The Fall Of Neil Woodford
His dramatic downfall is about more than a high-powered financier who lost his midas touch. It is a tale of hubris, obstinate conviction and misplaced loyalty. It exposes the flaws of a timid regulator and an industry in thrall to its star performers.
Money and Happiness
CLAY COCKRELL has an unusual job. He describes himself as a psychotherapist treating the “1% of the 1%” in New York City. From this vantage point, Cockrell has gained unique insights into the lives of the extremely wealthy. What conclusions does he draw about money and happiness? “If you have an enemy,” Cockrell says, “go buy them a lottery ticket because, on the off-chance that they win, their life is going to be really messed up.”
1. Money does indeed buy happiness—but to a limited extent. If you earn $40,000, you’ll definitely feel happier if you get a raise. But those benefits top out more quickly than you might expect—at around $75,000. People who earn $500,000 are indeed happier than those who earn $50,000, but not 10 times happier. The same applies to retirees: Those with $1 million in the bank are certainly happier than those with $100,000, but the happiness benefits aren’t proportional to the sum involved
Active vs Passive
The reality is that over the past ten years the average actively managed fund in the IA Global sector (which includes around 300 funds) has failed to keep up with its MSCI World index benchmark, while also underperforming their relative ETFs and passive index trackers
The efficiency of the market and access to information is making it harder for fund managers to outperform their passive counterparts.
How People Get It Wrong (what was said about facebook pre IPO)
Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do.
Negative Interest Rates:
Carlos: The money has arrived. What should I do with it between now and Monday?
HM: Put it in the bank.
Carlos: You know that means you’ll get less out on Monday than you put in today.
HM: Okay, then don’t put it in the bank.
Carlos: You have to put it in the bank.
HM: So put it in the bank.
The Journey To $200 Billion
Time it took to reach US$200 billion in annual revenue:
- Exxon Mobil: 128 years
- Toyota: 69 years
- Apple: 39 years
- Walmart: 36 years
- Amazon: 24 years
(Numbers are inflation adjusted)
Questions to ask before starting a business:
- Are you ready to fully own the ambiguity of a new initiative?
- Is your spouse fully on board?
- How will you accelerate the process of building trust with new partners?
- How will you protect the climate within your skull?
- How are you going to source enough good ideas?
- What are you compulsive about? Is it possible to put that at the center of the platform’s activity?
- Are you really focusing on what you’re going to value over the long term?
..you don’t win by predicting the future; you win by getting the odds right. You can be right about the future and still not make any money. At the racetrack, for example, the favorite horse may be the one most likely to win, but since everyone wants to bet on the favorite, how likely is it that betting on the favorite will make you money? The horse to bet on is the one more likely to win than most people expect. That’s the one that gives you the best odds. That’s the bet that pays off over time.