A Few Things: Marko Papic's Latest, Tudor Corp on AI, Primer on Multi-Strategy Hedge Funds, Generations, Latin American Technology, ChatGPT Explained, Foundation....

September 5 2023

Hi, I’m Ahmed Husain, feel free to connect here on LinkedIn or here on Twitter. Every week, I share my view on developments across markets, technology and being a better human. I advise and work with global family offices and investors looking to understand the world and find investment opportunities.

You can check out last week’s edition here: What’s Really Happening in China, Deciphering Geopolitical Alpha, Secrets of Peak Performance, Generations, News You Might Have Missed, Investing in the AI Bubble?….

Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If it was helpful to you, if you got value out of reading it, please let others know.

This week’s edition is action packed.

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Quotes I Am Thinking About:

“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.”

- Michael Jordan

"Success is stumbling from failure to failure with no loss of enthusiasm.”

- Winston Churchill

"If you wish to be out front, then act as if you were behind."

- Lao Tzu

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A. A Few Things Worth Checking Out:

1. Marko Papic and team at Clocktower Group shared their latest market analysis.

Key views on markets:

Key views on US election:

2. Listened to this podcast twice. Meb Faber spoke to Ulrike Hoffmann-Burchardi is a Portfolio Manager at Tudor Investment Corporation where she oversees a global equity portfolio inside Tudor’s flagship fund focusing on Digital, Data & Disruptive Innovation.

She shared lessons learned over the past 25 years and then dove into topics everyone is talking about today: data, AI, large language models. She shares how she sees investment teams incorporating AI and LLMs into their investing process in the future, her view of the macro landscape, and finally what areas of the market she likes today.

3. If you are curious about firms like Balyasny, Citadel and Millennium, Invest Like the Best spoke to Will England at Walleye Capital on - A Primer on Multi-Strategy Hedge Funds.

They covered the mechanics and complexity behind the multi-strategy model, the importance of finding managers with aligned incentives, and how to instill a culture of performance at a firm.

4. Question for you: I’ve been watching movies from the 80’s and 90’s with my 10 and 12 year old. One that they were most impressed with was Dead Poets Society.

What have you watched from your childhood with your kids, that they loved?

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B. Generations (continued):

Dr Jean Twenge is a psychologist, Professor of Psychology at San Diego State University, generational researcher and an author.

Each generation tends to view themselves as more refined than the one before them. But with Boomers, Millennials and Gen Z, something changed. Generations started to see life as easier in the past, less prosperous now and tougher to succeed.

Jean Twenge has spent a career working out just why modern groups believe this, and how true it is.

Last week we began the discussion on Jean Twenge’s Book Generations by outlining her theory about technology being the driver of generational differences.

This week, we’ll continue by discussing some of her predictions about the future that can arm us as investors and citizens.

The Future of Work:

1. Remote Work: WFH trend is here to stay. There is a generational shift away from the old BIC (“butt in chair”) model to one increasingly focused on results. This has implications for both office space and where people will choose to live. The future of work is both everywhere and nowhere.

2. Gen Z are not Millennials. Organisations will see a transition from the optimism, entitlement and self-confidence of Millennials to the pessimism, insecurity and doubt of Gen Z’s. They will need to more structure and direction, but the good news is that they are hard workers but do want to make friends at work.

3. Everything is political. Gen Z’s are more political and outspoken about their beliefs and they want their employers to take political positions.

4. Mental health. With depression on the rise among young people, companies will have to up their game when it comes to mental health. As Gen Z’ers rise in the workplace, managers will need to help channel their anxiety into productivity without dismissing it.

   

5. The flattening. Individualism has flattened the authority structure everywhere and flattened the org chart at work. Companies will have to adapt to more group-oriented structure, potentially with less top-down leadership.

The Future of Family:

The core issue here is Birth Rates: The US fertility rate is now 1.64, meaning each women on average is having less than 2 children, not enough to replace the population. As recently as 2008, this ratio was 2.1.

The theories for why birth rates will stay low are: (i) technology makes birth control possible, so having children becomes a choice (ii) Individualism (which we discussed last time) deemphasises family and tradition, which leads to fewer people choosing to have children (iii) The slow-life strategy (also discussed last week) means people wait to have children and have fewer of them.

Without huge immigration, this implies a population contraction and hence economic contraction. Another problem is retirement programs. In 2005, according to the Social Security Administration there were 3.3 workers for each retiree, in 2040 this will be 2.1.

Another problem is more lonely old people since fewer children means fewer relationships between siblings. This is also leading to more people treating their pets as members of the family.

With fewer children, school and college enrollment will decline. Fewer young people could mean less entrepreneurship and less innovation in the economy as youth is often the mother of invention.

The Future of the Economy:

Where and what do Millennials and Gen Z’s want to live and consume? It’s too early to say anything concrete, but this data that surprised me:

1 out of 4 married couples in the U.S. slept in different bedrooms. Couples sleeping apart will likely grow even more as younger Millennials and Gen Z’ers age. Individualism pulls for sleeping apart, and higher levels of anxiety and depression will mean higher levels of insomnia.

One growth market will be on products for pets, who are more and more considered part of the family. Think emotional support animals.

She spoke to Chris Williamson on the Modern Wisdom podcast about: Why Do Young People Seem So Fragile?

Key bits discussed:

07:18 Why Are So Many Young Girls Considering Suicide? 24:28 Managing the Rise of Addictive Technology 29:02 Why Gen-Z Take Less Risks 35:04 Young People’s Perspectives on Life 39:00 Why Women Are Having Less Kids 49:09 The Change in Education & Employment of Young People

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C. Latin American Technology and Venture

In July I visited Mexico City for the 1st time to begin to understand the country and to attend the AGM for a fund I’m invested in: Clocktower Venture’s Latin America Fintech Fund.

Thank you Camila Caso and Marc Gilly for all their advice.

I learnt a ton and Ben Savage at CTV and Julio Vasconcellos at Atlantico were great teachers about investing in the region.

Latin America's +600m population reveals a massive market teeming with opportunities for disruption. Central to this $6T USD economic block are powerhouses Brazil and Mexico, representing 58% of the total GDP of the region.

The continent seems to be at an inflection point. In the US about 60% of public market capitalisation is made up of technology companies but in Latin America that proportion is only 1.8%.

Latin America is about 10-15 years behind where China is, which is itself about 5-7 years behind where the US is. There is a ton of catch-up that will happen over the next couple decades and that presents a huge opportunity.

While LatAm has seen a smaller proportion of VC funding relative to its GDP compared to other emerging regions, it has achieved notable success for its investors.

If you’d like to go deeper into the Latin American Technology and Venture Capital scene Julio at Atlantico publishes this amazing annual report and was on the Village Global podcast last week discussing it.

This twitter thread summarises the key ideas in the report.

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D. The Technology Section:

1. Love these bite sized videos explaining AI and ChatGPT at its most simple level by those who created it:

Does AI have true Creativity and Imagination:

Much more here.

2. I’m finding science fiction a great tool to think creatively about the future. Especially when it’s Isaac Asimov.

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Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If it was helpful to you, if you got value out of reading it, please let others know.