A Few Things: Listening w/Galloway, Making Sense of Markets w/Damodaran, Understanding the Disorder, Macro Investing w/Scott Bessent, The Big Fail, Hidden Potential w/Adam Grant, Gold w/Idris Elba....
October 27, 2023
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
You can check out last week’s edition here: Finding Your Why, Fareed Zakaria on the Middle East, Iran's Role, Backlash on Climate Change, Material World, News and Charts You Missed, What's Next In AI and Crypto....
Believe it or not, that “♡ Like” button is a big deal, because it helps new readers understand if this is valuable and keeps me motivated.
This week’s edition is short but dense! I’ve been busy at work and with kids half term.
Quotes I Am Thinking About:
“Failure is the condiment that gives success its flavor.''
- Truman Capote
“We must all suffer one of two things: the pain of discipline or the pain of regret or disappointment.”
- Jim Rohn
“The two most important days in your life are the day you’re born and the day you find out why."
- Mark Twain
“It is almost always better to be too early than too late, but you must be prepared for price markdowns on what you buy.”
- Seth Klarman
“We admire people at their peak. We don’t get to see the distance they’ve traveled.”
- Adam Grant
A. A Few Things Worth Checking Out:
1. Listening is an under-appreciated gift. When we truly listen to others - give them our full presence and attention - we show them respect and care. This builds loyalty and connection.
To be a good leader, we must learn to listen first, speak last. Ask questions before asserting opinions. Lead with curiosity, not just confidence. Listen to understand, not just reply. This will earn others' trust and appreciation.
Likewise in our personal relationships, listening without judging or fixing shows love. When people are hurting, they often just need someone to hear them, fully. This is the greatest comfort we can offer.
Listening takes patience, presence and care. It builds bonds of loyalty and understanding. In a fragmented world, listening is an act of love. It reminds us of our shared humanity.
Even more relevant now than ever.
2. Invest Like the Best had Prof. Aswath Damodaran, the Godfather of Valuation to Make Sense of the Market. This conversation is worth listening to twice.
Key bits and good tweet summary.
(00:02:45) - (First question) - The general prevailing narrative in markets today
(00:05:00) - The biggest business implications given the current market landscape
(00:09:55) - His updated view and thoughts on what’s currently driving inflation
(00:13:35) - Macro variables that most have his attention today
(00:23:25) - His take on the new wave of AI in a broad sense
(00:29:15) - Trying to value AI companies without tangible business models
(00:35:55) - Commonalities between investors who beat the benchmark
(00:53:45) - The best business models he’s ever seen
(00:58:55) - The most interesting company he valued over the last year
(01:06:15) - The changing attitude towards ESG investing
(01:15:53) - What he’s most excited to look into over the coming year
3. As Israel and Ukraine struggle for survival, a newer “axis of ill will”—formed by Russia, China and Iran—sows discord around the globe.
Stephen Kotkin, the Hoover Institution’s Kleinheinz Senior Fellow and a vaunted historian, joins Hoover senior fellows Niall Ferguson and John Cochrane on the Hoover Institute’s podcast to assess options abroad and parallels to the past: Understanding the New World (Dis)Order.
4. The Money Maze podcast had Scott Bessent. Scott was a key player on the George Soros team, who in 1992 helped the Quantum Fund make $1bn, shorting sterling ahead of the UK’s withdrawal from the ERM. As Soros’s CIO, he was also dubbed ‘The Man Who Broke the Bank of Japan’ by the Wall Street Journal after making approximately $3.5bn on the Abenomics trade from 2012-2015.
Scott is widely acknowledged to be one of the world’s most highly respected macro hedge fund managers, and currently runs Key Square Capital Management. He has also taught financial history at Yale and is a prominent philanthropist.
Scott explains the key ingredients in being a macro manager. He opines on a range of key investment themes, including his thoughts on de-dollarisation, debt, commodities, the Ukraine rebuild, and AI. He also shares his analysis of the fast-evolving markets in both China and Japan.
Scott goes on to discuss risk, when and how he sizes positions, signposts that influence conviction, and dealing with information overload.
Another one to listen to more than once!
5. Bethany McLean is an American journalist and author. She is well known for her writing on the Enron scandal and the 2008 financial crisis, both of those books were written with Joe Nocera, as his her latest: The Big Fail.
In this hard-hitting book, they indict America's disastrous pandemic response. They reveal how flaws in capitalism left the U.S. unprepared, with supply chain failures, economic turmoil, and privatized healthcare leading to the world's highest COVID death toll. The authors compare the failed leadership of Cuomo and DeSantis while the elite escaped unscathed. A damning account of catastrophe that exposes how American capitalism jumped the rails.
6. Adam Grant has been making the rounds discussing his new book, Hidden Potential.
7. Gavekal had a piece titled: Migration, Energy And Climate Change. The average American consumes 10 times as much energy as the average Indian.
It asks, over the coming decade, what is most likely?
Western countries accept that they should bring down their energy consumption to the levels of poor countries. This seems unlikely.
People from poor countries move in large numbers to rich countries in
search of the lifestyles visible to them through social media, generating
greater-than-planned-for demand for energy. Consider Texas. With each
power outage, politicians from left and right hammer ERCOT, the state’s
grid operator, for its incompetence. But perhaps if Texas did not have to
accommodate an estimated 1.7mn illegal immigrants, planning for the
state’s electricity needs would not be so fraught with difficulty?
Energy demand in poor countries continues to grow, closing the gap with
rich-country demand. This seems likely.
These three scenarios are not mutually exclusive. Although in the case of the third scenario, we may be looking at an increasingly rapid acceleration in developing world demand growth.
In past decades, the scope for a poor country to consume energy was constrained by its ability to acquire US dollars to purchase oil or the turbines, nuclear reactors, dams and solar panels needed to generate electricity. The last few years have upended this. If China builds your power grid on credit, your energy use is less constrained by your need for US dollars. The prospects for mass migration upend demographic forecasts for the West.
The piece concludes: given the ability of many countries to buy energy in their own currencies, perhaps the “high price” that cures high prices will prove to be higher than in previous cycles?
8. Gold: A Journey with Idris Elba. The film explores the varied and often surprising ways in which gold and the societies it is part of have transformed over time.
The journey traces the human story of gold—and discover why the element’s contributions remain crucial to our evolution.
B. Byron Wien’s 20 Life Lessons
Byron Wien died this week. He was a legend on Wall Street and I’m thankful to have met him and got a signed copy of his 20 Life Lessons. I re-read them a few times a year, and they continue to help me. I hope you will find as much wisdom and advice in them as I do.
My favourite three:
When you meet someone new, treat that person as a friend. Assume he or she is a winner and will become a positive force in your life. Most people wait for others to prove their value. Give them the benefit of the doubt from the start. Occasionally you will be disappointed, but your network will broaden rapidly if you follow this path.
Don’t try to be better than your competitors, try to be different. There is always going to be someone smarter than you, but there may not be someone who is more imaginative.
Every year, try doing something you have never done before that is totally out of your comfort zone. It could be running a marathon, attending a conference that interests you on an off-beat subject that will be populated by people very different from your usual circle of associates and friends, or traveling to an obscure destination alone. This will add to the essential process of self-discovery.
We will miss you Byron.
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Have a great weekend.