What I Have Been Reading – November 2019


Downsides Of Wealth

Being rich does come with some downsides, though. The first thing you are thinking reading that, is, “cry me a river”. That is one of the downsides. You are not allowed to complain about anything, ever. Since most people imagine being rich as nirvana, you are no longer allowed to have any human needs or frustrations in the public eye. Yet, you are still a human being, but most people don’t treat you like one.

businessinsider.com

 

ESG Portfolios

Eight of the 10 biggest U.S. sustainable funds are invested in oil-and-gas companies … One simple explanation: No asset manager wants to deliver subpar returns. Energy stocks have been a losing bet this year. But research from the Federal Reserve Board has shown U.S. recessions have often followed periods when oil prices have run up rapidly. During those times, energy shares have often been among the few sectors to reliably produce gains—making them an important group for asset managers.

wsj.com

 

A Case For Higher Dividends

We look around us and imagine that today’s largest corporations will always be with us, but that simply isn’t the case. That brings me to my second key point: We should want companies to return cash to shareholders—and preferably lots of it.

Humbledollar

 

Passion Leads To Discoveries

The paths that lead to new ideas tend to look unpromising. If they looked promising, other people would already have explored them. How do the people who do great work discover these paths that others overlook? The popular story is that they simply have better vision: because they’re so talented, they see paths that others miss. But if you look at the way great discoveries are made, that’s not what happens. Darwin didn’t pay closer attention to individual species than other people because he saw that this would lead to great discoveries, and they didn’t. He was just really, really interested in such things.

Paul Graham

 

Nobel Laureate Robet Shiller On Picking Winners

Q: Do you think of yourself as someone smart enough to pick winners in the stock market?

A: Well, I actually think I’m smart enough to pick winners. I’ve always believed in value investing. Some stocks just get talked about, and people pay all sorts of attention to them, and everyone wants to invest in them, and they bid the price up and they are no longer a good buy. Other stocks, they are boring. There is no news about them – they are making toilet paper or something like that – and their price gets too low. So as a matter of routine, you buy low-priced stocks and sell high-priced stocks

wsj.com

 

Cryptoqueen

Ruja Ignatova called herself the Cryptoqueen. She told people she had invented a cryptocurrency to rival Bitcoin, and persuaded them to invest billions.

OneCoin, Dr Ruja told the Wembley audience, was the “Bitcoin Killer”. “In two years, nobody will speak about Bitcoin any more!” she shouted.

All over the world, people were already investing their savings into OneCoin, hoping to be part of this new revolution. Documents leaked to the BBC show that British people spent almost €30m on OneCoin in the first six months of 2016, €2m of it in a single week – and the rate of investment could have increased after the Wembley extravaganza. Between August 2014 and March 2017 more than €4bn was invested in dozens of countries. From Pakistan to Brazil, from Hong Kong to Norway, from Canada to Yemen… even Palestine.

Dr Ruja was starting to spend her new fortune: buying multi-million-dollar properties in the Bulgarian capital, Sofia, and the Black Sea resort of Sozopol. In her downtime she would throw parties on her luxurious yacht The Davina.

BBC

 

Scams

Why are we being overrun by scams? Society’s signals for judging reputation and trustworthiness haven’t caught up with the changing tech. Even though we know better, we reflexively mistake Instagram for reality — online influence is seen as a proxy for real-world authenticity, and so we are constantly falling under the sway of people who’ve found ways to game the digital realm. On your phone, the Fyre Festival looks irresistible.

nytimes.com

 

We Are Wired To Be Gullible

In a forthcoming book, “Duped”, Mr Levine argues that evolutionary pressures have adapted people to assume that others are telling the truth. Most communication by most people is truthful most of the time, so a presumption of honesty is usually justified and is necessary to keep communication efficient. If you checked everything you were told from first principles, it would become impossible to talk. Humans are hard-wired to assume that what they hear is true—and therefore, says Mr Levine, “hard-wired to be duped”.

economist.com

 

Social Media

One way to understand the impact of these public social networks on humanity is to think of this as the era in which humans took their personal thoughts and lives public at scale. Billions of humans IPO’d, whether we were ready for it or not, explaining why the concept of a personal “brand” became such a pervasive metaphor.

In another era, most of us lived in social circles of limited scope. Family, school, coworkers, neighbors. We were, for the most part, private entities. Social media companies quickly hit on the ideal configuration for rapid network growth: take the interaction between any two people and make it public. Conversation and information-sharing became a democratic form of performance art.

eugenewei.com

 

The Risks Of Index Funds

Michael Burry, the hedge fund legend whose prescient bets on the subprime mortgage crisis led to a silver screen depiction by Christian Bale in “The Big Short,” has earned respect.

Recently, Burry stated publicly that he sees the frenzy around passive investing as another dangerous bubble, and that when the massive inflows eventually reverse, “it will be ugly.”

“The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies – these do not require the security-level analysis that is required for true price discovery,” Burry said in a recent interview with Bloomberg.

usnews