ESG

  • A sceptics view on ESG full of interesting ideas.
  • Current ESG scores are contradictory as seen in the chart showing correlation across providers.
  • This point, rarely raised about ESG, argues that markets adjust to price things in – “If there is an investing lesson embedded here, it is the unsurprising one that investors who hope to benefit from ESG cannot do so by investing mechanically in companies that already identified as good (or bad), but have to adopt a more dynamic strategy built around either aspects of corporate social responsibility that are not easily measured and captured in scores, or from getting ahead of the market in recognizing aspects of corporate behavior that will hurt the company in the long term.” 

Marketplaces for Assets

  • Very comprehensive post on the landscape of companies involved in financialising new asset classes or democratising access to existing ones and creating markets.
  • Whether it’s the long tail of “alternative alternative” assets, venture-backed company shares, software contracts, or sport teams the financialization of everything is on its way.

Listed Companies in the US

  • The number of publicly listed companies in the US has fallen since the mid-1990s.
  • This chart captures this decline in the total number of listed stocks, including additions and subtractions each year from 1976 to 2019.
  • There are one-half as many public companies as there were in 1996 and three-quarters as many as there were in 1976. The Wilshire 5000 Total Market Index, launched in 1974 to reflect the complete U.S. equity market, had 3,473 stocks as of December 31, 2019.
  • Source.

Public to Private Equity

  • Over the past quarter century there has been a marked shift in U.S. equities from public markets to private markets controlled by buyout and venture capital firms. This change has had reverberations for asset managers, investors, executives, and policy makers.
  • A phenomenal and must read note from Mauboussin.

Institutions Took Over

  • “In 1970, individuals held roughly 75 percent of public equities and the institutional investment management industry was nascent”
  • This has moved steadily downwards as institutions took over.
  • We estimate that the number of chartered financial analyst (CFA) charterholders per public company increased from roughly 1 in 1976 to 27 in 2019.
  • Source.

Nintendo

  • A really insightful and bearish essay on Nintendo.
  • However, the “Nintendo is Disney” thesis is deeply flawed. It feels more like a desire to apply a pattern than to find a real analogue. Elements of Nintendo certainly represent Disney, but they represent Disney insofar as both companies are best in class creators of four-quadrant, multi-generational content. Otherwise the businesses are fundamentally different, their management styles fundamentally different, and their approaches to content itself are fundamentally different, too.

Long Term Valuation Cycles

  • Interesting chart from Deutsche’s latest Long Term Asset Return Study.
  • It plots the combined equity and bond valuations of 15 developed market countries.
  • 1980 marked the cheapest point on that series, and the era that followed marked the best combined asset price growth of any era in history.

Tik Tok

  • TikTok is a phenomenon.
  • Their rise had a lot to do with a huge advertising campaign in the US
  • This stat is staggering – for a period in 2018 nearly 22% of all ads seen by U.S. Apple device users on Facebook ad network came from TikTok and its Chinese counterpart Douyin”
  • As the article points out this actually provides more evidence of Facebooks dominance.

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.
WordPress Cookie Notice by Real Cookie Banner