Misc

Miscellaneous is often where the gems are.

Misc

Healthcare in China

  • “To say that healthcare in China is a growth story is an understatement: despite the country’s per capita spending growing at 16% p.a. over the past 18 years, it is still only 1/7th that of the UK and1/17th that of the US.“
  • “Consider the country’s changing demographics: in 1970, the median age was 19 years; today that figure is 38, and by 2040 it is projected to be 47.“
  • “As people age, they tend to experience more ailments, which require more (and costlier) treatments: according to Bernstein, Americans aged 25 or younger use five prescriptions per year, while those aged 65 or older use a whopping 46 scripts!“
  • Source.
Misc

Pension Funds

  • Interesting chart showing the asset allocation of pension fund assets and the split between defined contribution and defined benefit in different countries.
  • The UK really stands out.
  • For the top 7 countries (P7) the allocation to equities has been reduced dramatically in favour of “other assets” since 1999.
  • Defined contribution has also crossed 50% for the first time last year.
  • Source.
Misc

The Box

  • A great podcast on how container shipping started and revolutionised the world by a historian who wrote the book on the subject.
  • “Container didn’t just happen. Its adoption required huge sums of money, both from private investors and from ports that aspired to be on the leading edge of a new technology. It required years of high-stakes bargaining with two of the titans of organized labor, Harry Bridges and Teddy Gleason, as well as delicate negotiations on standards that made it possible for almost any container to travel on any truck or train or ship. Ultimately, it took McLean’s success in supplying U.S. forces in Vietnam to persuade the world of the container’s potential.“
Misc

Forecasting

  • A nice post reminding us, with supporting studies, that most forecasting isn’t very good whether it is recessions, GDP, interest rates, exchange rates etc.
  • And yet we persist – “To understand the extent of our forecasting fascination, I analysed the websites of three management consultancies looking for predictions with time frames ranging from 2025 to 2050. Whilst one prediction may be published multiple times, the size of the numbers still shocked me. Deloitte’s site makes 6904 predictions. McKinsey & Company make 4296. And Boston Consulting Group, 3679. In total, these three companies’ websites include just shy of 15,000 predictions stretching out over the next 30 years.“
Misc

Bessemer Memos

  • Bessemer Venture Partners are famous for publishing their anti-portfolio.
  • Recently they took to learning from their success and published a series of memos from some of their most successful venture investments.
  • “One pattern that consistently emerges is that Bessemer’s best investment decisions centered on people. In retrospect, the early products themselves are barely recognizable today. Rather, passionate, analytical and relentless founders zigged and zagged their way to that elusive “product-market fit”, and these memos provide a glimpse of those winning entrepreneurs before they were famous.“
Misc

Income Mobility

  • Interesting chart on income mobility in the US.
  • “This graphic plots the probability that a 30-year-old American has to out earn their parents (vertical axis) depending on their parent’s income percentile (horizontal axis). The 1st percentile represents America’s lowest earners, while the 99th percentile the richest.“
  • Take the 50th percentile (“middle class”) – the probability of someone out-earning their parents has fallen precipitously – it was 93% for people born in 1940 and dropped to 45% for those born in 1980.
Misc

Emissions and Emerging Countries

  • It is well documented that the CO2 intensity (CO2 per unit of economic growth) of the world has improved.
  • However the level of emissions keeps going up, with recent increases mostly coming from emerging economies.
  • The reason? These countries have taken the burden of de-industrialisation by the developed world over the last 25 years.
  • As the chart shows – this has taken the form of a shift of carbon-intensive manufacturing of steel, cement, ammonia and plastics.
  • These goods are produced both for domestic needs but also for export to the developed world.
  • Sourced from the brilliant JPM Energy Outlook note.
Misc

History of Fraud and Short Selling

  • A fascinating post on the history of fraud and how short sellers and the media uncover it – with clear parallels to Wirecard today.
  • As Jim Chanos put it – “It is short sellers who are the real time financial detectives, whereas the regulators are often financial archaeologists.”
  • Interesting chart showing how speculative grade bonds dominated as the role of underwriters changed.
Misc

Sellside Economists

  • Funny, but often true, ten rules to being a sellside economist.
  • How to get attention: If you want to get famous for making big non-consensus calls, without the danger of looking like a muppet, you should adopt ‘the 40% rule’. Basically you can forecast whatever you want with a probability of 40%. Greece to quit the euro? Maybe! Trump to fire Powell and hire his daughter as the new Fed chair? Never say never! 40% means the odds will be greater than anyone else is saying, which is why your clients need to listen to your warning, but also that they shouldn’t be too surprised if, you know, the extreme event doesn’t actually happen.
  • Recession watch: … So the best approach is to emphasise the dangers of recession but claim this is at least 18 months away. If it happens sooner, you can say you correctly warned about the dangers. If there is no recession you can simply postpone your forecast and hope nobody remembers.
Misc

Ride Hailing Impact on Emissions

  • Is ride-hailing good for the green house gas emissions?
  • “The answer from several recent studies is straightforward: after accounting for people who would have taken public transport, biked or walked instead, and those who would not have traveled at all, there’s a substantial net increase in estimated vehicle miles traveled and emissions from ride-sharing, possibly as large as 60%-80% compared to a world with no ride-sharing at all”
  • Charts tell this story – (clockwise) a surge in ride-hailing in the US including NYC coupled with increased emissions per trip and miles travelled compared to the category they replace.
  • Sourced from this great note on Energy market outlook.
Misc

Patent Power

  • An interactive table of the tech world’s most valuable patent portfolios.
  • This chart shows the top 20 companies overall. Clicking through it’s possible to rank by industry.
  • Usual suspects at the top but interesting to see companies like Cirrus Logic and Sonos making it.
  • For an explanation of how the Pipeline Power score – which takes into account the value rather than the raw quantity of patents in a portfolio – is derived click here.
  • NB Sadly the data is slightly dated (from 2017) but likely still very relevant.
Misc

Illiquid Investments

  • The popularity of illiquid investments has risen strongly over time.
  • As shown in this interesting chart from a Cambridge Associates report.
  • It depicts the asset allocation of endowments with greater than $500m assets.
  • These entities now hold 23% in private investments up from 8% 15 years ago.
  • In addition the median institution also holds 16% of their portfolio in uncalled capital commitments to private investment.
  • All this has serious implications in terms of liquidity.
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