A Few Things: Marko Papic, Bridgewater on Regime Change, TIME's Influential List, Adam Grant on Think Again
June 3, 2022
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
Alan Kay on the value of looking at old things in a new way:
"A change in perspective is worth 80 IQ points."
“Thankfully, persistence is a great substitute for talent.”
“The man who while he gives thinks of what he will get in return, deserves to be deceived.”
“Always pay it forward. And don’t keep count.”
Augusta F. Kantra:
“Discipline is just choosing between what you want now and what you want most.”
A. A Few Things Worth Checking Out
1. My friend and favourite market strategist Marko Papic was on the Market Huddle podcast sharing his latest view on Macro, where he thinks China will be slow till at least September and he had some surprising thoughts on regime change in Russia and Turkey.
2. Bridgewater’s Greg Jensen was on Odd Lots a couple of weeks ago laying out the case for a regime change.
The entire interview is worth a listen but the general idea is we could be entering a period of de-globalization, higher government spending, higher real interest rates and higher inflation.
Jensen’s conclusion was that in this type of environment, financial assets like stocks and bonds will struggle, possibly for an extended period of time. I’m not smart enough to predict regime changes in the economy. There are simply too many variables at play.
But it is true that recessions tend to change the winners and losers in the markets historically speaking. And it’s not out of the question for the markets to struggle for years at a time.
Sometimes a good idea is simple diversification:
3. In this Hidden Forces episode Demetri spoke to Daniel Peris about regime change and the phase shift to a world of dividends as a source of returns, which has fallen out of favour with investors over the last 30 years, and why dividend-paying securities are positioned to outperform some of their more growth-oriented, cashless competitors in the next 30.
Dividends are something this market hasn’t rewarded in two decades where the focus has been on share buybacks and growth at any cost.
The episode helps reimagine what is possible for your portfolios and how to manage them in a stagflationary global economy characterised by rising risk rates and persistently higher levels of financial volatility.
4. TIME on the 100 Most Influential People of 2022. Consists of short essays written by someone who knows them well.
Disclaimer: This is NOT RESEARCH (certainly not “substantive”) or any kind of INVESTMENT RECOMMENDATION. Just my personal weekly views for fellow financial professional.
B. Think Again
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn. ”
- Alvin Toffler
“It is not the strongest of the species that survives, not the most intelligent that survives. It is the one that is most adaptable to change”
- Often attributed to Charles Darwin
I am fan of Adam Grant, and Think Again is his 3rd book (he co-authored Plan B with Sheryl Sandberg). For those of you new to him, his prior books were Give and Take, and The Originals.
The big idea behind the book (from the inside cover): Intelligence is usually seen as the ability to think and learn, but in a rapidly changing world, the most crucial skill may be the ability to rethink and unlearn.
Recent global and political changes have forced many of us to re-evaluate our opinions and decisions. Yet we often still favour the comfort of conviction over the discomfort of doubt, and prefer opinions that make us feel good, instead of ideas that make us think hard.
The brighter we are, the blinder we can become to our own limitations.
The book is split into three sections:
Individual Rethinking: Updating our own views
Interpersonal Rethinking: Opening other people’s minds
Collective Rethinking: Creating communities of lifelong learners
When it comes to your own Rethinking, Adam outlines two cycles of thinking:
Which reminds me of this New Yorker cartoon - how often has this happened to you?
Some of this can be attributed to the now well-known Dunning-Kruger trap. Something I only learnt about in 2019 from WaitButWhy.
Step 1 on the road to thinking better is to be honest about what you really know.
A trick that helps is to focus on finding out what you don’t know vs fixating on knowing, another trick is separating your opinions from your identity.
Ray Dalio said in Principles:
“If you don’t look back at yourself and think, ‘Wow, how stupid I was a year ago,’ then you must not have learned much in the last year.”
The book gets even more interesting when it goes through how to help open other people’s minds, something I’m sure we all true to do ;-)
Adam presents some interesting work done by Neil Rackham in looking at what skilled negotiators do differently to average negotiators.
The big ideas when you want to convince someone are:
Find common ground early and often
Focus on the best reasons, quality not quantity
Ask questions, seek to honestly understand the other side
Questions are critical, because they help you understand the other side, but they also help them understand their own thinking.
After all people are more likely to convince themselves, then to be convinced by you.
This was a useful picture:
Top Tips for Individual Rethinking:
Think like a Scientist
Define your identity in terms of your values, not your opinions
Seek out information that goes against your views
Embrace the joy of being wrong
Learn something new from each person you meet
Build a challenge network, not just a support network.
When thinking about your life, here is a good way to re-think your past and future:
Katherine May on Seasons of Life:
"We are in the habit of imagining our lives to be linear, a long march from birth to death in which we mass our powers, only to surrender them again, all the while slowly losing our youthful beauty. This is a brutal untruth. Life meanders like a path through the woods. We have seasons when we flourish and seasons when the leaves fall from us, revealing our bare bones. Given time, they grow again."
or maybe better said by Helen Mirren:
This week’s email will be short since I’m on break with the family in Paris.