle structure used 97.4 per cent aluminium, which was very expensive,” he says. “Today, we can achieve the same strength with less aluminium.”
Li adds that the group has brought the manufacture of components such as semiconductors in-house and localised the sourcing of parts such as the air suspension, which was once imported from Germany…
…“There is an ideological hardwiring at the top of the Chinese hierarchy to favour production over consumption,” says Daleep Singh, a former White House adviser under Joe Biden who is now chief global economist at PGIM, the asset management group.
“China will continue to rely on the rest of the world to absorb their excess production because the domestic political cost of empowering their own consumers is too high.”…
…The surge in Chinese exports in the first three months of 2026 was driven by shipments to the EU, up 21.1 per cent, and to south-east Asia, up 20.5 per cent year on year — even as exports to the US fell…
…A further, critical factor is the Chinese currency. Lower inflation relative to Chinese trading partners has led to a real exchange rate devaluation in the past three years, helping boost net exports and the current account surplus, which stood at 3.7 per cent of GDP last year.
The IMF estimates the country’s real effective exchange rate — which measures the real value of the currency against a basket of competitors — is undervalued by around 16 per cent, fuelling the competitive advantage enjoyed by Chinese exporters.
China has kept exports competitive by buying dollars and depreciating the currency, accumulating “shadow reserves” through a complex web of state-owned banks.
Then, crucially, there is Beijing’s industrial policy.
China has a ream of policies to help companies get off the ground, with local governments in particular battling with each other to offer the best subsidies, cheap land, financing and tax breaks to lure in manufacturers and seed new industries on their turf.
The competition between localities can be so great that some businesses move from one place to the next as they chase subsidies and investment. They have become known as “migratory bird enterprises”…
…The way the Chinese system works, local officials have every incentive to protect their companies.
Value added tax generates nearly 40 per cent of China’s tax revenue, and the central government splits the receipts with the localities where products are made, giving them a direct stake in keeping factories running.
Adding local production capacity also creates the growth that officials are largely judged on, and any large-scale lay-off could threaten social stability, Beijing’s overriding priority.
“Officials are scared of missing their GDP targets. Nobody is scared of overcapacity,” says another founder, who asks to remain unnamed. “As long as you’re manufacturing, there’s VAT revenue. Whether you sell [a product] or make a profit, that doesn’t really affect them.”…
…Recent OECD analysis underscores the role of subsidies. Company-level analysis of Chinese industry by the 38-member organisation estimates that Chinese businesses are subsidised at between three and nine times the rate of their rich-world counterparts.
As well as grants and tax breaks, the OECD data finds that the biggest subsidies come in the form of loans from Chinese state banks offering below-market rates to Chinese companies that undercut international competition.
While such dynamics have helped Chinese groups dominate globally, profits are vanishing. In the solar industry, overcapacity has led to vast losses, which China’s top six publicly traded solar groups indicated would cumulatively total Rmb43bn for 2025.
Yet the subsidies continue. One of those six companies, Jinko Solar, received Rmb1.3bn in subsidies in the first half of 2025 but still lost Rmb3bn in the period…
…As Chinese factories rushed into solar, production capacity skyrocketed. The country has the ability to manufacture 1,200GW of solar panels annually, roughly double the 647GW installed worldwide last year, according to the China Photovoltaic Industry Association and energy think-tank Ember.
“Why was it possible to build capacity exceeding global demand by double in such a short time?” asked Li Dongsheng, the chair of television and solar conglomerate TCL. “The key reason is the distortion of resource allocation and inappropriate local government participation,” he said in an interview with local media last month.
4. Corporate dark arts gone awry: how executive incentives can destroy shareholder value $NNBR $GME $HAIN – Andrew Walker
A comp scheme that could encourage management to destroy value to maximize their own payout.
Gamestop (GME) serves as a perfect example here. In January, they gave their CEO a huge option package: the CEO got >171m options struck at $20.66/share (the stock’s closing price). The options don’t expire for 10 years, and they only vest if the company hits certain market cap and EBITDA targets…
…You can certainly see the logic behind the award: GME’s market cap is <$10B, and their 2026 EBITDA was ~$345m. This comp package is encouraging massive market cap and EBITDA growth in order to even begin vesting.
Corporate governance ninjas can probably already see the issue with this package: it encourages any growth in market cap and EBITDA, not per share numbers. That incentive carries a host of issues. To take it to the most extreme: the CEO could easily hit all of his targets by issuing stock like a wild man in order to boost the company’s market cap. He could then take all of that cash and go on an acquisition spree in order to drive the company’s EBITDA up. It doesn’t matter whether the acquisitions create value for shareholders; if they boost EBITDA, they help from a vesting perspective…
…A comp package could actually disincentivize management from maximizing shareholder value.
Why does this one scare me? Because I’m so focused on incentives, and I’m always worried I’ll be lured into a situation where the incentives look positive but are actually insidious.
A live example will show this best: consider NNBR. In 2023, the stock was trading for just over $1/share, and they recruited a new CEO with a contract that would give him up to 2.5m shares if the stock price could hold $11/share…
…Fast forward to today, and things haven’t gone that well. The stock is back down to $1.50/share (though some early strength in the stock resulted in the $2 and $3 tranches vesting), and the company is reviewing strategic alternatives. Imagine you’re the CEO and had two choices right now: sell the whole company for $3/share, or max out the company’s credit line, head to Vegas, plop down at a roulette table, and bet it all on lucky #13.
If we ignored the fact that option #2 would result in some jail time, the CEO is actually incentivized to pursue that “lever up and risk it all” option. Why? Selling the company doesn’t help him vest more units, so he’s not super incentivized to pursue a sale (particularly because it puts him out of a job). In contrast, if he got lucky with the “lever up and risk it all” strategy all those PSUs would go in the money and he’d grab a multi-million dollar windfall…
…Someone highlighted COOK’s pay to me recently, and I’d be remiss if I didn’t mention it. COOK’s financial performance for 2025 missed all of their executive team’s performance goals, resulting in their stock declining >50% during the year and “no payments under the program to the Company’s named executive officers”…. but “the Board decided to award Jeremy Andrus, the Company’s Chief Executive Officer, and Michael Joseph (Joey) Hord, the Company’s Chief Financial Officer, discretionary cash bonuses equal to $956,250 and $270,938, respectively, due to their significant contributions to the Company in 2025 and to promote retention.” Well done guys; if I was a shareholder I know I’d be thrilled with that decision!
5. Letter to the 20-year-old investor – Chin Hui Leong
If you are closer to 20, you have an edge that no amount of money can buy. More on that later…
…I actually started investing much earlier, in 2002. Back then, there weren’t many choices. I bought the only unit trust available that tracked the US-based S&P 500…
…But when I bought my first individual stock in 2005, things changed. I actually felt more comfortable holding individual stocks than I did when holding index funds…
…Since 1928, the S&P 500 has fallen 10 per cent (or more) roughly every 1.8 years and 20 per cent every five years or so. When that happens, if you’re watching the index too closely, you’ll be upset.
You’ll start looking for reasons why it declined; my advice is don’t.
The S&P 500 is made up of 500 stocks…
…Trying to figure out why all 500 – or even 30 – stocks fell at once is too much work…
…When I held individual stocks, whenever a stock price fell, I could look at how much cash the company had. I could check whether its products were still selling. I could see whether it was generating profits and free cash flow…
…Between 2005 and 2010, the S&P 500 peaked in 2007, only to fall spectacularly during the global financial crisis. While the US market recovered starting from 2009, the index ended 2010 roughly where it started five years earlier…
…During what was rated as one of the deepest recessions in 70 years, I started noticing that certain companies were thriving.
The companies included Apple, Amazon, Booking Holdings, and Netlifx. They were among the 25 stocks I bought and held for a decade or more…
…Through it all, there were benefits I did not expect. I had a window into the future. I knew that online streaming was coming before it happened. I knew that same-day delivery was possible back in 2009…
…Amazon is up 39 times from when I bought it in 2010. Netflix has grown over 313 times. Booking Holdings is up 21 times. And Apple, which people thought had saturated its market a decade ago, is up 26 times…
…If you started investing at 20, or even earlier, time is on your side.
Disclaimer: None of the information or analysis presented is intended to form the basis for any offer or recommendation. We currently have a vested interest in Amazon, Apple, and Netflix. Holdings are subject to change at any time.
