- It helps to study organisations that have been innovating consistently.
- One such organisation is DARPA.
- Since 1958, it has been a driving force in the creation of weather satellites, GPS, personal computers, modern robotics, the Internet, autonomous cars, and voice interfaces, to name a few.
- This fascinating and thorough article, or more precisely a self describe “collection of atomic notes”, attempts to explain why DARPA works in search of creating a private sector funded “ARPA”.
- The section on program managers is worth a look as the characteristics described there are also those that make good investment analysts.
Misc
Miscellaneous is often where the gems are.
Lessons
- An absolutely brilliant ten bits of advice by Milton Glaser, the famous graphic designer. Each one a gem.
- “It makes me nervous when someone believes too deeply or too much. I think that being skeptical and questioning all deeply held beliefs is essential. Of course we must know the difference between skepticism and cynicism because cynicism is as much a restriction of one’s openness to the world as passionate belief is. They are sort of twins.”
UK Online Nation Report
- Comprehensive report with loads of stats on “what people in the UK are doing online, how they are served by online content providers and platforms, and their experiences of using the internet, alongside business models and industry trends.“
- 71% of all online time is spent on mobiles now, yet half of over 75 year olds don’t use the internet at all.
- 39% of online time by adults was spent on Google or Facebook owned sites, and these two control 79% of UK online ad revenue.
Quantum Computing Patents
- China is leagues ahead in quantum computing patent filings.
- Source: ML.
Artificial Intelligence
- This dataset tracks the flow of talent in AI around the world.
- The chart shows the top 25 institutions for AI research.
- “The United States has a large lead over all other countries in top-tier AI research, with nearly 60% of top-tier researchers working for American universities and companies. The US lead is built on attracting international talent, with more than two-thirds of the top-tier AI researchers working in the United States having received undergraduate degrees in other countries.”
App Usage and Covid
- Neat chart that shows smartphone apps by user growth and usage.
- Some apps are managing to both attract new users and increase usage.
- Source.
Passion Economy & Disruption
- An insightful post about how the passion economy will disrupt traditional competitors.
- Passion economy is the ability of “new digital platforms enable people to earn a livelihood in a way that highlights their individuality.“
- Disruption happens as “these workers can develop new products/services that serve previous non-consumers and over-served consumers. This means that across different industries, new Passion Economy platforms have the potential to disrupt incumbents.“
Forecasting is Hard
- Phil Tetlock has spent 30 years studying forecasting and has written a must read book on the subject.
- It turns out that there are characteristics that make a better forecaster. One needs to be like a fox (these ideas are explained in detail here).
- This is a fascinating article that, in five steps, brings to life Tetlock’s work in the current Covid environment.
Poker Psychology
- As opposed to some video games, where probabilities are tweaked to psychologically hook players, in poker “the probabilities are what they are: they don’t accommodate. Instead, they force you to confront the wrongness of your intuitions if you are to succeed. “Part of what I get out of a game is being confronted with reality in a way that is not accommodating to my incorrect preconceptions,””
- This from a brilliant article by a psychologist learning to play poker.
- Our beliefs are skewed because small samples don’t mirror large ones, that this leads to the emergence of the gamblers fallacy, but perhaps this bias actually has positive advantages through an internal locus of control and our understanding of luck.
- All have clear relevance to investing.
- For a full 1 hour podcast from the author – head here.
Portfolio Turnover
- A long term chart of portfolio turnover for US based mutual funds.
- 1975 saw a big rise as trading commissions were de-regulated and bid-ask spreads were moved from 1/8th basis.
- The next 30 years has seen a precipitous decline.
- NB. Turnover is defined as the lower of the total amount of securities purchased/sold divided by total net asset value of the fund.
- Source.
Peter Thiel
- A fascinating article about Peter Thiel.
- “Wherever there’s a major shift in the American landscape in the past half-decade—be it political or cultural—there, somewhere on the donor list of the political campaign, or among the investors in the controversial technology, is Peter Thiel.“
Marc Andreessen Interview
- Brilliant interview with Marc Andreessen.
- Full of insights on a multitude of topics.
- On investing he says – “It’s really, really, really hard to be a good poker player. And if you’re kicking yourself every time you have a bad hand, the bad habits just simply happen. You just need to be able to have a system that lets you think through the process…“
Doing Business in Japan
- If you have ever invested in Japanese stocks it can feel like learning all over again.
- This is a really great article written by a westerner fluent in Japanese who has spent his whole professional career in Japan including starting a business.
Football Clubs
- Interesting report from KPMG on valuation of football clubs.
- There are actually several listed football clubs – Manchester United, AS Roma, Juventus, Borussia Dortmund, Celtic, Lazio to name a few.
- Attached is an interesting table showing operating revenue evolution as well as how the revenue split between matchday, broadcasting and commercial has evolved.
Asset Management Fees
- This is an interesting chart showing two decades of falling fees in the US investment management industry.
- Fees have fallen across the board, particularly for passive funds.
- More data in the Morningstar piece.
Millennials
- Fascinating article on how millennials have suffered economically.
- “Chart depicts inflation adjusted GDP growth per person for each generations first 15 years in the work force (from age 18) averaged across birth year for each generation“.
- h/t The Big Picture.
George Soros
- An old but fantastic article on George Soros.
- Interesting lessons here on buying into bubbles, reflexivity (that markets can influence the events they anticipate), instinct (the famous back pain he gets) and mistakes.
- “He once asked Byron Wien, an investment strategist and friend, why he went to work every day. Why not work on the days when it makes sense to do so, he asked, when there is something special to be done?
- Wien replied: “George, one of the differences between you and me is you know when those days are and I don’t.”
Alternative Data
- A must read article on the rise of alternative data in the investment management industry from the Man Group Institute.
- This chart shows how the supply of this data has exploded.
- Demand has also followed.
- The article contains plenty of warnings and things to be mindful of including – methodology, data quality, historic length, data lag, various biases, scope, governance and crowding.
UK Universities
- Good article on the possible future financial difficulties faced by UK Universities as a result of the Covid-19 pandemic.
- This chart shows that from 2006 to 2019 the number of Chinese students (paying full fees) in UK universities increased from 25k to 90k.
- Fees are by far the most important source of income.
- It is unclear what Covid-19 impact will be next year but as suggested it could just be short term liquidity issue for universities.
Making Mistakes
- Making mistakes in investing is normal.
- One of the better investment books around is exactly about that.
- A personal favourite was when Stanley Druckenmiller got himself involved in Tech stocks at the top of the dot-com bubble.
- “Druckenmiller knew exactly what he was doing – he just couldn’t stop himself. ‘I bought $6 billion worth of tech stocks, and in six weeks I had lost $3 billion in that one play. You asked me what I learned. I didn’t learn anything. I already knew that I wasn’t supposed to do that. I was just an emotional basketcase and couldn’t help myself. So maybe I learned not to do it again, but I already knew that.‘”