Misc

Miscellaneous is often where the gems are.

Misc

Sports League Investing

  • A nice report on investing in sports teams, leagues, and related businesses from JPMAM.
  • Why now? Historically ownership of sports teams in the US was for the ultra-wealthy, but this is about to change.
  • “Forbes also constructs a valuation index for each league. As shown below on the left, these indexes have substantially eclipsed the S&P 500 since 2005. To be clear, sports teams are much more expensive than equities: most teams are now valued at 5x-12x sales compared to ~3x sales for the S&P 500.”
Misc

Biotech Startups

  • “According to the latest Pitchbook data, venture creation in biotech hit its slowest quarterly pace in eight years during 1Q 2024.  With just over 60 new biotechs raising their first round of financing, the sector’s company formation activity has slowed 50-60% from its historic peak in 2021.“
  • The piece argues why this is a positive for the health of the sector.
  • Source: LifeSciVC.
Misc

50 Things I Know

  • “I know that the legal profession does a great job of identifying competence and rewarding it financially. Cheap lawyers are expensive.“
  • “I know that environmental influence is the most effective form of behavioral control. Accordingly, if you want radical change, radically change your environment. Being in the wrong city will cancel out years of self-improvement.“
  • More here.
Misc

Advice

  • KK’s latest annual list.
  • Admitting that “I don’t know” at least once a day will make you a better person.
  • Changing your mind about important things is not a consequence of stupidity, but a sign of intelligence.
  • Where you live—what city, what country—has more impact on your well being than any other factor. Where you live is one of the few things in your life you can choose and change.
Misc

The Books Business

  • Everything you wanted to know about the publishing business from that time Random House tried to buy Simon & Schuster and the DOJ sued making “the head of every major publishing house and literary agency got up on the stand to speak about the publishing industry and give numbers …”.
  • “I think I can sum up what I’ve learned like this: The Big Five publishing houses spend most of their money on book advances for big celebrities like Britney Spears and franchise authors like James Patterson and this is the bulk of their business. They also sell a lot of Bibles, repeat best sellers like Lord of the Rings, and children’s books like The Very Hungry Caterpillar. These two market categories (celebrity books and repeat bestsellers from the backlist) make up the entirety of the publishing industry and even fund their vanity project: publishing all the rest of the books we think about when we think about book publishing (which make no money at all and typically sell less than 1,000 copies).“
Misc

Inequality in the UK

  • Nice page from IFS on how income inequality, living standards and poverty are evolving.
  • This one, in particular, is interesting – “Another way to see how income inequality has changed over time is the following chart – known as a ‘growth incidence curve’. This shows the average annual percentage growth in incomes at each percentile of the income distribution, for selected time periods.“
Misc

Why is the VIX so low?

  • Latest BIS quarterly thinks it is not because of the rise of 0DTE options (those that expire the same day). This week these hit a new record volume share at 57%.
  • Rather the rise of yield-enhancing ETFs that sell options (in various forms) is the real culprit – see lhs of chart. JPM has some further analysis via FT.
  • While on the topic of 0DTE the rhs chart shows their truly lottery-like payoff structure.
  • “Investing in 0DTE options loses money on average, with annualised returns of -32,000%, but on rare occasions generates extremely high returns of up to 79,000%. These returns are much more volatile than the returns on one-month options, which have an average return of -550% annualised and a maximum of 2,500%.”
Misc

US Navy vs. PLAN

  • People’s Liberation Army Navy, when it comes to quantity, is on track to overtake the US.
  • Their shipbuilding capacity is wildly more dominant – controlling 40% of the world’s commercial shipbuilding market compared to just 0.5% for the US.
  • This article argues that the US Navy still has quality – but that might erode and “quantity eventually improves quality”.
Misc

1900 vs. 2024

  • Let this sink in – “Of the US firms listed in 1900, some 80% of their value was in industries that are small or extinct today; the UK figure is 65%“
  • Many of these industries have simply moved to lower-cost countries.
  • “Yet similarities between 1900 and 2024 are also apparent. The banking and insurance industries continue to be important. Similarly, such industries as food, beverages (including alcohol), tobacco, and utilities were present in 1900 and continue to be represented today. In the UK, quoted mining companies were important in 1900 just as they are in London today“
  • Source: UBS.
Misc

Regime Investing

  • “Inflation is probably the most predictable of the regime frameworks, in terms of the magnitude of returns and the persistence of direction. If you are only allowed to use one economic datapoint to guide your decisions, US headline CPI should be it.“
  • Equity bull markets are 80% of history. Don’t forget the simple lessons…
  • Man group’s team tries to study whether investment regimes exist and whether one can profit from them.
Misc

Secured High Yield

  • “Senior secured bonds have always been a constituent of the high yield market. However, over the past few years, their share of the overall index has increased dramatically and is now at a record level of the market. While the coupon structure is different, senior secured bonds are “secured” by the assets of the borrower, much like leveraged loans. This recent development — the growth of senior secured bonds as an overall percentage of the high yield market — blurs the lines between these markets and may lead to increasingly similar behavior between the markets.”
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