What We’re Reading (Week Ending 10 January 2021)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 10 January 2021:

1. One of The Great Bubbles of Financial History – Michael Batnick

Jeremy Grantham is going for it. In his latest piece, Waiting For The Last Dance, he writes:

“I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.”

Yikes

Grantham is famous for calling the Japanese, tech, and housing bubbles. So when he speaks on this topic, investors pay attention. You can’t mention his prescient calls without mentioning the ones that didn’t come to fruition. It’s only fair to point out that he has been bearish for much of the recent bull market….

…It’s hard to argue with Grantham when he says, “a higher-priced asset will produce a lower return than a lower-priced asset.” It’s hard, but I’m going to try anyway. I have a massive amount of respect for Grantham, so I hope this does not come off as disrespectful. I’m just trying to provide an alternate view…

…One of the most popular methods that market historians use is the CAPE ratio, which I want to discuss briefly. At just under 34x, it’s the second-highest it’s ever been, behind only the tech bubble in 2000…

 …One other thing the long-term does is hide the medium long-term. Including numbers from the 1800s masks the fact that the CAPE ratio has been rising for decades, as I wrote about in 2017, “Should Stocks Be Worth More Now Than They Used to Be?

The average CAPE ratio for the entire data series is 17. But it averaged 25 in the 90s, 26.7 in the 2000s, and 25.5 in the most recent decade. We haven’t once talked about how things like low interest rates, low inflation, Fed intervention, fiscal policy, or market structure affect market behavior, but those are different stories for a different day.

At 34x on the CAPE ratio, it’s impossible to argue stocks are cheap. I won’t do that. But what if we’re looking at the wrong metric?

Ensemble Capital recently tweeted:

“The 9% long term rate of return to US equities has historically come from a 4% FCF yield and 5% growth. In the decade since 2009, there have been regular claims that we were back in a bubble, but the FCF yield suggested valuation was not stretched. This is still true today.”…

…I will go on record that I don’t think this is anywhere near like 1999 or 1929, despite what the CAPE ratio says. Are there pockets of excess? Absolutely, I’m not blind. But a 70% decline in the major averages? Sorry, I don’t see it.

2. Twitter thread on the establishment of Amazon Web Services in its early days – Dan Rose

I was at Amzn in 2000 when the internet bubble popped. Capital markets dried up & we were burning $1B/yr. Our biggest expense was datacenter -> expensive Sun servers. We spent a year ripping out Sun & replacing with HP/Linux, which formed the foundation for AWS. The backstory:…

…Amazon’s CTO was Rick Dalzell – ex-Walmart, hard-charging operator. He pivoted the entire eng org to replace Sun with HP/Linux. Linux kernel was released in ’94, same year Jeff started Amzn. 6 years later we were betting the company on it, a novel and risky approach at the time….

Product development ground to a halt during the transition, we froze all new features for over a year. We had a huge backlog but nothing could ship until we completed the shift to Linux. I remember an all-hands where one of our eng VPs flashed an image of a snake swallowing a rat

This coincided with – and further contributed to – deceleration in revenue growth as we also had to raise prices to slow burn. It was a viscous cycle, and we were running out of time as we ran out of money. Amzn came within a few quarters of going bankrupt around this time.

But once we started the transition to Linux, there was no going back. All hands on deck refactoring our code base, replacing servers, preparing for the cutover. If it worked, infra costs would go down by 80%+. If it failed, the website would fall over and the company would die.

We finally completed the transition, just in time and without a hitch. It was a huge accomplishment for the entire engineering team. The site chugged on with no disruption. Capex was massively reduced overnight. And we suddenly had an infinitely scalable infrastructure.

Then something even more interesting happened. As a retailer we had always faced huge seasonality, with traffic and revenue surging every Nov/Dec. Jeff started to think – we have all this excess server capacity for 46 weeks/year, why not rent it out to other companies?

Around this same time, Jeff was also interested in decoupling internal dependencies so teams could build without being gated by other teams. The architectural changes required to enable this loosely coupled model became the API primitives for AWS.

3. Two Worlds: So Much Prosperity, So Much Skepticism – Morgan Housel

The demand for forecasts grows after a surprise. It’s quite an irony. Surprises make you feel like you’re not in control, which is when it feels best to grab the wheel with both hands, listening to those who tell you what happens next despite being blindsided by what just happened…

…But the most important economic stories don’t require forecasts; they’ve already happened. And they tend to be the most overlooked, because when everyone’s focused on the future it’s easy to ignore what’s sitting right in front of us.

I want to tell you two of the biggest economic stories that aren’t getting enough attention.

One is that household finances might be in the best shape they’ve ever been in. Ever. That might sound crazy, and it’s easy to overlook because of the second story: Covid has dumped kerosene on wealth inequality in ways we’ve yet to fully grasp…

…Your spending is someone else’s income.

When you don’t spend, someone else gets laid off, which means they don’t spend, and someone else gets laid off, on and on.

Same thing works in the other direction. That’s why booms and busts have momentum.

And it’s why last March was such a red-alert moment for the global economy. Once spending stops due to lockdowns – and “stop” is hardly an exaggeration here – incomes collapse, and a nasty cycle takes hold.

Stimulus checks blunted the worst. Big portions of the economy figuring out how to operate with everyone working from home helped too.

But a lot of the spending still stopped. Vacations that would have been taken never happened. Weddings that would have taken place were postponed. Trips to the mall were replaced with aimlessly scrolling Twitter.

When income is replaced with stimulus checks but spending doesn’t rebound, savings surges.

Which is what happened in 2020, in an epic way.

The personal savings rate averaged 7% in the quarter-century before 2020. Then Covid hit, and overnight it went to 34%. It’s since dropped to about 14%, which would have been a 50-year high before Covid.

The result is that the amount of cash households have in the bank has absolutely exploded. I don’t even know if that word does justice. American households have $1 trillion more in checking accounts today than they did a year ago. For perspective, they held $800 billion in checking accounts a year ago. So it’s more than doubled. In one year. Benjamin Roth observed that “no one had any money” during the Great Depression. We now have so much I’ve run out of adjectives.

You begin to wonder what happens to that money once there’s widespread vaccination and the vacations, weddings, and mall trips that have been delayed are suddenly unshackled.

The best comparison might be the late 1940s and 1950s.

Then, as now, bank accounts were stuffed full as war-time spending brought record-low unemployment. And then, as now, a lot of that money couldn’t be spent because of war-time rationing.

After the war ended and life got on, the amount of pent-up demand for household goods mixed with the prosperity of war-time employment and savings was simply extraordinary. It’s what created the 1950s economic boom.

Fewer than two million homes were built from 1940 to 1945. Then seven million were built from 1945 to 1950. Commercial car production was virtually nonexistent from 1942 to 1945 as assembly lines were converted to build tanks and planes. Then 21 million cars were sold from 1945 to 1950.

4. Tweet on how nobody can foresee the future – Bill Mann

[Title of memo] Thoughts for the 2001 Quadrennial Defense Review

If you had been a security policy-maker in the world’s greatest power in 1900, you would have been a Brit, looking warily at your age-old enemy, Frane.

By 1910, you would be allied with France and your enemy would be Germany.

By 1920, World War I would have been fought and won, and you’d be engaged in a naval arms race with your erstwhile allies, the U.S. and Japan.

By 1930, naval arms limitation treaties were in effect, the Great Depression was underway, and the defense planning standard said “no war for ten years.”

Nine years later World War II had begun…

… By 1970, the peak of our involvement in Vietnam had come and gone, we were beginning detente with the Soviets, and we were anointing the Shah as our protege in the Gulf region.

By 1980, the Soviets were in Afghanistan, Iran was in the throes of revolution, there was talk of our “hollow forces” and a “window of vulnerability,” and the U.S. was the greatest creditor nation the world had ever seen…

… Ten years later [in 2000], Warsaw was the capital of a NATO nation, asymmetric threats transcended geography, and the parallel revolutions of information, biotechnology, robotics, nanotechnology, and high density energy sources foreshadowed changes almost beyond forecasting.

All of which is to say that I’m not sure what 2020 will look like, but I’m sure that it will be very little like we expect, so we should plan accordingly.

5. Deep Risk in the United States of America – Ben Carlson

One of my favorite descriptions of risk in the financial markets comes from William Bernstein in his book, Deep Risk: How History Informs Portfolio Design:

Risk, then, comes in two flavors: “shallow risk,” a loss of real capital that recovers relatively quickly, say within several years; and “deep risk,” a permanent loss of real capital. Put into different words, shallow risk, if handled properly, deprives you only of sleep for a while; deep risk deprives you of sustenance.

A few weeks after Trump was inaugurated in early 2017, I wrote a piece called Deep Risk Under President Trump. This was my conclusion:

Let’s hope shallow risk — run-of-the-mill market volatility — is the only thing we have to worry about over the next four years. But with Trump threatening countries, companies, regulations and industries, it’s worth understanding what could happen if we do experience deep risk within our financial markets.

It turns out it wasn’t the markets where deep risk resided. Markets have done just fine throughout this entire ordeal. Investors have learned to live with geopolitical risk. Markets don’t care about politics.

The real deep risk came to fruition in our democracy and the trust and faith in our government institutions.

While the stock market continues to hit new highs, our political sphere is in the midst of a great depression.

The first time I became truly terrified of this deep risk came from a Vanity Fair article by Michael Lewis in the fall of 2017.

This piece would lead to Lewis’s book, The Fifth Risk: Undoing Democracy, which detailed the neglect and mismanagement of government agencies and services by the new administration in 2017. Lewis details four risks of this neglect in the book, leaving the fifth risk open-ended.

That fifth risk is the risk that’s hard to imagine.

No one could have imagined we would experience a global pandemic in 2020.

No one could have imagined the United States would have one of the worst responses to that pandemic.

No one could have imagined the president himself would contract that disease.

No one could have imagined we would have a contested presidential election.

And no one could have imagined that same president would incite mob violence on our own Capitol Building because he refuses to admit he lost fair and square.

6. No, you did not miss a bull run Chin Hui Leong

Here’s the thing. I have never timed my stock buys perfectly over the last 15 years of investing. And that’s not the worst thing in the world. Let me share two examples that stand out.

In February 2007, I invested in shares of a Mexican food chain, Chipotle Mexican Grill. With the benefit of hindsight, my timing was pretty bad.

In October 2007, less than 10 months after I bought the shares, the S&P 500 almost hit 1,600 points before proceeding to fall to below 700 points over the next one and half years. That’s a fall of well over 50 per cent. But my timing didn’t matter over the long run.

Today, 13 years later, those shares are up over 2,300 per cent, a satisfying return by any account. In short, it didn’t matter that I bought too early. And that’s not the only instance.

Here’s a different example.

In June 2010, I bought shares of Apple, more than a year after the stock market had bottomed out in March 2009. By then, the stock market was already up by 60 per cent from its low.

Again, the timing of my entry was off by a wide margin. But that didn’t matter in the end. Today, over a decade later, the shares have risen by over 1,200 per cent from the day I bought my first shares.

7. Twitter thread on 40 lessons on investing and life – Eugene Ng

Reflecting on 2020 with 40 Lessons on Investing and Life. Below are my reflections for 2020 in my investing journey, I hope by sharing, it might help you in many ways as it did for me as well. Here goes…

(1) You can do it.

I used to be get horrible grades in English. To write a book, self-publishing it & being an Amazon Best Seller in 5 countries (US, Canada, Australia, Germany & UK) is no mean feat. Anyone can do anything, as long as you set your mind & heart to do it…

…(3) Your Vision.

Make your portfolio reflect your best vision for your future. This drives what I do at Vision Capital through Vision Investing to invest in companies that are shaping and changing the world for the better. The companies you own, ultimately reflect who you are….

…(6) Staying in the game.

The only reason we can be in the game for the long term, because our portfolio is not concentrated & we don’t use leverage or options. It might be great 80–95% of the time, but when it bites, it will take you out of the game, that’s not what we want…

…(10) Creating Value. For Others.

The sole purpose of the book was never for fame, recognition or the money. It was to help the world invest better in the the best companies, creating a flywheel of change, capital, investors, companies, culture & a new way of investing…

…(12) Network.

Dare to ask, dare to engage, dare to try. For there is little downside, & a lot of upside if you find a new meaningful interaction. Luck & serendipity is when preparation meets opportunity. Dare to say yes sometimes. If it works out, great, if not, move on….

(13) Concentration vs Diversification.

Less than 1% of companies & a small handful of companies will drive the majority of market returns, that’s why I don’t hold a concentrated portfolio. Also because they are so many great companies & opportunities. Choose what works for you…

…(25) Gratitude.

Be grateful. Practice gratitude every day. Give thanks for the smallest things in life, the sun, the clear skies, the clean air, the greenery, the birds chirping, your loved ones, your kids, anything. There is beauty in everything.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in the shares of Amazon, Apple, and Chipotle Mexican Grill. Holdings are subject to change at any time.

What We’re Reading (Week Ending 27 December 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 27 December 2020:

1. The Airbnbs – Paul Graham

What was special about the Airbnbs was how earnest they were. They did nothing half-way, and we could sense this even in the interview. Sometimes after we interviewed a startup we’d be uncertain what to do, and have to talk it over. Other times we’d just look at one another and smile. The Airbnbs’ interview was that kind. We didn’t even like the idea that much. Nor did users, at that stage; they had no growth. But the founders seemed so full of energy that it was impossible not to like them.

That first impression was not misleading. During the batch our nickname for Brian Chesky was The Tasmanian Devil, because like the cartoon character he seemed a tornado of energy. All three of them were like that. No one ever worked harder during YC than the Airbnbs did. When you talked to the Airbnbs, they took notes. If you suggested an idea to them in office hours, the next time you talked to them they’d not only have implemented it, but also implemented two new ideas they had in the process. “They probably have the best attitude of any startup we’ve funded” I wrote to Mike Arrington during the batch…

…What we didn’t realize when we first met Brian and Joe and Nate was that Airbnb was on its last legs. After working on the company for a year and getting no growth, they’d agreed to give it one last shot. They’d try this Y Combinator thing, and if the company still didn’t take off, they’d give up.

Any normal person would have given up already. They’d been funding the company with credit cards. They had a binder full of credit cards they’d maxed out. Investors didn’t think much of the idea. One investor they met in a cafe walked out in the middle of meeting with them. They thought he was going to the bathroom, but he never came back. “He didn’t even finish his smoothie,” Brian said. And now, in late 2008, it was the worst recession in decades. The stock market was in free fall and wouldn’t hit bottom for another four months.

Why hadn’t they given up? This is a useful question to ask. People, like matter, reveal their nature under extreme conditions. One thing that’s clear is that they weren’t doing this just for the money. As a money-making scheme, this was pretty lousy: a year’s work and all they had to show for it was a binder full of maxed-out credit cards. So why were they still working on this startup? Because of the experience they’d had as the first hosts.

When they first tried renting out airbeds on their floor during a design convention, all they were hoping for was to make enough money to pay their rent that month. But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they’d all had a great experience. Clearly there was something new here: for hosts, a new way to make money that had literally been right under their noses, and for guests, a new way to travel that was in many ways better than hotels.

That experience was why the Airbnbs didn’t give up. They knew they’d discovered something. They’d seen a glimpse of the future, and they couldn’t let it go.

2. How Pfizer Delivered a Covid Vaccine in Record Time: Crazy Deadlines, a Pushy CEO – Jared S. Hopkins

Even for jaded pharmaceutical scientists, what happened next was little short of miraculous. U.S. health regulators Friday night authorized the Covid-19 vaccine developed by Pfizer and its German partner BioNTech SE. The shot is already in U.K. use and will be the first given in the U.S., capping the fastest vaccine development ever in the West.

How the drugmakers pulled off the feat, cutting the typical time from more than 10 years to under one, partly stems from their bet on the gene-based technology.

As the inside story shows, it was also the product of demanding leadership, which bordered on the unreasonable. From urging vaccine researchers to move fast to pressing the manufacturing staff to ramp up, Mr. Bourla pushed employees to go beyond even their own ambitious goals to meet Covid-19’s challenge…

…BioNTech wanted to make vaccines out of messenger RNA, or mRNA, the molecules that carry genetic instructions telling cells what proteins to make.

The German company’s researchers thought they could use the genetic sequence of the coronavirus, which had recently been published, to synthesize mRNA that would instruct cells to make a harmless version of the spike protein that protrudes from the surface of the virus.

The defanged spike proteins would prompt a person’s immune system to produce antibodies that could fight off the real virus.

Unlike the months it takes to cultivate a vaccine in test tubes, designing an mRNA vaccine would be quick. BioNTech simply plugged the genetic code for the spike protein into its software. On Jan. 25, BioNTech Chief Executive Ugur Sahin designed 10 candidates himself.

The company’s researchers would create 10 more different potential coronavirus vaccines for a total of 20, each slightly different in the event one design worked better and more safely than the others.

But BioNTech, founded in 2008 and with just 1,000 employees when the pandemic hit, needed a big partner to manufacture the vaccines for human trials and potentially for people around the world.

During a March 1 phone call, Dr. Sahin proposed a coronavirus vaccine collaboration with Kathrin Jansen, Pfizer’s vaccine-research chief.

Many in pharma were skeptical of mRNA, which had been long in the making but never the basis for an approved product. Dr. Jansen, known in the industry for helping develop Merck & Co’s cervical-cancer shot Gardasil, saw promise, in large part because mRNA vaccines appeared to produce stronger immune responses than older shots.

“This is a disaster, and it’s getting worse,” Dr. Jansen told Dr. Sahin. “Happy to work with you.”

Mr. Bourla gave his go-ahead a week later, at one of Pfizer’s first leadership meetings on the program. When vaccine researchers at a follow-up meeting in mid-March forecast a coronavirus vaccine in the middle of 2021, Mr. Bourla spoke up.

“Sorry, this will not work,” he said. “People are dying.”

3. What If You Only Invested at Market Peaks? – Ben Carlson

In 2014 I wrote a piece called What If You Only Invested at Market Peaks?

It’s hard to believe it now, but many investors assumed after a massive 30%+ run-up in the S&P 500 in 2013 that a peak was imminent.

So I decided to simply run the numbers as a thought exercise on the results of an investor who only invested their money at market peaks, just before a market crash.

I was more curious than anything and unsure about what the results would show. They were surprisingly better than expected.

I didn’t put much thought into this piece but it has become by far the most widely read piece of content I’ve ever written. It’s been read nearly a million times.

It still gets tens of thousands of page views a year.

I used this example in my book A Wealth of Common Sense but have always thought this story would be even better with visuals.

So with the help of our producer, Duncan Hill, I found an illustrator1 who could turn my story about the world’s worst market timer into a cartoon.

I updated some of the numbers, did some voiceover work, got the illustration just how we wanted it and had Duncan put it all together…

…There were some lean times in there, especially in the aftermath of the Great Depression. But by and large, the long-term returns even from the height of market peaks look pretty decent.

I’m not suggesting investors are owed anything over the long-run. The stock market is and always has been a risky proposition, especially in the short-to-intermediate-term.

But if you have a long enough time horizon and are willing to be patient, the long-run remains a good place to be when investing in the stock market.

4. Barry Ritholtz and Josh Brown Won’t Predict The Market, But They’ll Talk About Anything Else. – Leslie P. Norton

Barron’s: You’re bloggers and money managers. How does that work?

Barry Ritholtz: The blogging was an attempt to correct broader errors from Wall Street and the press—that people understood what was actually going on in the world, and that their process wasn’t completely damaged by their own cognitive errors and behavioral biases. That led to optimist bias, where people think, “Hey, I could pick stocks, I can market-time.” I also recognized the academic research that [showed] it’s much, much harder to be a successful stockpicker, a market timer, or trader than it appears, and you’re better off owning the globe and trying not to get in your own way.

As the world gets more complicated, you have to be really selective with how you use technology. Sometimes, it’s a boon to investors, and other times, the gamification of trading, apps like Robinhood, are encouraging not the greatest behavior.

Josh Brown: Barry doesn’t get enough credit. We all wanted to start blogs like Barry’s. He was first to write about behavioral investing in a popular format. I worked as a retail broker at a succession of firms; I had a front-row seat for 10 years of everything not to do. I saw every horrendous mistake and swindle, and as a 20-something, I’d say, “I’m not going to do that—or that, either.”

It didn’t feel fortunate at the time, because my career was going nowhere. I was 30 years old, with a negative bank account, a mortgage, a 2-year-old daughter, and a pregnant wife. When I met Barry, I said, “Whatever you’re doing, I want to be part of it.” He said, “I don’t deal with clients. That will be your role.” In my blog, I share what I’m learning in real time. There’s always a new topic—cryptocurrency, tariffs, interest rates, the intersection of elections with markets. I try to share my own process…

Has the pandemic altered the way you think about investing?

Brown: The thing is how outrageous the response in asset prices has been. There’s an argument to be made that the stock market is higher because of the pandemic than if 2020 had been a more routine year. It’s an affirmation of why we’re rules-based investors.

Ritholtz: Not only did you have to predict that a pandemic would occur, but you would have had to take it to the second level, which is that the Federal Reserve’s going to take rates to zero, and that Congress, which cannot agree on renaming a library, would panic and pass a $3 trillion stimulus. That’s how you get to a positive year, despite all the terrible news. We never try to guess what’s going to happen. If we’re not making forecasts, we’re not marrying forecasts.

Josh, you published a book that included 25 people’s portfolios. What was the most useful advice?

Brown: We gave people a blank sheet of paper and were very surprised that none of the chapters read like anyone else’s. Bob Seawright wrote something very poignant about an investment in a summer cottage for the family. It was a terrible investment financially, but it was one of the best investments of all time because of the memories it created. It was important for me to hear, because I work 18 to 20 hour days, and I work on Saturdays and Sundays, and I’m reading, and I’m blogging, and I’m doing podcasts. I don’t really smell the roses that much.

5. It’s the index, stupid! Our New Not-So-Neutral Financial Market Arbiters – Johannes Petry, Jan Fichtner and Eelke Heemskerk

Historically, index providers were primarily providers of information. Indices were ‘news items’, helpful for investment decisions — but arguably not essential. Actively managed funds merely used them as baselines to compare their performance, they were not expected to direct financial markets. As previously noted, the hallmark of active investors was to be different from the index — rather than being reliable, the index was there to be beaten. Hence, index providers’ decisions over the composition of their indices had relatively limited impact on financial flows — deviation from the index was a worthy risk metric. But their exact composition was not yet crucial to investors, listed companies or countries.

This changed fundamentally with the global financial crisis, which triggered two reinforcing trends: concentration, and the rise of passive investment. Together, these transformed index providers from merely supplying information to exerting power over asset allocation in capital markets.

First, the index industry concentrated — not least because banks sold non-core businesses to raise cash, as they tried to stay afloat during the financial meltdown that engulfed their industry. By 2017, the three indices S&P DJI, MSCI and FTSE Russell accounted for 27%, 26% and 25% of global revenues in the index industry, respectively.

This market concentration led to a growing power position of the few index providers that had historically positioned themselves and their brands in financial markets. With profit margins averaging between 60-70%, they operate in a quasi-oligopolistic market structure. This is because their indices are not easily substitutable, due to unique brand recognition and network externalities, e.g. through liquid futures markets based on their indices. The S&P 500, for instance, represents US blue chips like no other index. It is also the most widely tracked index globally, and S&P 500 index futures are the most traded futures contract in the world.

Second, and more importantly, the money mass-migration towards passive investments significantly increased the authority of index providers. They came to influence asset allocation in unprecedented ways, as more and more funds directly tracked the indices they own, construct and maintain. ETFs indexed to FTSE Russell indices more than doubled from US$315 billion in 2013 to US$765 billion in 2019. Meanwhile passive funds tracking MSCI indices even increased more than sevenfold between 2008 and 2020, from $132 billion to more than $1 trillion. ETFs and index mutual funds that follow S&P DJI indices increased from $1.7 trillion in 2011 to staggering $6.3 trillion in 2019. Whereas in the past indices only loosely anchored fund holdings around a baseline, now they have an instant, ‘mechanic’ effect on the holdings of passive funds.

As passive funds simply replicate an index, index providers’ decisions to change index compositions lead to quasi-automatic asset reallocations. Index providers now effectively ‘steer’ financial flows.

6. Managers at Major Index Provider, Sushi Restaurant Charged With Insider Trading Alicia McElhaney

A senior index manager at S&P Dow Jones Indices has been charged the U.S. Securities and Exchange Commission and the Justice Department for insider trading.

According to complaints filed Monday by both entities, Yinghang “James” Yang allegedly used information that he learned on the job to help his friend Yuanbiao Chen, a manager at a sushi restaurant, trade options on companies before they were added to or removed from S&P indices…

…The scheme allegedly began in April 2019, when Yang wrote a check for $3,000 to his co-conspirator, who then deposited it in his personal bank account. Roughly a month later, the co-conspirator opened a brokerage account, the Justice Department’s complaint shows. (Chen was not named in the Justice Department complaint.)

Between June and October, Yang and Chen allegedly used the account to buy call or put options on publicly-traded companies, according to the SEC complaint. On the days of the trades, S&P would announce after hours that the same companies would be added to or removed from its indices, according to the Justice Department. The positions would then be liquidated, the Justice Department said.

Yang and Chen started small: Each of the early transactions was worth roughly $2,000 or so. For instance, on July 9, they bought T-Mobile call options at 1:25 p.m, according to the SEC complaint. At 5:15 p.m., just after markets closed, S&P announced that T-Mobile would be added to one of its indices. The next morning, Chen and Yang reportedly sold the call options, making $1,096, the SEC said…

…But in the middle of September, the trades ramped up. Just before 2 p.m. on September 26, for example, Chen bought call options for Las Vegas Sands, the SEC said. At 5:15, S&P announced the addition of the company to its indices. The reported profit? $325,956.

During that period, Chen and Yang made these types of trades on 14 occasions, the SEC said.

Then came the payout. On October 4, Chen allegedly wrote Yang three checks totaling $100,000 from the brokerage account, the complaint said. The Justice Department said Yang used this money to make credit card payments, pay off student loans, and fund his own trading activity.

In total, the duo made $912,082 on the options trading, returning 136 percent on their investments, according to the complaints.

7. The Down Under Scammer You’ve Probably Never Heard of – David Wilson

As such, it’s worth revisiting Australia’s singularly tragic version of both men: the bipolar insider trader Rene Rivkin, who after being sentenced to just nine months of weekend detention stints, sparking national gloating, killed himself in 2005. 

“Cell, cell, cell,” the lead story in The Sydney Morning Herald crowed.

If he had lived, however, Rivkin might have served more time. For one thing, he was also a suspect in a seamy murder case and the recipient of a lavish insurance payout under suspicious circumstances. And he allegedly offloaded stocks that his newsletter, the Rivkin Report, tipped. Last, despite having untold wealth hidden in the Swiss banking system, Rivkin owed the taxman millions.

His memory still casts a tailored shadow across the Australian investment landscape, because the “guru of greed” was such an epic character: a high-octane, cigar-smoking, Prozac-popping Sydney-sider dubbed “Australia’s most aggressive broker.” Some even labeled him messianic based on his grandiose claims of persecution, going so far as to compare his criminal conviction to the crucifixion of Jesus…

…Later that year the Australian investments commission charged Rivkin with insider trading for buying 50,000 Qantas Airways shares after chatting to the head of the aptly named, now-defunct Impulse Airlines. In 2003 Impulse founder Gerry McGowan testified to having told Rivkin that Australia’s flying flag carrier planned to buy his company.

In one of many plot twists, Rivkin’s mischief yielded a piddling profit. Nonetheless, Justice Anthony Whealy denied clemency….

…What drove Rivkin, Wood’s troubled boss? Jan Marshall, a scam victim advocate and educator and the chief executive of Life After Scams, says: “People start off with small risks, and as they pay off, they begin to think they are invincible. They are driven by their greed to take bigger and bigger risks.”

Almost certainly, Marshall adds, Rivkin had a sociopathic streak. That means no conscience and no concern for how others might be affected by his acts, she explains.

Hong Kong–based Dr. Anthony Dickinson, an expert on workplace psychopaths, also believes Rivkin to have been a sociopath. Unlike full-blown psychopaths, sociopaths have some empathy, he notes.

“But their sense of right and wrong is based upon the norms and expectations of their subculture,” says the neuroscience-trained psychologist.

As to why Rivkin risked all on Impulse Airlines, Dickinson suggests: “Classic case of the gambler’s fallacy” — the myth that winning streaks are inevitable. Or, more likely, Rivkin was just “upscaling” business-as-usual practices, assuming he would never be caught or could buy his way out if he was.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have no vested interest in the shares of any companies mentioned. Holdings are subject to change at any time.

What We’re Reading (Week Ending 20 December 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 20 December 2020:

1. Last Man Standing – Morgan Housel

Let me propose the equivalent for individual investors. It might push you away trying to earn the highest returns because returns, like margins, don’t matter; generating wealth does.

Everything worthwhile in investing comes from compounding. Compounding is the whole secret sauce, the rocket fuel, that creates fortunes.

And compounding is just returns leveraged with time.

Earning a 20% return in one year is neat. Doing it for three years is cool. Earning 20% per year for 30 years creates something so extraordinary it’s hard to fathom. Time is the investing factor that separates, “Hey, nice work,” from “Wait, what? Are you serious?”

The time component of compounding is why 99% of Warren Buffett’s net worth came after his 50th birthday, and 97% came after he turned 65.

Yes, he’s a good investor.

But a lot of people are good investors.

Buffett’s secret is that he’s been a good investor for 80 years. His secret is time. Most investing secrets are.

Once you accept that compounding is where the magic happens, and realize how critical time is to compounding, the most important question to answer as an investor is not, “How can I earn the highest returns?” It’s, “What are the best returns I can sustain for the longest period of time?”

That’s how you maximize wealth.

2. The Essex Boys: How Nine Traders Hit a Gusher With Negative Oil – Liam Vaughan, Kit Chellel, and Benjamin Bain

Among the many previously unthinkable moments of 2020, one of the strangest occurred on April 20, when the price of crude oil fell below zero. West Texas Intermediate futures, the most popular instrument used to trade the commodity, had started the day at $18 a barrel. That was already low, but prices kept tumbling until, at 2:08 p.m. New York time, they went negative.

Amazingly, that meant anyone selling oil had to pay someone else to take it off their hands. Then the crude market collapsed completely, falling almost $40 in 20 minutes, to close at –$38. It was the lowest price for oil in the 138-year history of the New York Mercantile Exchange—and in all likelihood the lowest price in the millennia since humans first began burning the stuff for heat and light…

…U.S. authorities and investigators from Nymex trawled through trading data for insights into who exactly was driving the action on April 20. According to people familiar with their thinking, they were shocked to discover that the firm that appeared to have had the biggest impact on prices that afternoon wasn’t a Wall Street bank or a big oil company, but a tiny outfit called Vega Capital London Ltd. A group of nine independent traders affiliated with Vega and operating out of their homes in Essex, the county just northeast of London, had made $660 million among them in just a few hours. Now the authorities must decide whether anyone at Vega breached market rules by joining forces to push down prices—or if they simply pulled off one of the greatest trades in history. A lawyer for a number of the Vega traders vehemently denies wrongdoing by his clients and says they each traded based on “blaring” market signals…

…The pits were collegial and freewheeling, a place of ethical and regulatory gray areas. If a local overheard news about a big trade that some oil major had in the works, he might try to jump ahead of it, a prohibited but pervasive practice known as front-running. The cavernous trading floor had cameras, but there were blind spots where people went to share information. A former executive struggles to remember a single meeting of the exchange’s compliance committee.

One trick involved an instrument called Trade at Settlement, or TAS, an agreement to buy or sell a future at wherever the price ends up at the closing bell. The contract was aimed at investment funds, whose mandate it was to track the price of oil over the long term. But some traders figured out that they could take the other side of these TAS trades, then work together at the end of the day to push the closing price as low as possible so they could pocket a profit. The practice, while officially against the rules, was so common and effective it had a nickname: “Grab a Grand.”

3. Terry Smith talks big tech, fraud and ESG – Dave Baxter

[Question to Terry Smith] On Facebook (US:FB), what are your thoughts on the risks of it being broken up or more heavily regulated? More generally, is the quality of Facebook’s service deteriorating for advertisers? We ask this in light of this year’s hate speech ad boycott and recent news that the company overestimated the reach of some ad campaigns.

[Terry Smith’s response] Regulation doesn’t concern me much. Increased regulation tends to cement incumbents in place as newcomers find it hard to comply. The tobacco industry flourished for decades with tighter regulation.

I am not saying a break-up couldn’t occur, but I believe the last break-up of a company in the US forced by antitrust action was AT&T in 1984. It produced the so called Baby Bells (the offspring of ‘Ma Bell’-AT&T), which by 2018 had merged to form…AT&T. Also as an investor it’s by no means clear that a break up into its constituent parts would destroy value.

Again let’s look at the facts. The hate speech ad boycott was a non-event. Most advertisers did not participate, those who did only ‘paused’ their advertising rather than cancelling it indefinitely, and some of those who said they would boycott Facebook were, shall we say, misleading. Moreover, it is quite likely that other advertisers took advantage of the absence of their virtue signalling competitors to up their advertising spend. In its last quarter, Facebook’s revenue was up 22 per cent and ad impressions were up 35 per cent. It’s important to understand that Facebook’s advertising is more about enabling small businesses to advertise effectively than it is about the large corporate advertisers who were the ones who publicly announced their boycott, which was temporary if it happened at all.  Facebook’s top 100 advertisers only account for 16 per cent of Facebook’s revenues. I regard the recent news about Facebook overestimating the time viewers spent watching videos in the same light. Try to bear in mind when you read news about Facebook that most of the conventional media loathes and fears it in equal proportions…

[Question to Terry Smith] Nowadays how widespread (or not) is creative accounting, and outright fraud, compared with when you wrote Accounting for Growth?

[Terry Smith’s response] I think Wirecard answers that in a single word.

4. The Daughter of a Slave Who Did the Unthinkable: Build a Bank – Jason Zweig

If Ms. Fraser has finally cracked the glass ceiling, it was Maggie Lena Walker who first battered down the walls.

The daughter of a former slave, Walker became the first Black woman ever to head a U.S. bank when she founded the St. Luke Penny Savings Bank in Richmond, Va., in 1903. Her success came from doing what great entrepreneurs do: Walker zeroed in on an underserved market and focused her prodigious energy on meeting its needs. But her story is all the more remarkable because it played out on a stage of such intense bigotry.

Her mother, Elizabeth Draper, was an illiterate teenager when Walker was born. Her father was a white Confederate soldier who, historians believe, raped Elizabeth. When Walker finished high school, her father, who still lived nearby, sent her a dress as a graduation gift. Her mother burned it.

As a girl, Walker helped her mother work as a washerwoman and soon joined her as a member of the Independent Order of St. Luke. This was a mutual-benefit society originally set up by a free woman in Baltimore that provided insurance, educational funding and other financial services to Black people after the Civil War.

After graduating high school and working three years as a teacher, Walker quickly advanced at St. Luke. She became the organization’s head in 1899, when it was on the brink of failure. Under her leadership, it blossomed to 100,000 members across 24 states.

Having grown up in a network of mothers who had to manage family finances to the penny, Walker saw the economic independence of Black women as an ethical imperative.

“Who is so helpless as the Negro woman?” she asked in a speech in 1901. “Who is so circumscribed and hemmed in, in the race of life, in the struggle for bread, meat and clothing, as the Negro woman?”

She called for St. Luke to create a department store and a newspaper—but, above all, a bank. That, she believed, was the way to uplift Black women. “Let us put our moneys together; let us use our moneys; let us put our money out…and reap the benefit ourselves,” she proclaimed. “Let us have a bank that will take the nickels and turn them into dollars.”

5. Penis Thieves & Asset Bubbles – Ben Carlson

In 2005, a man was sitting on a bus in Nigeria minding his own business when all of the sudden he let out an ear-piercing scream.

Wasiu Karimu began shouting that his genitalia had magically disappeared into his own body.

He immediately grabbed the woman seated next to him and demanded that she restore his stolen manhood at once.

Karimu continued shouting at the woman as they got off the bus which caused a commotion. The police eventually brought them down to the station to settle their dispute.

When asked to prove his claim of penis theft, the man told the police commissioner his organ had gradually returned to its rightful place.

This may sound like a case of a mentally unstable person making an outlandish claim. But thousands of people in places like Nigeria, Singapore and parts of China have experienced the phenomenon known in medical literature as koro or magical penis theft.

It’s a situation where people, mostly men, have the feeling their genitals are being sucked into their bodies. When doctors examine these patients, the men often look down and claim it had magically reappeared.

Magic penis theft is what is referred to as a culture-bound syndrome which are diseases that are more prevalent in certain societies or cultures…

…I believe culture-bound syndrome exists in the markets as well.

One of the simplest explanations offered for the continued strength of the U.S. stock market in recent years is generationally low interest rates. If there are no safe yield alternatives, investors are forced to go out further on the risk curve.

And this makes sense in theory until you realize the fact that rates are even lower in places like Europe and Japan yet they haven’t seen the same level of euphoria in their markets.

Yields for 10 year government bonds in Japan have been under 3% since 1996 and less than 1% since 2010:

Yet there hasn’t been a whiff of speculation in Japanese markets in that time.

6. Twitter thread on quotes from Charlie Munger from a recent interview Tren Griffin

2/ “All successful investment involves trying to get into something where it’s worth more than you’re paying. That’s what successful investment is. There are a lot of different ways to find something worth more than you’re paying. You can do what Sequoia does [e.g, in VC].”

3/ “Good investing requires a weird combination of patience and aggression and not many people have it. It also requires a big amount of self-awareness about how much you know and how much you don’t know. You have to know the edge of your own competency.”

4/ “A lot of brilliant people are no good knowing the edge of their own competency. They think they’re way smarter than they are. Of course, that’s dangerous and causes trouble.” Charlie Munger…

…6/ “I don’t think we want the whole world trying to get rich by outsmarting the rest of the world. But that’s what’s happened. There’s been frenzies of speculation and so on.  It’s been very interesting, but it’s not been all good.” ..

…20/ “Early innovation by Giannini’s Bank of America helped immigrants by giving them loans. He kind of knew which ones were good for it and which ones weren’t. I think that was all for the good. That brought banking to a lot of people who deserved it.”

21/ “Bank of America helped the economy and helped everybody. Once banking got so they wanted to have soft hands and make zillions as speculators, those developments haven’t been a plus. In other words, I like banking when they’re trying to avoid losses prudently.”

7. How to Revive the Economy, and When to Worry About All That Debt – Corinne Purtill

Maya MacGuineas is head of an organization called Campaign to Fix the Debt, which is dedicated to the thesis that “America’s growing national debt profoundly threatens our economic future.” But even she says that now is not the time to worry about borrowing.

“Responsible fiscal policy is borrowing like crazy right now,” Ms. MacGuineas said. There will come a time, she said, to re-evaluate the trade-offs. In the meantime, it’s time to spend, but be aware that a pivot will be necessary at some point:

“No matter which party is in power, it’s nice to be able to enact your agenda without having to pay for it. We saw that in the four years leading up to this downturn, and I’m concerned there will be lots of voices saying we shouldn’t pay for things down the road. But I think responsible fiscal policy is borrowing like crazy right now. Things that are targeted, things that are smart, to goose the economy. But once we stabilize the economy, be willing to bring that debt back down so it’s not growing faster than the economy.”

The urgency of economic aid can’t be an excuse for programs that worsen inequality.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in the shares of Facebook. Holdings are subject to change at any time.

What We’re Reading (Week Ending 13 December 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 13 December 2020:

1. The Secret Wisdom of Nature: Trees, Animals, and the Extraordinary Balance of All Living Things by Peter Wohlleben – The Rabbit Hole

1. Nature is like the mechanism in an enormous clock. Everything is neatly arranged and interconnected. Every entity has its place and its function.

2. It’s important for us to realize that even small interventions can have huge consequences,  and we’d do better to keep our hands off everything in nature that we do not absolutely have to touch…

…4. In undisturbed ancient forests, youngsters have to spend their first two hundred years waiting patiently in their mothers’ shade. As they struggle to put on a few feet, they develop wood that is incredibly dense. In modern managed forests today, seedlings grow without any parental shade to slow them down. They shoot up and form large growth rings even without a nutrient boost from added nitrogen. Consequently, their woody cells are much larger than normal and contain much more air, which makes them susceptible to fungi—after all, fungi like to breathe, too. A tree that grows quickly rots quickly and therefore never has a chance to grow old…

…19. Researchers from the United States suspect that there are definite disadvantages to our powerful brain. They compared the self-destructive programming of human cells with a  similar program run by ape cells. This program destroys and dismantles old and defective cells. Their comparison showed that the cleanup mechanism is a lot more effective in apes than it is in people, and the researchers believe that the reduced rate at which cells are broken down in people allows for larger brain growth and a higher rate of connections between cells. This improvement in intelligence probably comes at a high price, because the self-cleansing mechanism also gets rids of cancer cells. Whereas apes hardly ever get cancer, this disease is one of the top causes of death in people. Is the price for our intellectual capacities too high? If our current level of intelligence is not suited to the survival of humankind, it must either be increased or lowered. The latter is probably unacceptable thanks to our ideas about self-worth.

20. There’s a simple reason these treeless landscapes delight us so much. We are, from a  biological perspective, animals of the plains, and we feel secure in landscapes with extensive views where we can move around easily.

2. Everything We’ve Learned About Modern Economic Theory Is Wrong – Brandon Kochkodin

His beef is that all too often, economic models assume something called “ergodicity.” That is, the average of all possible outcomes of a given situation informs how any one person might experience it. But that’s often not the case, which Peters says renders much of the field’s predictions irrelevant in real life. In those instances, his solution is to borrow math commonly used in thermodynamics to model outcomes using the correct average.

If Peters is right — and it’s a pretty ginormous if — the consequences are hard to overstate. Simply put, his “fix” would upend three centuries of economic thought, and reshape our understanding of the field as well as everything it touches, from risk management to income inequality to how central banks set interest rates and even the use of behavioral economics to fight Covid-19…

…Peters takes aim at expected utility theory, the bedrock that modern economics is built on. It explains that when we make decisions, we conduct a cost-benefit analysis and try to choose the option that maximizes our wealth.

The problem, Peters says, is the model fails to predict how humans actually behave because the math is flawed. Expected utility is calculated as an average of all possible outcomes for a given event. What this misses is how a single outlier can, in effect, skew perceptions. Or put another way, what you might expect on average has little resemblance to what most people experience.

Consider a simple coin-flip game, which Peters uses to illustrate his point.

Starting with $100, your bankroll increases 50% every time you flip heads. But if the coin lands on tails, you lose 40% of your total. Since you’re just as likely to flip heads as tails, it would appear that you should, on average, come out ahead if you played enough times because your potential payoff each time is greater than your potential loss. In economics jargon, the expected utility is positive, so one might assume that taking the bet is a no-brainer…

…Suppose in the same game, heads came up half the time. Instead of getting fatter, your $100 bankroll would actually be down to $59 after 10 coin flips. It doesn’t matter whether you land on heads the first five times, the last five times or any other combination in between.

The “likeliest” outcome of the 50-50 proposition would still leave you with $41 less in your pocket.

Now, say 10,000 people played 100 times each, without assuming all players land on heads exactly 50% of the time. (This mimics what happens in real life, where outcomes often diverge dramatically from the mean.)

Well, in that case, one lucky gambler would end up with $117 million and accrue more than 70% of the group’s wealth, according to a natural simulation run by Jason Collins, the former head of behavioral economics for PwC in Australia who has written extensively about Peters’ research. The average expected payout, pulled up by a lucky few, would still be a hefty $16,000.

But tellingly, over half the players wind up with less than a dollar.

“For most people, the series of bets is a disaster,” Collins wrote. “It looks good only on average, propped up by the extreme good luck” of a just a handful of players.

3. Company Offering Pandemic Stock Tips Accused of $137M Fraud – Michael Kunzelman

The founders of a company called Raging Bull tout themselves as expert stock traders who teach customers how they, too, can become millionaires…

…Federal regulators say the company operators have defrauded consumers out of more than $137 million over the past three years. And the coronavirus-fueled economic crisis hasn’t tempered their “reckless” efforts to dupe vulnerable investors, government lawyers wrote in a court filing Monday.

The Federal Trade Commission sued RagingBull.com LLC and the company’s co-founders, Jeffrey Bishop and Jason Bond, in Maryland. FTC attorneys are seeking federal court orders freezing company assets, halting the alleged fraud scheme and awarding relief to consumers, including refunds and restitution…

…Ads for Bishop’s services call him a “genius trader who has made millions in the stock market.” The company’s website says Bond is a former gym teacher who taught himself to trade stocks and rid himself of $250,000 in debt.

The company’s marketing materials don’t tell consumers that Bishop and Bond primarily derive their incomes from Raging Bull customers’ subscription fees, not from stock and options trades. The suit says they have incurred “substantial and persistent losses” from their own stock and options trading activities.

In 2017, Raging Bull emailed subscribers that Bond was invited to speak at Harvard Business School and posted video of the speech. But the FTC says the school never invited him. Instead, the agency says Bond paid a third-party promoter to stage the event at the Harvard Faculty Club using a fake Harvard insignia.

4. The Reasonable Optimist – Morgan Housel

Germany’s GDP fell by more than half in 1945, when the end of World War II left a pile of bombed-out buildings and starving citizens.

No one a few years prior was predicting a 50% economic collapse, but it’s what happened.

Then came an equal surprise in the other direction: West Germany’s economy recovered all its lost ground and exceeded its pre-war GDP by 1950…

…One prominent medical study begins: “The incidence of pathological gambling in Parkinson’s patients is significantly greater than in the general population.”

Dozens of studies have confirmed this. Even among people with no history of poor financial decisions, a typical Parkinson’s drug regimen increases the likelihood of compulsive gambling.

It’s a big deal. Doctors have been sued. Casinos have been sued. Pharmaceutical companies have been sued – all linked to compulsive gambling after taking Parkinson’s medications. A Louisiana lawmaker once raided his campaign account to go on a gambling spree. He claimed his addiction started soon after he began treatment for Parkinson’s. “The drugs involved, I’m sure they had something to do with it,” he said.

Other Parkinson’s patients suffer cheaper but similar side effects: superstitious beliefs and delusions.

The suspect drugs – dopamine agonists – help reduce Parkinson’s tremors. But as a nasty side effect they can fool patients into believing the world is giving them concrete signals: that there are patterns to exploit at casinos, that conspiracy theories are real, that a person obviously loves or hates you, or that a full moon portends disaster.

That’s what dopamine does: it reduces skepticism and pushes the signal-to-noise ratio heavily towards signal, offering a rewarding brain buzz for finding patterns in the world whether they’re real or not. It’s gullibility and overconfidence’s best friend.

5. Bill Gates Just Predicted the Pandemic Will Change the World in These 7 Dramatic Ways – Jessica Stillman

Before the pandemic you would probably worry a client might feel slighted if you opted to meet with them virtually rather than in person, but after Covid the calculus of when to go and when to Zoom will be very different, according to Gates.

“Just like World War II brought women into the workforce and a lot of that stayed, this idea of, ‘Do I need to go there physically?’ We’re now allowed to ask that,” he says. That will be true of work meetings, but also of other previously in-person interactions.

“The idea of learning or having a doctor’s appointment or a sales call where it’s just screen-based with something like Zoom or Microsoft Teams will change dramatically,” Gates predicts…

…The knock-on effects of more remote work won’t end there. They’ll also reshape our communities, Gates believes. Downtowns will be less important, bedroom communities will be more important (and we may even rethink the design of our homes).

“In the cities that are very successful, just take Seattle and San Francisco … even for the person who’s well-paid, they’re spending an insane amount of their money on their rent,” he points out. Without the anchor of an office you have to visit every day, staying in such expensive places becomes less appealing, and a bigger house in a smaller community with less traffic much more so.

6. I Started Trading Hot Stocks on Robinhood. Then I Couldn’t Stop. Jason Zweig

You’ve probably heard of it, even if you aren’t among the 13 million people already using it. Robinhood makes trading stocks, options and cryptocurrencies fun and exciting, and analysts have attributed some of this year’s skyrocketing stock prices to novice Robinhood traders.

My editor and I decided that I should see what the fuss is all about. I started trading on Robinhood on Oct. 27, expensing my $100 investment. Any profits I made would go to charity; any losses would go toward public humiliation. I closed all my positions on Nov. 17…

…Signing up was fun and easy. Three mystery cards emblazoned with question marks popped up. I scrubbed to reveal which free stock I had won, like in a scratch-off lottery game. Confetti showered my phone screen: I’d gotten one free share of Sirius XM Holdings Inc., at $5.76.

The next morning, my phone lit up: “Your free share of SIRI is up 1.05% today. Check on your portfolio now.” Two hours later, Robinhood nudged me again: “Start Trading Today.” An email from Robinhood proclaimed “You’re Ready To Begin Trading!”

Still, I didn’t start for a few days. Then I was swept away.

Whenever a stock’s price changes, Robinhood updates it not just by showing an uptick in green and a downtick in red, but also by spinning the digits up and down like a slot machine. This flux of direction and color quickly becomes hypnotic…

…Robinhood doesn’t think my experience is typical. “We’re proud to have made investing relevant to a new generation and to help first-time investors become long-term investors,” the firm said in a statement.

In the end, after three hectic weeks, I finished with $95.01. I’d lost 5% of what I’d put in. Counting the free stock I’d gotten, I was down 10.2%.

Over the same period, the S&P 500 went up 7%.

The lesson?

You can’t invest without trading, but you can trade without investing. Even the most patient and meticulous buy-and-hold investor has to buy in the first place.

A short-term trader, however, can make money—for a while, by sheer luck—without knowing anything. And thinking you’re investing when all you’re doing is trading is like trying to run a marathon by doing 26 one-mile sprints right after the other.

To invest means, literally, to clothe yourself in an asset. That gives a stock the chance to work for you over the years it may take for a company to prosper. It also minimizes your tax bills—and your stress.

7. How an Energy Startup’s Plan to Disrupt the Power Grid Got Disrupted – Rebecca Davis O’Brien & Katherine Blunt

Bloom Energy Corp. became a hot startup more than a decade ago by promising to upset the utility industry with devices that could power the nation’s buildings. Today, it’s a reminder of how a rapidly changing industry can foil even the most driven entrepreneurs.

Bloom’s founder, KR Sridhar, helped develop fuel cells for NASA before forming the company in 2001. The next year, he packed his technology into three U-Hauls and headed to California.

Fuel cells use chemical reactions to generate electricity, and proponents hold they will go mainstream one day as a clean, reliable energy source. They have defied broad commercialization, but Mr. Sridhar told a powerful story: Bloom would sell the technology in “Bloom Boxes” running on natural gas and providing power more cheaply than the utilities on the electric grid…

…As with many Silicon Valley startups, Bloom presented the kind of bold technological and revenue prospects that persuade investors to look beyond profitability. Mr. Sridhar’s vision: a Bloom Box in every American home. “It’s about seeing the world as what it can be,” he told “60 Minutes” in 2010, “and not what it is.”

The world Mr. Sridhar foresaw hasn’t arrived. His San Jose, Calif., startup hasn’t put fuel cells in homes and instead has a niche clientele among companies willing to pay a premium for a continuous on-site energy source. In 2009, it projected profits by 2010, according to board materials reviewed by The Wall Street Journal; but it has never reported a profit, losing over $3 billion since inception.

Mr. Sridhar’s proposition to disrupt the energy market came as the world was trying to figure out how to wean off fossil fuels. Instead, the energy industry has disrupted Mr. Sridhar’s strategy, turning to wind and solar power, which have lower costs and deliver cleaner energy than Bloom’s cells, which emit carbon dioxide. Grid power is still less expensive than Bloom’s in most places.

Along the way, Bloom ran into supply issues, its cells remained expensive and it fell short of its projections for how many customers it would win, according to former executives and employees, board materials and public filings.

After Bloom’s auditor raised concerns about how the company had reported revenue, it restated results in March for the two years since its $270 million initial public offering, cutting its reported revenue by 15%. Bloom’s growth is sometimes difficult to assess because of its accounting practices.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently do not have a vested interest in any companies mentioned. Holdings are subject to change at any time.

What We’re Reading (Week Ending 06 December 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 06 December 2020:

1. ‘It will change everything’: DeepMind’s AI makes gigantic leap in solving protein structures – Ewen Callaway

An artificial intelligence (AI) network developed by Google AI offshoot DeepMind has made a gargantuan leap in solving one of biology’s grandest challenges — determining a protein’s 3D shape from its amino-acid sequence.

DeepMind’s program, called AlphaFold, outperformed around 100 other teams in a biennial protein-structure prediction challenge called CASP, short for Critical Assessment of Structure Prediction. The results were announced on 30 November, at the start of the conference — held virtually this year — that takes stock of the exercise.

“This is a big deal,” says John Moult, a computational biologist at the University of Maryland in College Park, who co-founded CASP in 1994 to improve computational methods for accurately predicting protein structures. “In some sense the problem is solved.”

The ability to accurately predict protein structures from their amino-acid sequence would be a huge boon to life sciences and medicine. It would vastly accelerate efforts to understand the building blocks of cells and enable quicker and more advanced drug discovery.

2. Tony Hsieh’s American Tragedy: The Self-Destructive Last Months Of The Zappos Visionary – Angel Au-Yeung and David Jeans

Taken together, the memories of Hsieh paint an image of a man whose mission in life was to create happiness. This took shape in many ways. In pioneering, at Zappos, the concept of an online store fueled by a customer-first, no-questions-asked return policy, Hsieh arguably had a bigger effect on online retail than anyone short of Bezos himself. In investing $350 million into downtown Las Vegas, he lovingly turned a seedy part of town into an arts, cultural and tech hub, with a community of Airstream trailers, one of which Hsieh lived in for years. As a business evangelist, the 2010 title of his New York Times number one bestseller said it all: Delivering Happiness: A Path To Profits, Passion and Purpose.

But while he directly (by the tens of thousands) and indirectly (by the millions) delivered on making other people smile, Hsieh was privately coping with issues of mental health and addiction. Forbes has interviewed more than 20 of his close friends and colleagues over the past few days, each trying to come to grips with how this brightest of lights had met such a dark and sudden end.

Reconciling their accounts, one word rises up: tragedy. According to his friends and family, Hsieh’s personal struggles took a dramatic turn south over the past year, especially as the Covid-19 pandemic curtailed the nonstop action that Hsieh seemingly craved. According to numerous sources with direct knowledge, Hsieh, always a heavy drinker, veered into frequent drug use, notably nitrous oxide. Friends also cited mental health battles, as Hsieh often struggled with sleep and feelings of loneliness—traits that drove his fervor for purpose and passion in life. By August, it was announced that he had “retired” from the company he built, and which Amazon had let him run largely autonomously since paying $1.2 billion for Zappos in 2009. Friends and family members, understanding the emerging crisis, attempted interventions over the past few months to try to get him sober.

Instead, these old friends say, Hsieh retreated to Park City, where he surrounded himself with yes-men, paying dearly for the privilege. With a net worth that Forbes recently estimated, conservatively, at $700 million, Hsieh’s offer was simple: He would double the amount of their highest-ever salary. All they had to do was move to Park City with him and “be happy,” according to two sources with personal knowledge of Hsieh’s months in Utah. “In the end, the king had no clothes, and the sycophants wouldn’t say a fucking word,” said a close friend who tried to stage one of the interventions, with the help of Hsieh’s family. “People took that deal from somebody who was obviously sick,” encouraging his drug use, either tacitly or actively.

3. How Venture Capitalists Are Deforming Capitalism – Charles Duhigg

Neuner began hearing similar stories from other co-working entrepreneurs: WeWork came to town, opened near an existing co-working office, and undercut the competitor on price. Sometimes WeWork promised tenants a moving bonus if they terminated an existing lease; in other instances, the company obtained client directories from competitors’ Web sites and offered everyone on the lists three months of free rent. Jerome Chang, the owner of Blankspaces, in Los Angeles, told me, “My average rate was five hundred and fifty dollars per desk per month, and I was just scraping by. Then WeWork arrived, and I had to drop it to four hundred and fifty, and then three hundred and fifty. It eviscerated my business.” Rebecca Brian Pan, who founded a co-working company named Covo, said, “No one could make money at these prices. But they kept lowering them so that they were cheaper than everyone else. It was like they had a bottomless bank account that made it impossible for anyone else to survive.”

Neuner began slashing NextSpace’s prices and adding amenities—free beer; lunchtime classes on accounting, coding, and chakra cleansing—but none of it mattered. WeWork’s prices were too low. By the end of 2014, WeWork had raised more than half a billion dollars from venture capitalists. Although it was now losing six million dollars a month, it was growing faster than ever before, with plans for sixty locations in more than a dozen cities.

Meanwhile, one of Silicon Valley’s most prominent investors, Bruce Dunlevie, of the venture-capital firm Benchmark, had joined WeWork’s board of directors. Benchmark, founded in 1995 in Menlo Park, had funded such Silicon Valley startups as eBay, Twitter, and Instagram. Dunlevie admitted to a partner that he wasn’t certain how WeWork would ever become profitable, but he was taken with Neumann. Dunlevie said to the partner, “Let’s give him some money, and he’ll figure it out.” Around this time, Benchmark made its first investment in WeWork—seventeen million dollars….

…In six years, Neuner opened nine NextSpace locations, as far east as Chicago. “But I was so burnt out by everyone saying I was a failure just because I didn’t want to dominate the globe,” he said. In 2014, Neuner resigned, and NextSpace began closing its sites. “It was heartbreaking,” he said. “V.C.s seem like these quiet, boring guys who are good at math, encourage you to dream big, and have private planes. You know who else is quiet, good at math, and has private planes? Drug cartels.”

As NextSpace’s offices shut down or were sold off, WeWork opened forty new locations and announced that it had raised hundreds of millions of dollars more. It became one of the biggest property lessors in New York, London, and Washington, D.C. One fall day in 2017, as Neuner was browsing in a bookstore near NextSpace’s original location, in Santa Cruz, he passed a magazine rack and saw that Forbes had put Adam Neumann on its cover. The accompanying article described how Neumann had met with Masayoshi Son, one of Japan’s wealthiest men and the head of the enormous investment firm SoftBank. Son had been so impressed by a twelve-minute tour of WeWork’s headquarters that he had scribbled out a spur-of-the-moment contract to invest $4.4 billion in the company. That backing, Neumann had explained to the Forbes reporter, was based not on financial estimates but, rather, “on our energy and spirituality.”

4. The 3 Most Important Words in Finance – Ben Carlson

When I first started out in the investment business I was always overly impressed with the smartest people in the room who seemed to have it all figured out about what was going to happen with certain stocks or the markets in general.

It took a while but I eventually discovered it was those investors who had enough self-awareness to admit they didn’t know what was going to happen next and they didn’t have all of the answers who were truly intelligent.

The 3 most important words in finance are “I don’t know” because the markets will humiliate you without the requisite self-awareness to recognize your own deficiencies.

It’s actually quite freeing for yourself and your clients when you’re willing to admit you don’t know what’s going to happen next.

Useful financial advice does not have to be predicated on your ability to predict the future. In fact, pitching yourself as someone who can predict the future is the fastest way to create a mismatch between expectations and reality. Eventually you will be disappointed or caught off guard when you’re wrong.

5. Who is the world’s best banker? – The Economist

Measured by the hardest test of all— creating something from nothing and delivering long-term shareholder returns while supporting the economy—the answer is someone of whom few outside Asia and the investment elite would have heard: Aditya Puri, who on October 26th retired from HDFC Bank. Now the world’s tenth-most-valuable bank, it is worth about $90bn, more than Citigroup or HSBC.

HDFC is Indian, headquartered in Mumbai, and has been run by Mr Puri since its creation in 1994. Today it has branches in mega-cities and rural backwaters alike. It serves consumers and firms and eschews the wilder reaches of investment banking and foreign adventures. This unlikely formula has produced spectacular results.

In order to assess Mr Puri’s performance The Economist has compared total shareholder returns during his tenure with those achieved by the chief executives of the world’s top 50 banks, by market value (see chart). Mr Puri has delivered cumulative returns exceeding 16,000% over the quarter-century since his bank went public. That is far more than any other boss in our sample, including Jamie Dimon of JPMorgan Chase, widely viewed as the leading banker of his generation. This is not wholly a function of the length of Mr Puri’s tenure: annualised total returns have been 22%, placing him among the top two. The power of compounding means the absolute value created for shareholders during his tenure is a giant $83bn….

…So what is HDFC’s secret sauce? Being in India is no guarantee of success—the industry still features decrepit state lenders and wild-west chancers and is in the midst of a slump that has only been aggravated by covid-19. Instead three factors stand out. First, Mr Puri’s management style, which features a clear vision, microscopic attention to detail, blunt speaking and a knack for retaining talent. Such was his dedication that, presented with a staggering bill for heart surgery, he sought to encourage the doctor to bank more with HDFC….

…Mr Puri leaves behind some question marks. The man many saw as his most likely successor quit in 2018; the bank’s new CEO is Sashidhar Jagdishan, another veteran. Some investors wonder if the bank will eventually merge with its largest shareholder, Mr Parekh’s Housing Development Finance Corporation. The biggest question of all is how Mr Puri got away with working the sort of hours that get you laughed off Wall Street. He tended to take a lunch break, often at home with his wife, and would leave the office at 5.30pm. Perhaps this was the secret of his success.

6. When Hedge Funds Hide Michelle Celarier

The only default that threatens to rival the politics of the Argentine drama is the ongoing fracas over $74 billion in defaulted Puerto Rico debt that began to take shape in 2015, when then-governor Alejandro García Padilla boldly proclaimed, “The debt is not payable.”

Hedge funds, it turned out, had gobbled up Puerto Rico debt assuming it was a sure thing. Their reasoning was that, unlike other issuers of municipal debt, under U.S. law Puerto Rico couldn’t file for bankruptcy. DCI Group, the same lobbying group that had worked for Singer and other Argentina bondholders, fought hard to keep it that way.

But Puerto Rico is not like Argentina in one critical way: Its residents are also U.S. citizens.

In 2016 the U.S. Congress finally enabled the island commonwealth to declare bankruptcy. Puerto Rico did just that. Now payments of debt and principal have ceased as lawsuits with several groups of competing bondholders are winding their way through the courts even as the island struggles to recover from the devastation of Hurricane Maria.

In both of these highly charged cases, powerful hedge funds — Singer’s Elliott in Argentina and Seth Klarman’s Baupost Group in Puerto Rico — tried to hide their ownership of the beleaguered debt and their attempt to wrest payment from desperate creditors. The stories behind their efforts at secrecy shed more light on why such opacity is prized by the hedge funds, equally abhorred by their opponents, and often ultimately unsuccessful in shielding funds from public censure.

In fact, sometimes the attempt to hide only makes things worse.

7. How to Find Winning Stocks in an Uncertain Recovery – Chin Hui Leong 

Most companies have taken it on the chin as lockdowns disrupted their businesses.

For instance, Mexican food chain Chipotle Mexican Grill was forced to temporarily shutter 100 of its stores, causing it to lose almost a quarter of its restaurant sales in April.

But as in-store sales declined, its digital orders started to take over.

As shutdowns peaked in the second quarter, Chipotle was able to arrest the decline in sales by increasing the proportion of its digital sales to over 60% of total revenue, more than twice the channel’s contribution compared to its first quarter.

Interestingly, as lockdowns were eased, Chipotle’s digital sales were sustained at almost 50% of revenue for the third quarter. As a result, the company was able to deliver a solid 14.1% year on year growth in sales.

As we look back at the first nine months of the year, the Mexican restaurant chain had to take its lumps like most companies.

However, unlike many companies, Chipotle was able to emerge as a much stronger version of itself compared to where it was before the pandemic.

In response, its shares have risen almost 60% year to date.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in the shares of Alphabet (parent of Google), Amazon, and Chipotle Mexican Grill. Holdings are subject to change at any time.

What We’re Reading (Week Ending 29 November 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 29 November 2020:

1. Politics, Science and the Remarkable Race for a Coronavirus Vaccine – Sharon LaFraniere, Katie Thomas, Noah Weiland, David Gelles, Sheryl Gay Stolberg and Denise Grady

Moderna’s goal was to get from a vaccine design to a human trial in three months. The design came quickly. “This is not a complicated virus,” Mr. Bancel said.

Dr. Graham said that after China released the genetic sequence of the new virus, the vaccine research center zeroed in on the gene for the virus’s spike protein and sent the data to Moderna in a Microsoft Word file. Moderna’s scientists had independently identified the same gene. Mr. Bancel said Moderna then plugged that data into its computers and came up with the design for an mRNA vaccine. The entire process took two days…

…By early fall, political pressures that had been building all year burst into the open. Federal regulators were trying to issue guidelines to ensure enough follow-up of clinical trial participants to make sure the vaccines were safe, but White House officials were blocking them. The president was attacking F.D.A. officials as antagonists intent on thwarting his re-election.

Dr. Bourla had been dragged into the political thicket, in part because of his own promises that Pfizer expected clinical trial results by October. The president ballyhooed that deadline on the campaign trail, and tried to publicly link himself to Pfizer’s leader.

Dr. Sahin, of BioNTech and Pfizer’s partner, said Dr. Bourla was trying to manage “an uncomfortable situation.” But when the president went after the F.D.A., Dr. Bourla drew a line, deciding that public confidence in a vaccine was at stake. “We had statements against the F.D.A., the deep state, et cetera, that really were concerning for me,” he said. “We needed to speak up.”

He called Alex Gorsky, the chief executive of Johnson & Johnson, another leading contender in the vaccine race, then recruited leaders from other companies. Together, they drafted a statement that said the industry would “stand with science” and follow F.D.A. guidelines. By Sept. 8, nine companies, including Moderna, had signed on.

2. Why Everyone’s Suddenly Hoarding Mason Jars – Jen Doll

But Marisa McClellan, a canning expert and cookbook author who’s a brand ambassador for Ball (yes, even mason jars have brand ambassadors these days) says we’re simply in a cycle that — along with economic recession — tends to happen every 10 years or so. In times of economic insecurity like the last recession in 2009, when McClellan started her Food in Jars blog, people turned to canning to soothe their fears, and mason jar sales took off.

This pattern happened in the Great Depression and World War II, when canning surged and there were mason jar sales spikes and lid shortages; again during the back-to-the land movement in the 1970s and ’80s; and again as people prepared for the Y2K disaster that never came. Now, in a time of pandemic, employment upheaval, political turmoil, a growing distrust in our established systems, the jars are once again in high demand.

In other words, there may be no better barometer of the state of our economy than the mason jar.

3. How To Think For Yourself – Paul Graham

There’s room for a little novelty in most kinds of work, but in practice there’s a fairly sharp distinction between the kinds of work where it’s essential to be independent-minded, and the kinds where it’s not.

I wish someone had told me about this distinction when I was a kid, because it’s one of the most important things to think about when you’re deciding what kind of work you want to do. Do you want to do the kind of work where you can only win by thinking differently from everyone else? I suspect most people’s unconscious mind will answer that question before their conscious mind has a chance to. I know mine does.

Independent-mindedness seems to be more a matter of nature than nurture. Which means if you pick the wrong type of work, you’re going to be unhappy. If you’re naturally independent-minded, you’re going to find it frustrating to be a middle manager. And if you’re naturally conventional-minded, you’re going to be sailing into a headwind if you try to do original research.

One difficulty here, though, is that people are often mistaken about where they fall on the spectrum from conventional- to independent-minded. Conventional-minded people don’t like to think of themselves as conventional-minded. And in any case, it genuinely feels to them as if they make up their own minds about everything. It’s just a coincidence that their beliefs are identical to their peers’. And the independent-minded, meanwhile, are often unaware how different their ideas are from conventional ones, at least till they state them publicly…

…Fortunately you don’t have to spend all your time with independent-minded people. It’s enough to have one or two you can talk to regularly. And once you find them, they’re usually as eager to talk as you are; they need you too. Although universities no longer have the kind of monopoly they used to have on education, good universities are still an excellent way to meet independent-minded people. Most students will still be conventional-minded, but you’ll at least find clumps of independent-minded ones, rather than the near zero you may have found in high school.

It also works to go in the other direction: as well as cultivating a small collection of independent-minded friends, to try to meet as many different types of people as you can. It will decrease the influence of your immediate peers if you have several other groups of peers. Plus if you’re part of several different worlds, you can often import ideas from one to another.

But by different types of people, I don’t mean demographically different. For this technique to work, they have to think differently. So while it’s an excellent idea to go and visit other countries, you can probably find people who think differently right around the corner. When I meet someone who knows a lot about something unusual (which includes practically everyone, if you dig deep enough), I try to learn what they know that other people don’t. There are almost always surprises here. It’s a good way to make conversation when you meet strangers, but I don’t do it to make conversation. I really want to know.

4. There’s Always a Chart – Michael Batnick

If you’re looking for evidence that shorts have thrown in the towel, and therefore now’s the time to get cautious, there’s a chart for that.

If you’re looking for evidence that actually, an absence of bears doesn’t mean an overwhelming amount of bulls, there’s a chart for that too…

…If you’re looking for evidence that strong breadth is bullish and not bearish, you guessed it; there’s a chart for that too….

…If you’re looking for something to confirm your view, you’re going to find it. Whether it’s a data point that supports your ideas or a contra data point that negates it, thereby making you even more confident, then you’re going to find that too.

5. The Tweet That Led To A Science Paper About Galactic Crepuscular Rays – Phil Plait

Y’all should know Judy Schmidt’s name by now. I’ve linked to her work many times here on the blog; she’s an image processing wizard, taking raw images from Hubble and turning them into ridiculously beautiful art.

There’s science there, too, like a weird nebula she and I tried to figure out in a nearby galaxy. We never really reached a conclusion on that one, but sometimes what she does leads to not just science, but a science publication.

And in this particular case it started with a tweet:

“Looking at this new pic of IC5063 (from Barth’s Prop15444), trying to figure out if I can make a color image… hmm maybe not, but are these cones I’m straining to see real, I wonder?”

This is a Hubble image of the sorta nearby galaxy IC5063, which is about 160 million light years away. It’s a disk galaxy, though it’s hard to tell in that image. What Judy was straining to see are what look like rays of light coming out from the center, very faint, just barely above the background levels of the image.

A lot of astronomers follow her, and a conversation started (click through the tweet above to see the whole thing). Dr. Julianne Delcanton suggested they look like ionization cones: Intense light from the center of the galaxy blasts out and zaps gas around it, creating glowing triangles of light in images. We all agreed it does look like that (especially after Bill Keel processed the image to enhance the rays), and then, after Judy asked if they could be shadows, one of us (cough cough) suggested they do look like crepuscular rays: Opaque stuff deep in the center of the galaxy blocks the light in some directions but not others, so you see bright and dark rays fanning out, like rays of light from the setting Sun (crepuscular means relating to twilight)…

…This idea of torus shadowing had been speculated for a while, but never before seen. So this is a first! And it’s all because Judy loves processing Hubble images, saw something funny, and decided to throw it out to the community on social media.

6. Happiness Won’t Save You – Jennifer Senior

More than 40 years ago, three psychologists published a study with the eccentric, mildly seductive title, “Lottery Winners and Accident Victims: Is Happiness Relative?” Even if you don’t think you know what it says, there’s a decent chance you do. It has seeped into TED talks, life-hack segments on morning shows, even the occasional whiff of movie dialogue. The paper is the peanut butter and jelly sandwich of happiness studies, a staple in any curriculum that looks at the psychology of human flourishing…

…There were flaws in the study — its design, alas, was as crude as an ax — but you can see why it became famous. It had an irresistible takeaway: Money! It doesn’t buy you happiness! Perhaps even more fundamentally, it had a sexy, almost absurd, premise. What kind of mind would think to pair lottery winners and accident victims in a research paper? Who in academic psychology had such a cockeyed imagination? It was social science by way of Samuel Beckett….

…The answer to that question is a fellow by the name of Philip Brickman, a 34-year-old rising star at Northwestern University. He was warm, irrepressible, spellbinding to talk to; his mind was a chirping hatchery of ideas. Unlike so many of his peers, his preoccupations had little to do with cognitive processes. Rather, they had to do with matters of the heart: how we cope with adversity; how we care for others; how we form commitments, subdue inner conflicts, wrench meaning and happiness from this brief life.

“He wanted the world to be a more humane place,” his closest friend, Jeffery Paige, told me.

So for Brickman to come up with a study like this one made perfect sense. It was idiosyncratic, humanistic and, above all, relevant: Does money fulfill us? Does irremediable damage to the body cause irremediable damage to the spirit? Can we simply adapt to anything?

What, ultimately, do we need to carry us through?

Not long after publishing that study, Brickman left Northwestern for the University of Michigan, where he’d become the director of the oldest and most storied arm of the Institute for Social Research. It was a prestige gig, an honor often reserved for academics at the pinnacle of their careers. Paige, a professor emeritus of sociology at the University of Michigan, told me he thought Brickman was destined for the National Academy of Sciences one day.

We’ll never know. On May 13, 1982, at the age of 38, Philip Brickman made his way onto the roof of Tower Plaza, the tallest building in Ann Arbor, and jumped. It was a 26-story fall. The man who’d done one of psychology’s foundational studies about happiness couldn’t make his own pain go away.

7. The Road Ahead after 25 years Bill Gates

Twenty-five years ago today, I published my first book, The Road Ahead. At the time, people were wondering where digital technology was headed and how it would affect our lives, and I wanted to share my thoughts—and my enthusiasm. I also had fun making some predictions about breakthroughs in computing, and especially the Internet, that were coming in the next couple of decades.

Next February, I’ll release another book, this one about climate change. Before it hits the shelves, I thought it would be fun to look back at The Road Ahead and see how things turned out.

As I wrote in The Road Ahead, we tend to overestimate the changes that will happen in the short term and underestimate the ones that will happen over the long term. That is certainly my experience with the book itself. I was too optimistic about some things, but other things happened even faster or more dramatically than I imagined…

…One thing I wrote about that hasn’t happened yet—but I still think will happen—is the way the Internet will affect the structure of our cities. Today the cost of living in a dense downtown, like Seattle’s, is so high that many workers (including teachers, police officers, and baristas) can’t afford to live there. Even high earners spend a disproportionate percentage of their income on rent. As a result, some cities are arguably too successful, and others are not successful enough. It’s a real problem for our country…

The Road Ahead has a lot in common with my new book, How to Avoid a Climate Disaster. Both are about how technology and innovation can help solve important problems. Both share glimpses into the cutting-edge technology I get to learn about.

One thing is different: The stakes are higher with climate change. As passionate as I am about software, the effort to avoid a climate disaster has a whole other level of urgency. Failing to get this right will have bad consequences for humanity. But you can also see the glass as half full. There are huge opportunities to solve this problem, eliminate our greenhouse gas emissions, and create new industries that make clean energy available and affordable for everyone—including people in the world’s poorest countries.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have no vested interest in any companies mentioned. Holdings are subject to change at any time.

What We’re Reading (Week Ending 22 November 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 22 November 2020:

1. The Magic of Mushrooms – Packy McCormick

Because of long-held negative or recreational associations, most people are unaware that psychedelics are the most promising treatment for a wide range of mental health issues — from depression to alcoholism to anorexia — that we’ve ever seen.

The psychedelic renaissance couldn’t have come at a better time. The world desperately needs innovative solutions to mental health disorders. The worldwide numbers are staggering…

…The total direct and indirect costs of the mental health epidemic are expected to reach $6 trillion by 2030, up from $2.5 trillion in 2010, according to the World Economic Forum. The Lancet Commission estimates that number to be as high as $16 trillion when you include the loss of productivity, and spending on social welfare, education, and law and order. Despite the huge need, the last real innovation in the fight against mental illness was the release of Prozac in 1988.

After fifty years in the dark, though, psychedelics are once again getting the chance to shine. Led by public figures like Michael Pollan, Tim Ferriss, and even Joe Rogan, and leading institutions like Johns Hopkins, NYU, Berkeley, and Imperial College London, therapeutic psychedelics are going mainstream again:

2. We Have No Idea What Happens Next – Morgan Housel

There’s a theory in evolutionary biology called Fisher’s Fundamental Theorem of Natural Selection.

It’s the idea that variance equals strength, because the more diverse a population is the more chances it has to come up with new traits that can be selected for. No one can know what traits will be useful; that’s not how evolution works. But if you create a lot of traits, the useful one – whatever it is – will be in there somewhere.

The same thing applies to the diversity of events a society faces.

It still feels hard, if not reckless, to imagine the upside of Covid-19. We may not have even seen the worst of it yet.

But everyone in the world has suddenly been exposed to problems they had never seen before. They’ve become aware of new risks. New constraints in how they live, work, and play. A whole new set of perspectives on how to keep your family safe, run a business, and use technology.

Some of the changes that will bring are obvious. We’re already better and faster at creating vaccines than we were a year ago. Doctors are more knowledgeable. Remote work is more efficient. Travel is less necessary.

Then there’s a second tier of change: perhaps using our new knowledge of mRNA vaccines to treat other diseases, like cancer. It seems likely, but who knows.

Then there’s the big unknown: the crazy, disconnected, counterintuitive change set in motion this year that we’ll only be able to piece together in hindsight. The kinds of things that only happen when seven billion people have their lives thrown upside down, experience a bunch of stuff they’d never imagined, and are either motivated or forced to do something completely different than they had considered in January.

3. What is the Future of Fiscal Policy Now That the Election is Over? – Nathan Tankus

Worse still, the third wave of Coronavirus is in full swing. New York City schools could be shut as early as Monday, and indoor dining should probably already be shut. This second wave of shutdowns will be more economically harmful than the first wave because any savings they had were exhausted by the first wave and it is most likely that most affected businesses have already exhausted their access to credit (and perhaps even their willingness to take on more debt).

It’s likely that the second wave of shutdowns will accelerate permanent job losses while the temporary job losses generate renewed drops in demand. In other words, the economic situation has still been deteriorating and it will likely get hammered at a time where fiscal support is, at best, months away.

4. Extra Buzz #19: Ant Group: The Biggest IPO That Wasn’t – Rui Ma

And now we come to the biggest riddle of this all. I hope I’ve given you enough context on why the regulators wanted to step in, and why the citizens were in support.

But that still doesn’t explain why the IPO was halted literally two days before the listing. As Reuters reported, there are folks with knowledge of the deal who say that it was due to outrage at Jack Ma’s comments. The regulators were personally offended and retaliated because they were thin-skinned. I can believe that. Jack wasn’t kind. More importantly, as I quoted in my article for Tortoise, Western experts thought this was an indication of the government’s capriciousness and unreliability. China doesn’t know what it’s doing, as one oped columnist wrote, in the provocatively titled “Ant’s Suspended IPO Turns Jack Ma Into Ray Dalio’s Worst Nightmare.” (Ray Dalio, by the way, has since responded .. nope.)

But was that how it was actually perceived on the ground in China and by those seeking to do business in China? I turned to the many China-focused investors I’ve now come to know as part of doing Tech Buzz, as well as some old friends from venture, and asked them if they felt the same. Nope. Hmmm, interesting, I thought. How about Chinese entrepreneurs and engineers? Normal everyday folk? Nope.

No matter who I asked, no one thought it was to upstage Jack Ma specifically, and everyone thought this was a good move. Many thought his speech was made out of desperation, a last ditch attempt to sway public opinion which failed. No one gets to Jack’s level in China without having some major cunning, they explained. The regulators would be people he knew well, not ones he was still feeling out. The hotheadedness isn’t indiscriminate … it was strategic. If it put him in the line of fire, that was because he knew which buttons he was pressing. A few even believed this was a stunt, fully coordinated* by Jack and the regulators in order to legitimize Ant while crushing the rest of industry. (That seems too “5D chess” for me.)

Either way, it didn’t matter, because there was every reason the government should step in, to stop the greed. On the part of Ant, and on the part of everyone in that microlending business. “Thank goodness the government did so before the public bore the losses,” they said, pretty uniformly. Kind of true. Even if you weren’t planning to buy Ant shares, you could’ve been an indirect shareholder of sorts — as Chairman Eric Jing noted at the beginning of the Bund Summit speech, “hello to our big shareholder, the Social Security Fund, sitting in the audience.”

Furthermore, every single Chinese person said, why would the government need to go to such lengths to punish Jack Ma? Couldn’t they just say he had an issue with his taxes or something like that? As for why the last-minute halt, that’s simple enough — there are so many competing and conflicting interests among these agencies — it’s embarrassing that it got down to the wire as it did, but better to have reversed course than to have the public holding the bag for the sake of saving face and trying to get the Biggest IPO in the bag.

Isn’t that interesting? You could use the concept of “saving face” in these two directly opposing ways, and yet explain the situation to your satisfaction. 

5. Twitter thread on the real story behind the infamous Tulip Mania in the 1600s Sahil Bloom

In 1637, the Dutch Republic erupted into a speculative fever over an unlikely item…the tulip. Tulip Mania has become a legend synonymous with market euphoria and bubbles. But is this tale all it’s cracked up to be?

1/ The tulip is a spring-blooming flower native to the valleys of the Tien Shan Mountains in Central Asia. It is believed to have been introduced to Europe in 1554, when an ambassador of the Holy Roman Emperor sent tulip bulbs and seeds to Vienna from the Ottoman Empire.

2/ Tulips gained in popularity as people were attracted to their rich color and ability to grow in sub-optimal conditions. They soon became a coveted status symbol for the wealthy. The Semper Augustus, with its colorful, flame-like streaks, was the most desired of them all.

3/ By the early 1600s, the Dutch Republic was entering a golden age. Many financial innovations popped up during this time – the first stock exchange, for example. But it was another financial innovation that would propel tulips into historical lore: the futures contract.

4/ As tulips grow slowly and may take several years to bloom, paper contracts were written that entitled the buyer to the future tulips. These contracts were freely-traded. So in addition to the physical market for tulip bulbs, a thriving paper market was established.

5/ By 1634, the prices of tulip bulbs were rising sharply. Traders would meet in special taverns. In these taverns, no bulbs ever changed hands, just the paper contracts. Speculative buying (buying on the expectation of further price increases) took hold. The frenzy was on.

6. Cederberg Capital Investor Day Fireside Chat – November 2020 – Cederberg Capital and Tao Ye

So the corona virus, if you’re standing in February of this year, it’s very scary because we would literally have to plan out for zero revenue – not zero profit – for how many years and for how many months that we can sustain as a company, without selling and servicing a car. So, our HR department (I was in the US with my family at the time). My HR director in our emergency business meeting, proposed something to me that truly reflected our culture. She said, now that we know as a company that we could sustain ourselves for quite a long time without selling anything, can I propose that we pay full bonus and salary for employees for February.

Now that was a very profound statement, if you put yourself in the shoes of February… Scary time. And the local government actually does not mandate you pay full salary anymore. They basically said you could just pay a bare minimum, like 20% of your base salary, and then you’re legally okay. But we’re not only paying the base, we’re paying the full bonus as if people are hitting all the KPIs.

Now I will say that we don’t really publicise it internally, but over time people understand it. And they’ve learned to appreciate that. So coupled with the fact that they live in a very simple and direct culture environment, and also coupled with the fact that we’re a fast growing company, which creates a lot of opportunities for people. Those couple of things probably enable us to manage to keep and retain and grow a group of very, very good managers out of the industry that is very, very loyal and very, very effective and very, very productive. I could talk about this…

7. Twitter thread on how to detect financial fraud using Benford’s Law Nick Maggiulli

\1 Tweetstorm on How to Detect Financial Fraud Using Simple Math (aka Benford’s Law or the Leading Digit law)

If you haven’t heard of this, it will BLOW YOUR MIND.

First, let’s consider something mundane: The revenue of every company in the S&P 500 in 2017.

\2 For example, Walmart had 2017 revenue of $485 billion, Exxon Mobile had $237 billion, and Amazon had $177 billion.  Now, let’s take the LEADING DIGITS of these numbers.  So, the leading digit for Walmart’s revenue is 4, for Exxon is 2, and for Amazon is 1.

\3 Question: If we took the leading digits for revenue for ALL the companies in the S&P 500 would you expect the distribution of leading digits to be equal?  For example, is a leading digit of 8 more likely than 5?  Is 2 more likely than 3?

\4 This may sound silly to you because they should be equally likely, right?

NOPE.

In fact, over 30% of the revenue numbers will have a leading digit of 1, while 5% will have a leading digit of 9. More of the numbers will start with 1 than 2, 2 than 3, and so on to 9.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in Amazon. Holdings are subject to change at any time.

What We’re Reading (Week Ending 15 November 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 15 November 2020:

1. The Big Lessons From History – Morgan Housel

Harry Houdini used to invite the strongest man in the audience on stage. Then he’d ask the man to punch him in the stomach as hard as he could.

Houdini was an amateur boxer, and told crowds he could withstand any man’s punch with barely a flinch. The stunt matched what people loved about his famous escapes: the idea that his body could conquer physics.

After a show in 1926 Houdini invited a group of students backstage to meet him. One, a guy named Gordon Whitehead, walked up and started punching Houdini in the stomach without warning.

Whitehead didn’t mean any harm. He thought he was just performing the same trick he saw Houdini pull off on stage.

But Houdni wasn’t prepared to be punched like he would be on stage. He wasn’t flexing his solar plexus, steadying his stance, and holding his breath like he normally would before the trick. Whitehead caught him off guard. Houdini waved him off, clearly in pain.

The next day Houdini woke up doubled over in pain.

His appendix was ruptured, almost certainly from Whitehead’s punches.

And then Harry Houdini died.

The riskiest stuff is always what you don’t see coming.

2. The Overton Window & Understanding What Is Possible – Sean Stannard-Stockton, CFA

The Overton Window is a concept named for Joseph Overton, a political theorist. Overton argued that the range of political policy possibilities was not directly related to any politician’s individual preferences, but rather by the range of options that are politically acceptable to mainstream voters. This range of politically acceptable outcomes changes over time, but at any given moment, only policy options that fall within the Overton Window have any hope of becoming reality…

…What is amazing about the Overton Window is that most of the time you aren’t even aware it exists. The possibilities that are Unthinkable are not thought of as not possible due to current social norms, rather they are viewed as actually impossible. But when the window shifts, it is hard to even remember how things used to be…

…A few years ago, the concept of Modern Monetary Theory (MMT) started to enter the public consciousness. While this theory is not new, it was previously considered Unthinkable. Starting a couple of years ago, the Overton Window began to shift with MMT sliding from Unthinkable to Radical. When Congress approved a simply massive level of spending back in March, market participants began to realize that one way to view this action was as a real-time experiment in MMT informed policy. Not that either the Democrats or Republicans who voted on a bipartisan basis did so because of MMT, but rather because MMT adherents argue that this massive level of government spending will not result in increased inflation nor will the large associated deficit, or the increase in government debt, prove to be problematic.

A full description of MMT is beyond the scope of this post. But in June, prominent MMT economist Stephanie Kelton published The Deficit Myth, which offers an incredibly accessible explanation of MMT that is easily understandable (and frankly enjoyable) for non-economists. In fact, the book is a major, mainstream best seller which is a rare feat for any economics book…

…The key point is not that MMT is correct. Rather that the MMT view of the world is now entering the Overton Window and is probably best described today as Acceptable. It is not yet considered Sensible or Popular, but in a strange way it may actually already be Policy in that the massive deficit spending engaged in this year is widely agreed as having been one of the most effective fiscal interventions in history.

While some may argue that the Democrats’ likely (unless they win both Georgia runoff races) failure to win the Senate means large government spending is off the table, the Overton Window is not about which party holds a slight majority in Congress. Rather the Overton Window describes the range of policies that society deems acceptable and both political parties are required to operate within this window.

You can see this already playing out with the Republican controlled Senate authorizing a shocking $2 trillion stimulus bill in March, twice as large as all of the stimulus spending done during the Financial Crisis. And today, Republican Senators are calling for “just” $500 billion in additional spending, while the bipartisan Problems Solvers Caucus, made up of moderates on both sides of the aisle, are calling for “just” $1.5-$2.0 trillion in new spending. Either one of these bills, on top of the over $2 trillion in spending already approved, would have been completely unacceptable prior to COVID. The size of this spending dwarfs anything that voters or a majority of Congress would have considered possible.

The Unthinkable is now Policy.

3. Chipotle to Unleash Digital-Only Restaurants – Danny Klein

While the surge was undoubtedly a pandemic byproduct of quarantine behavior and heightened adoption for things like delivery and mobile ordering, the alluring point for Chipotle was it held 80–85 percent of digital sales gains in Q3 even as it recovered 50–55 percent of in-store business. This past quarter, about half of Chipotle’s digital business came via delivery (the rest through order ahead and pickup). As of October, Chipotle’s digital mix remained in the “high 40s,” Niccol said…

…With this all stirring at break-neck pace, it’s not surprising to see Chipotle enter another surging trend. The chain Wednesday unveiled its first digital-only restaurant.

Called the “Chipotle Digital Kitchen,” it will be located just outside the gate of the military academy in Highland Falls, New York. It’s opening Saturday for pickup and delivery only, and will allow Chipotle to enter more urban areas that typically wouldn’t support a full-size restaurant, the company said. Additionally, it will allow for flexibility with future locations.

Chipotle’s Digital Kitchen concept is focused on accelerating digital business in non-traditional venues. The company said the build is unique “because it does not include a dining room or front service line.” Guests must order in advance via the fast casual’s website, app, or through third-party delivery partners. Orders are picked up from a lobby designed to include all of the sounds, smells, and kitchen views of a traditional Chipotle, the company added.

It will also service large catering orders available for pickup in a separate lobby with its own dedicated entry.

4. Cancer Screening Leaps Forward – Andy Kessler

So Illumina spun out a new company named Grail in Menlo Park, Calif., to do what’s known as Circulating Cell-free Genome Atlas studies. Running DNA sequencing on regular blood samples, Grail generates hundreds of gigabytes of data per person—the well-known A-T-G-C nucleotides, but also the “methylation status,” or whether a particular DNA site’s function is turned on or off (technically, whether or not it represses gene transcription).

Most popular DNA screenings for cancer risk test only a single gene site, like BRCA1. But Grail’s chief medical officer Josh Ofman tells me, “cancer may show up as thousands of methylation changes, a much richer signal to teach machine learning algorithms to find cancer” vs. a single site. “There are 30 million methylation sites in the entire human genome on 100,000 DNA fragments. Grail looks at a million of them.” It takes industrial-grade artificial intelligence to find patterns in all this data, something a human eye would never see.

Mind you, this is not a consumer 23andMe test of your genome that says you might have, say, a 68% chance of getting cancer. Grail is detecting the signature of actual cancer cells in your blood. According to validation data published in the Annals of Oncology, the test can find 50 different types, more than half of all known cancers.

5. Lessons in Growth Investing with Anu Hariharan Patrick O’Shaughnessy and Anu Hariharan

I actually think there’s way more opportunity ahead of us. Let me compare it with a little few numbers. Pre-COVID I had looked at this. The total global market cap was $85 trillion. Internet economy enabled businesses was less than 10%, so roughly 8 trillion. Even if you assume a 10% CAGR and play this out. Let’s say in 2045, I think I had seen estimates that if you assume the global market cap is going to be around 450 trillion, Internet economy should surely be at least 15% of that, even if less like $60 trillion economy. Guess what? From 8 trillion to 60 trillion. I’m willing to bet all day long that we are still very, very nascent. Even in the most developed markets.

Let me make it further specific and real for people. Let’s look at the US economy. Pre-COVID, our Internet penetration was up 20% in 2019 and I think April reports 27%. A lot has been written about consumer eCommerce penetration. Not much has been said about B2B wholesale eCommerce penetration. B2B wholesale in the US is a $16 trillion market. Less than 8% of it is online. Less than 8%. 49% of B2B wholesale eCommerce transactions happen via phone and fax. And Faire which is one of the marketplaces that’s working on it is still just attacking a small sliver of retail. The retail market that they serve is a $670 billion market. You have so many more verticals here.

Think of aerospace, chemicals, industrials. You’re just going to see an explosion of vertical players in B2B wholesale eCommerce. B2C consumer eCommerce itself is still sub 30%. So therefore, just the Internet economy we’re just still scratching the surface. We just have years to compound, and I think we’re still in the early stages of the Internet economy…

…Well, there are a lot of people that have really helped me, but I think the kindest thing that comes to mind is Dr. Jeffrey Reed. He was my research advisor at Virginia Tech. I was doing my Master’s in wireless communications. This was in 2002, right after 9/11. And the funding that most state universities got from the government was completely slashed. Even private funding was at an all-time low. So I had come with the hope of getting a research fellowship. The university and the research group had no money to be able to fund me.

I come from a Tier-3 town in India. My parents were very middle class, and my dad had pretty much taken an entire loan against all his assets and could pay only for a year of my tuition. Come summer, and I was working enough in Virginia Tech to cover all my living expenses. But as an international student, you can work only 20 hours and you have to work in campus. You can’t work outside. So there’s only so much I could do. And I remember very vividly, this was July, and my dad basically said, “Look, this is it. This is the last straw. Finish whatever credits you can, you’re going to come back in August.” And I was like, “Yeah, I get it.”

And so I went to my advisor and said, “Look, I really can’t continue, and I need to find a way to graduate. So I should finish whatever credits I can in the summer, and maybe I could do it remotely. Would you be open to doing remotely?” He asked me, “How much money do you need?” And I said, “Well, I haven’t paid tuition this month. I need to pay $1,200.” He took a checkbook, wrote a check, and gave it to me without any questions. And I think if I look back in life, if he hadn’t done that, my life would have turned out very different.

6. Intel’s Disruption is Now Complete – James Allworth

So begins the story that Clay Christensen would love to tell about how Andy Grove of Intel famously came to be a convert to the theory of disruption. Christensen shared with Grove his research on how steel minimills, starting at the low end of the market, had gained a foothold and used that to expand the addressable market, continued to move upmarket, and finally disrupted the giant incumbents like US Steel.

Grove immediately grokked it…

…Yesterday, Apple announced the first Macs that will run on silicon that they themselves designed. No longer will Intel be inside. It’s the first change in the architecture of the CPU that the Mac runs on since… well, 2005, when they switched to Intel.

There’s a lot of great coverage of the new chips, but one piece of analysis in particular stood out to me — this chart over at Anandtech:

What about this chart is interesting? Well, it turns out, it bears a striking resemblance to one drawn before — actually, 25 years ago. Take a look at this chart drawn by Clayton Christensen, back in 1995 — in his very first article on disruptive innovation:

He might not have realized it at the time, but when Grove was reading Christensen’s work, he wasn’t just reading about how Intel would go on to conquer the personal computer market. He was also reading about what would eventually befall the company he co-founded, 25 years before it happened.

7. Twitter Thread On How To Interpret Pfizer’s COVID-19 vaccine news Natalie E. Dean, PhD

Big news from Pfizer, with apparent high efficacy (>90%) based on 94 confirmed COVID-19 cases at their interim analysis.

A thread on how I interpret this news. Briefly:
“Celebrate, but let the process play out over time as intended.”
1/8

Vaccine trials are “event-driven.” They continue until enough endpoints have accrued (here, lab-confirmed *symptomatic* infections). Statisticians can take planned “early looks” at the data, and so allow us to tell if a product is working exceptionally well (or not at all). 2/8

When the vaccine is highly effective, we need less data to see it. While trials are planned for 150+ total events, this is what we need for a 60% efficacy vaccine. I say this because 94 events is a lot of data for a vaccine trial, and even more so when efficacy exceeds 90%. ⅜

Pfizer’s first analysis was planned for 32 events, which they pushed back after discussions with FDA. But by the time they analyzed the data, 94 had accrued. This shows how quickly trials can generate results when placed in hotspots (and how much transmission is ongoing!). 4/8

While the results are exciting, of course we will want to independently evaluate them. Unlike treatments, promising data from vaccines do not immediately change standard of care. The vaccines will undergo a rigorous review process first which will play out over time. 5/8


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in Apple, Chipotle Mexican Grill, and Illumina. Holdings are subject to change at any time.

What We’re Reading (Week Ending 08 November 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 08 November 2020:

1. A Twitter thread on Jon Boorman’s final words – Jon Boorman

1) I’ve become very stoical in recent years which has made this much easier to process. I’ve had an absolutely glorious life. I sometimes feel I’ve had two or three

6)It’s a deep privilege to be able to say goodbye to people.

Deep privilege.

Constant family.

Countless friends…

7) Knowing that you will die is fairly innocuous, of course we all will. But when you know you face death within weeks/months, your perspective changes. There’s elements of that we should have in our daily lives…

9) I know I will die. I just know what will kill me. And roughly when.

So buy that coffee.

Have that ice cream.

And be nice.

2. How Discord (somewhat accidentally) invented the future of the internet – David Pierce

Citron learned to code because he wanted to make games, and after graduating set out to do just that. His first company started as a video game studio and even launched a game on the iPhone App Store’s first day in 2008. That petered out and eventually pivoted into a social network for gamers called OpenFeint, which Citron described as “essentially like Xbox Live for iPhones.” He sold that to the Japanese gaming giant Gree, then started another company, Hammer & Chisel, in 2012 “with the idea of building a new kind of gaming company, more around tablets and core multiplayer games.” It built a game called Fates Forever, an online multiplayer game that feels a lot like League of Legends. It also built voice and text chat into the game, so players could talk to each other while they played.

And then that extremely Silicon Valley thing happened: Citron and his team realized that the best thing about their game was the chat feature. (Not a great sign for the game, but you get the point.) This was circa 2014, when everyone was still using TeamSpeak or Skype and everyone still hated TeamSpeak or Skype. Citron and the Hammer & Chisel team knew they could do better and decided they wanted to try.

It was a painful transition. Hammer & Chisel shut down its game development team, laid off a third of the company, shifted a lot of people to new roles and spent about six months reorienting the company and its culture. It wasn’t obvious its new idea was going to work, either. “When we decided to go all in on Discord, we had maybe 10 users,” Citron said. There was one group playing League of Legends, one WoW guild and not much else. “We would show it to our friends, and they’d be like, ‘This is cool!’ and then they’d never use it.”

After talking to users and seeing the data, the team realized its problem: Discord was better than Skype, certainly, but it still wasn’t very good. Calls would fail; quality would waver. Why would people drop a tool they hated for another tool they’d learn to hate? The Discord team ended up completely rebuilding its voice technology three times in the first few months of the app’s life. Around the same time, it also launched a feature that let users moderate, ban and give roles and permissions to others in their server. That was when people who tested Discord started to immediately notice it was better. And tell their friends about it.

Discord now claims May 13, 2015, as its launch day, because that was the day strangers started really using the service. Someone posted about Discord in the Final Fantasy XIV subreddit, with a link to a Discord server where they could talk about a new expansion pack. Citron and his Discord co-founder, Stan Vishnevskiy, immediately jumped into the server, hopped into voice chat and started talking to anyone who showed up. The Redditors would go back, say “I just talked to the developers there, they’re pretty cool,” and send even more people to Discord. “That day,” Citron said, “we got a couple hundred registration[s]. That kind of kicked the snowball off the top of the mountain.”

3. I Have A Few Questions – Morgan Housel

Who has the right answers but I ignore because they’re not articulate?…

…Which of my current views would I disagree with if I were born in a different country or generation?

What do I desperately want to be true, so much that I think it’s true when it’s clearly not?…

…What looks unsustainable but is actually a new trend we haven’t accepted yet?

What has been true for decades that will stop working, but will drag along stubborn adherents because it had such a long track record of success?

Who do I think is smart but is actually full of it?

What do I ignore because it’s too painful to accept?

4. My Biggest Post-Election Market Questions – Ben Carlson

Does the stock market care about anything anymore? We are still in the midst of a global pandemic that is only getting worse, oil prices went negative in the spring and we just went through a contested presidential election.

And yet the S&P 500 is just 2% below all-time highs.

Yes, the stock market plunged nearly 35% during those tumultuous days of February and March but it still boggles the mind how much we’ve gone through this year and the stock market has given a collective shrug based on where we stand.

5. A Twitter thread on 100 lessons on investing Anand Chokkavelu

1. Most of this list is dedicated to insight on stock picking, but know this: It’s darn hard to beat the market. 99% of people are best served steadily buying and holding low-cost index funds at the core of their portfolios — and I may be understating that 99% figure.

3. Being contrarian doesn’t mean just doing the opposite. The “contrarian” street-crosser gets run over by a truck.

12. Example No. 3: leveraged ETFs. Bastardized ETFs like the Direxion Daily Financial Bull 3X ($FAS) are another great way to lose money. Even if you guess right on direction, the mathematics of the daily reckoning mean these instruments are long-term losers.

30. Adding money to winners > Adding money to losers. This one’s hard. One way I try to remind myself: Every 10-bagger has to double first; Every total loss has to drop 50% first.

38. While price matters, it’s hard to overpay for a truly great growth company. Like in a marriage, the trick is to correctly identify one, build conviction by learning more quarter after quarter, and try to hold on through the inevitable tough times. (cont.)

57. Long-tail events (aka black swans), as explained in @nntaleb’s Incerto series, are by definition unpredictable. And brutal. Since life isn’t a Monte Carlo simulation, we should think hard about our true personal risk tolerances.

85. If you can learn quickly from your own mistakes, you’re ahead of the game. If you can learn quickly from others’ mistakes, you’ve won the game.

91. Downer alert: We like control, but we can’t control everything. Life and luck can (and will) trump investment plans. You can do everything right and still die penniless. All we can do is give ourselves a better chance to succeed.

100. Despite my best efforts to improve each day, I will repeatedly and thoroughly fail to heed these lessons. Let’s hope you’re better at No. 85 than I am.

6. Traffic fatality rates spiked during the pandemic – Joann Muller

There were fewer cars on the road last spring during the height of the pandemic, but traffic fatality rates increased 30% in the second quarter as evidence suggests drivers engaged in more risky behavior, federal officials say…

…Risky behavior, along with a potential reduction in law enforcement and safety messaging during the pandemic, could have contributed to increased fatality rates, NHTSA concluded.

7. The Wizard Of Apps: How Jeff Lawson Built Twilio Into The Mightiest Unicorn Miguel Helft

About a year after Lawson and two friends founded Twilio in 2008, Lawson was invited to introduce it at a popular networking mixer called the SF New Tech Meetup. Rather than talk about an inherently difficult-to-explain technology, Lawson decided to let the Twilio software speak for itself. In front of a thousand people Lawson began telling his story while simultaneously coding a Twilio app—a simple conference line. In just a few minutes he opened an account and secured a phone number, and after writing a handful of lines of code that everyone in the room could understand, his conference line was up and running. Lawson then asked everyone to phone in, and just like that a mob of developers was on a giant conference call. Lawson then added some more code, and his app called everyone back to thank them for participating. As phones throughout the room began buzzing, the crowd went wild with enthusiasm. “He is the let-me-show-you-what-we-can-do type of exec,” says Byron Deeter, of Bessemer Venture Partners, an early backer who has become Twilio’s largest shareholder. “There’s no bravado and no ego, and that gives him a special charisma and authenticity.”

Lawson’s parlor trick did more than generate industry buzz. It epitomized a developer-centric business strategy that has fueled its growth. Twilio is exceedingly simple to use and charges no upfront fees, so programmers often use it to test an idea or product. Pretty soon that product scales and turns into a six- or seven-figure account that required no traditional sales process. “We onboard developers like consumers and let them spend like enterprises,” Lawson says. Like others that have embraced developer-driven marketing—Amazon for computing services, Stripe for payments, New Relic for analytics—Twilio benefits as companies increasingly turn to software for differentiation. “As that happens, and companies hire more developers, they come in with Twilio in their tool belt,” Lawson adds.


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in Amazon.com and Twilio. Holdings are subject to change at any time.

What We’re Reading (Week Ending 01 November 2020)

The best articles we’ve read in recent times on a wide range of topics, including investing, business, and the world in general.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 01 November 2020:

1. The Fine Line Between Persistence and Insanity in the Markets – Ben Carlson

So people’s ears perked up when Einhorn said this week in a letter to his investors, “we are now in the midst of an enormous tech bubble.”

The problem with this statement is Einhorn has been saying the same thing for more than 6 years now. This is from a CNBC story in April of 2014:

“Now there is a clear consensus that we are witnessing our second tech bubble in 15 years,” Greenlight Capital said in an investor letter Tuesday. “What is uncertain is how much further the bubble can expand, and what might pop it.”

The firm said there were several indications of the over-exuberance, including the rejection of conventional valuation methods; short sellers forced to cover their positions because of losses; and “huge” first-day stock appreciations after their initial public offerings.

“The current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm,” the letter said. The firm said it was shorting a group of undisclosed “high-flying momentum stocks.”…

…Am I being disciplined in my long-term approach or blind to the fact that the world has changed is the single most difficult question to answer as an investor because no one is right all the time. The truth is the answer to this question is always unknown.

Sometimes you have to look like an idiot for a while before your investment thesis pans out. On the other hand, there’s the old saying that insanity is doing the same thing over and over again but expecting a different result.

What if continuously betting against tech stocks in a big way proves to be the definition of insanity? These stocks would have to see a spectacular crash to fall back to levels last seen in 2016 or 2014. Stranger things have happened, I guess, but I wonder what would cause Einhorn to change his mind.

The problem with bubble-spotting is no matter what happens you assume you’re right. If prices fall then you nailed it and if prices rise it simply makes you think the bubble is still inflating. I don’t know if this is a bubble or not but the answer will likely look obvious with the benefit of hindsight either way.

2. Lots of Overnight Tragedies, No Overnight Miracles – Morgan Housel

Dwight Eisenhower ate a hamburger for dinner on September 24th, 1955. Later that evening he told his wife the onions gave him heartburn. Then he began to panic. The president had a massive heart attack. It easily could have killed him. If it had, Eisenhower would have joined more than 700,000 Americans who died of heart disease that year.

What’s happened since has been extraordinary. But few paid attention.

The age-adjusted death rate per capita from heart disease has declined more than 70% since the 1950s, according to the National Institute of Health.

So many Americans die of heart disease that cutting the fatality rate by 70% leads to a number of lives saved that is hard to comprehend.

Had the rate had not declined over the last 65 years – if we hadn’t become better at treating heart disease and the mortality rate plateaued since the 1950s – 25 million more Americans would have died from heart disease over the last 65 years than actually did.

25 million!

Even in a single year the improvement is incredible: more than half a million fewer Americans now die of heart disease each year than would have if we hadn’t made any improvements since the 1950s. Picture the population of Atlanta saved every year. Or a full football stadium saved every month

How is this not a bigger story?

Why are we not shouting in the streets about how incredible this is and building statues for cardiologists?

I’ll tell you why: because the improvement happened too slowly for anyone to notice.

3. A Columnist Makes Sense of Wall Street Like None Other (See Footnote) – Emily Flitter

Each weekday, Mr. Levine, 42, wakes up at 5 in the morning. He looks at what’s going on in the markets, scrolls through emails from readers and plugs into the chatter of early-to-work traders. Then he starts to write. Roughly 5,000 words later on a long-winded day, he files Money Stuff to his editor, and it’s sent to subscribers around noon. (His column is currently on a parental leave hiatus, and will return this winter.)

Mr. Levine’s favorite subjects include insider trading statutes, bond-market liquidity and the ubiquity of securities fraud, but his columns are never boring. They may be the only entertaining words a financial markets professional reads all day.

Often, a significant chunk of the newsletter is devoted to a legal battle between sophisticated counterparties, or a complex financial product. Mr. Levine deconstructs the topics in a way that is less like a conventional business column and more like he is providing an introductory course on the subject.

If Mr. Levine’s column requires the use of a technical term, it is typically accompanied by not just a definition but a full-throated explanation, with practical examples, of how it works. There are footnotes — lots of footnotes. The tone, though, is anything but pedantic. Mr. Levine writes about Wall Street in a way that makes its denizens feel as if he is writing for them. Yet he gives the same impression of personalization to readers who know little about finance. He once took a term that appeared in a lawsuit — a “cash-settled forward purchase agreement for Citigroup shares with downside protection in the form of a put option at the same price as the forward” — and gave it the acronym CSFPAFCSWDPITFOAPOATSPATF. He makes readers feel in on the savage joke that is late capitalism.

4. Look Who’s Really Chasing Hot Stocks Like Zoom – Jason Zweig

Among this year’s hottest stocks, few are favorites of individual investors, and index funds aren’t their main buyers. Who’s driving them up? Professional stock pickers—the very people pointing the finger at everyone else.

Let’s look at Zoom Video Communications Inc., ZM -5.88% the teleconferencing company whose stock is up more than 660% so far this year. Given the popularity of its service and the stock’s scorching performance, you might expect Zoom is a darling among individual investors and traders.

Yet, on the Robinhood app used by millions of individual traders, Zoom was only the 49th widest-owned stock this week, according to the online broker’s tally of most-popular holdings.

In fact, of the 25 stocks with market values above $10 billion that have the hottest returns so far this year, only two— Moderna Inc. and Peloton Interactive Inc. —are among the 25 most-popular stocks on Robinhood. They are up 278% and 362%, respectively, in 2020.

The biggest performance chasers? Big institutions, whose ownership of scalding-hot stocks has boomed this year, even as these shares become wildly expensive by traditional yardsticks.

Some of that is natural; as a company’s market value grows, it becomes eligible for ownership at funds that can’t hold small stocks. Then again, professional investors, just like many amateurs, can’t resist a hot stock.

5. A Corporate Sleuth Claims Squarepoint Capital Took Her Content. The Hedge Fund Is Threatening Action. What Actually Happened? Richard Teitelbaum

The news was potentially lethal. It was an inkling that Elbaze, a researcher at quantitative hedge fund Squarepoint Capital, might have been seeking improper access to Footnoted.com, the financial website Leder had started 14 years before and had turned into a thriving news and research service.

Elbaze had asked Leder a year earlier for, first, a trial subscription, and then a flat rate for full historical access to reports.

She had refused. Experience had shown her that Footnoted data is fiendishly difficult for quants to format. Firms like Two Sigma Investments, Point72 Asset Management’s Cubist Systematic Strategies, and AQR Capital Management had queried her about subscribing. Leder had even held informal talks with two funds to buy Footnoted outright so they could do the job themselves.

Reluctantly, however, just weeks before the email, she had agreed to provide London-based Squarepoint a trial. Then Elbaze seemed to have ramped up his activity.

“I was just, ‘Holy shit, what’s going on here?’” Leder recalls asking herself at the time. She emailed her developer. “He seems to have downloaded my entire database,” she wrote. “If he did do this, it’s a big BIG problem.” 

In fact, Leder estimated that Elbaze had viewed more than 17,000 pages — some of which even paid subscribers couldn’t get a hold of. A forensic investigation commissioned by Leder backed up her assessment.

6. Failing to Plan: How Ayn Rand Destroyed Sears – Michal Rozworski and Leigh Phillips

Lampert, libertarian and fan of the laissez-faire egotism of Russian American novelist Ayn Rand, had made his way from working in warehouses as a teenager, via a spell with Goldman Sachs, to managing a $15 billion hedge fund by the age of 41. The wunderkind was hailed as the Steve Jobs of the investment world. In 2003, the fund he managed, ESL Investments, took over the bankrupt discount retail chain Kmart (launched the same year as Walmart). A year later, he parlayed this into a $12 billion buyout of a stagnating (but by no means troubled) Sears.

At first, the familiar strategy of merciless, life-destroying post-acquisition cost cutting and layoffs did manage to turn around the fortunes of the merged Kmart-Sears, now operating as Sears Holdings. But Lampert’s big wheeze went well beyond the usual corporate raider tales of asset stripping, consolidation and chopping-block use of operations as a vehicle to generate cash for investments elsewhere. Lampert intended to use Sears as a grand free market experiment to show that the invisible hand would outperform the central planning typical of any firm.

He radically restructured operations, splitting the company into thirty, and later forty, different units that were to compete against each other. Instead of cooperating, as in a normal firm, divisions such as apparel, tools, appliances, human resources, IT and branding were now in essence to operate as autonomous businesses, each with their own president, board of directors, chief marketing officer and statement of profit or loss. An eye-popping 2013 series of interviews by Bloomberg Businessweek investigative journalist Mina Kimes with some forty former executives described Lampert’s Randian calculus: “If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.”…

…And so if the apparel division wanted to use the services of IT or human resources, they had to sign contracts with them, or alternately to use outside contractors if it would improve the financial performance of the unit—regardless of whether it would improve the performance of the company as a whole. Kimes tells the story of how Sears’s widely trusted appliance brand, Kenmore, was divided between the appliance division and the branding division. The former had to pay fees to the latter for any transaction. But selling non-Sears-branded appliances was more profitable to the appliances division, so they began to offer more prominent in-store placement to rivals of Kenmore products, undermining overall profitability. Its in-house tool brand, Craftsman—so ubiquitous an American trademark that it plays a pivotal role in a Neal Stephenson science fiction bestseller, Seveneves, 5,000 years in the future—refused to pay extra royalties to the in-house battery brand DieHard, so they went with an external provider, again indifferent to what this meant for the company’s bottom line as a whole.

Executives would attach screen protectors to their laptops at meetings to prevent their colleagues from finding out what they were up to. Units would scrap over floor and shelf space for their products. Screaming matches between the chief marketing officers of the different divisions were common at meetings intended to agree on the content of the crucial weekly circular advertising specials. They would fight over key positioning, aiming to optimize their own unit’s profits, even at another unit’s expense, sometimes with grimly hilarious result. Kimes describes screwdrivers being advertised next to lingerie, and how the sporting goods division succeeded in getting the Doodle Bug mini-bike for young boys placed on the cover of the Mothers’ Day edition of the circular. As for different divisions swallowing lower profits, or losses, on discounted goods in order to attract customers for other items, forget about it. One executive quoted in the Bloomberg investigation described the situation as “dysfunctionality at the highest level.”

7. Shonda Rhimes Is Ready to “Own Her S***”: The Game-Changing Showrunner on Leaving ABC, “Culture Shock” at Netflix and Overcoming Her Fears Lacey Rose

Shonda Rhimes was tired of the battles. She was producing some 70 hours of annual television in 256 territories; she was making tens of millions of dollars for herself and more than $2 billion for Disney, and still there were battles with ABC. They’d push, she’d push back. Over budget. Over content. Over an ad she and the stars of her series — Grey’s Anatomy, Scandal and How to Get Away With Murder — made for then-presidential nominee Hillary Clinton.

But by early 2017, her reps were back in discussions with the company about a new multiyear deal. They’d already made a hefty ask of her longtime home and were waiting as the TV group’s then leadership prolonged the process, with one briefly tenured ABC executive determined to drive down the price tag on their most valuable creator. Meanwhile, Rhimes was growing creatively restless. “I felt like I was dying,” she says now of the unforgiving pace and constraints of network TV. “Like I’d been pushing the same ball up the same hill in the exact same way for a really long time.”

She knew her breaking point would come, but what it would be she never could have predicted. As part of her ABC relationship, Rhimes had been given an all-inclusive pass to Disneyland — and without a partner, she’d negotiated a second for her nanny. But on this day, she needed one for her sister, too, as she’d be taking Rhimes’ teenage daughter while the nanny chaperoned her younger two. If the passes had been interchangeable, Rhimes would have been happy to give up hers — when would she have time to go to Disneyland anyway?


Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. We currently have a vested interest in Netflix and Zoom Video Communications. Holdings are subject to change at any time.