
Discover more from A Few Things....
A. On Markets:
Bloomberg put together a great overview of all the 2020 market predictions from the major shops. It’s searchable by asset and theme and a great way to see consensus around what the street is thinking.
The consensus will almost certainly be wrong. This year… the herd is calling for no recession, a muddle-through low growth economy, and very meager but positive returns in the stock market.
The site Visual Capitalist also put together a post aggregating a summary of popular 2020 predictions after analyzing over “100 articles, white papers, and interviews.”
Here’s a graphic they created showing Wall Street’s end of year predictions for the S&P. The average price target is for a gain of just 3.5% which makes it one of the smallest expected gains in 20-years according to Bloomberg.

Lastly this article shows the returns of the World’s Stock Markets from 1990 to 2019. Some interesting stats:
The S&P is up almost 10x in those 30 years, with the DAX a close second and Hang Seng third. Meanwhile, the NKY has managed a cumulative 1% return !
What about the next ten years and the next thirty years ? Where are the next 10x returns ?
B. On Asking Beautiful Questions
One of the life changing books I read a few years ago was “A More Beautiful Question” by Warren Berger.
The book is about asking more questions in our lives as a force for igniting change.
As the world becomes more complex and dynamic knowledge becomes a commodity. Answers are available everywhere.
We cannot compete with technology in storing answers. But when it comes to questioning we have the edge. Computers do not know how to ask questions. We humans have curiosity, creativity, divergent thinking skills, imagination, and judgement.
To use this effectively we need to ask questions.
If we think of questions and answers as stocks, the value of questions are going up and answers are coming down.

An average four year old girl in Britain asks around 390 questions a day. But as we age we stop asking questions. Our reading and writing skills go up but our questioning skills go down.
We stop questioning because in order to question we need to think. This requires some mental work. Our brain tries to find ways to reduce this work. One way to reduce the workload is to not question and accept everything around us and operate in an autopilot mode. Psychologist Daniel Kahneman refers to this as System 1 thinking.
In order to question we need to accept our ignorance. But our society punishes ignorance by labeling the ignorant as an idiot. In order to question we need to remain curious and engage our System 2 thinking.
I have a question for you ? (thanks to my friend Dylan Grice for reminding me of our conversation many months ago):
What Are You Compounding In Your Life?
Is this what you want to compound ?
C. Getting Lucky
A great conversation on the Knowledge Podcast between Jim Collins and Shane made me think about the role of luck in our lives.
One quote stands out:
People think about luck as kind of “what” luck but I’ve had great “who” luck in my life. And “who” luck is when you come across somebody who changes your trajectory or invests in you, bets on you, gives you guidance and key points."
What are all of us doing to bring more “Who” luck into our lives ?
And then Jim asks a great question - when you do get lucky, what’s your return on luck ? Do you maximize it or do you not ?
Here’s what they learned from looking at the role of luck in a company’s success.
A) It’s not that great companies were more lucky than companies that weren’t great.
B) It’s critical to minimize the impact of back luck - make sure negative black swans don’t kill the company.
C) When good luck does happen, great companies use it more than fully.
On (B), it made me think about Nassim Taleb’s book Anti-fragile, an idea that carries a lot of weight for planning your portfolio and your life.
The big idea is: think of the world as consisting of three types of people, investments, structures….Fragile, Resilient and Anti-fragile.
Fragile: Suffers from volatility, more downside than upside from volatility, mistakes are rare and large.
Resilient: Stays the same in volatility, indifferent to tranquility and volatility.
Anti-fragile: Grows and gets stronger from volatility, more upside than downside from volatility, seeks disorder, mistakes small and benign.
If you are really Anti-fragile then bad luck doesn’t kill you, it makes you stronger.
Which reminded me of these two quotes:
Survival is the only road to riches. Let me say that again: Survival is the only road to riches.
- Peter Bernstein in Against the Gods
The first step toward anti-fragility consists in first decreasing downside, rather than increasing upside; that is, by lowering exposure to negative Black Swans and letting natural anti-fragility work by itself.
- Nassim Taleb
A Few Things Worth Checking Out:
1. The importance of compounding and the ease by which it can be forgotten:
You are given the choice between two sums of money: one million dollars or a penny that will double every day for 30 days.
Which should you choose?
Here are a couple hints.
The penny that doubles daily would be worth $1.28 after the first week. After the second week, it would be worth $163.84. You will probably reason that the penny would be worth more than the one million dollars. (Why, otherwise, all the theatrics?) By just how much, though, might surprise you.
It turns out that after doubling 30 times, the penny would be worth $10,737,418.24! This is a terrific exercise because it highlights the not-so-obvious power of compound returns (in this case, the penny compounds at 100% for 30 periods).
I say not-so-obvious because you would have been better off taking the one million dollars until the 27th day. But in those final four days, the value of the penny increases from less than $700,000 to more than $10.7 million.
Patience and a long-term perspective are required to give the power of compounding an opportunity to do its magic. From this riddle, we may learn the importance of holding on so that we allow our investments to compound uninterrupted for long enough that the compounding effects we saw in days 27 to 30 have an opportunity to play out in our portfolios.
From this great Akre Capital article on the Art of Not Selling.
I often look at this Buffett data:

2. Former US Secretary of Defense Ash Carter discusses his views on key issues in US foreign policy and the role of technology and innovation in addressing America’s greatest national security challenges.
On the US-China relationship (12 min onwards): “We have been in a sustained competitive relationship with a Communist dictatorship for decades before. It was called the Soviet Union. But the difference was we didn’t trade with the Soviet Union…. We trade with China. We have abundant, voluminous trade with China. Everybody else trades with China. So you’ve got to think about this completely differently. And I’m afraid that our policymakers of all kinds, and our economists, for that matter, run around with two models in their head: cold war or free trade. Well, neither of them applies to this circumstance. So we need a new playbook.”
3. Three good things I’ve read on US-Iran & what comes next: a) 2013 New Yorker article on just who Soleimani is b) Peter Zeihan on what kind of fight does Iran want c) Geopolitical and Energy Implications of Qasem Soleimani's Death by Columbia University.
4. J.P. Morgan put out the Q1 2020 Guide To the Markets (great charts).
5. Twitter has been a huge source of learning and connection for me, and this tweetstorm was pretty mind-blowing.

Quotes I’m Thinking About:
Time magnifies the margin between success and failure. It will multiply whatever you feed it. Good habits make time your ally. Bad habits make time your enemy.
- James Clear
A man can be himself only so long as he is alone, and if he does not love solitude, he will not love freedom, for it is only when he is alone that he is really free.
- Arthur Schopenhauer