Playing An Infinite Game, The US Dollar, Amazon's Profits...

September 10, 2020

Sep 10, 2020

“Between stimulus and response there is a space. In that space is your power to choose your response. In your response lies your growth and your freedom.”

– Victor Frankl

“The best time to make friends is before you need them”

- Ethel Barrymore

“When I was young I observed that nine out of every ten things I did were failures, so I did ten times more work.”

- George Bernard Shaw

A. Playing an Infinite Game

Simon Sinek is most well known for his TED talk that sparked his book - Start With Why (43 million views and 3rd most viewed ever). Highly recommended.

His new book is called The Infinite Game. It takes the idea that James Carse first wrote about in the 80's in his book: Finite and Infinite Games.

In finite games, like football or chess, the players are known, the rules are fixed, and the endpoint is clear. The winners and losers are easily identified. In infinite games, like business or politics or life itself, the players come and go, the rules are changeable, and there is no defined endpoint.

The book focuses on an interesting idea: what is winning when it comes to the most interesting ideas in our life. Winning in business / career, winning in our relationships, winning in life. What does winning - which imply a zero sum, finite mind set imply for the most important things in our lives.

The book really is a discussion about Buffett's inner vs outer score card. So much of what is broken today is because we approach life as a finite game, even though it is an infinite game.

You do not win LIFE.

In Simon’s opinion, if you have a inner score card, what really matters is:

1. Is my daily work aligned with my long term values and vision ? Do you know your long term vision and values ?

2. Who am I helping today ?

3. Who am I competing with daily - the right competition is who you were yesterday?

4. What are you getting better at every day? Is it an infinite / perpetual goal that you can keep striving towards ?

It was a good reminder to myself to keep playing the infinite game and not get stressed about rankings and short term goals.

B. The US Dollar

So many investments are predicated on the direction of the US Dollar.

The Dollar’s position as the global reserve currency rests on geopolitical and macroeconomic foundation.

For now the US remains the global hegemon, but its relative power is eroding.
The following charts from Marko Papic @ The Clocktower Group stood out. We are going to be doing an event with him in November, so reach out if you’d like an invite.

The allocation to USD is going down, while the allocation to Gold is going up and Gold continues to become a large % of the reserves of China and Russia.

Speaking to clients, I would say 70% of them already have 8-10% of their assets in Physical Gold Bullion.

For many decades, America has been, for the most part, a global hegemon. It has served the twin functions of the consumer of last resort and policeman of last resort for the world.

A trend that cannot continue forever, eventually stops.

While slowing down for the last ten years, Trump has really tried to put a stop to this. This has huge implications for geo-politics.

I’m on the look out for more global conflicts as the US Navy withdraws from its policeman role.

Coming back to the US, Millennials are now the median voter.

This has happened at a time when there is deep malaise affecting Millennials in the US. Income inequality in the US is now expressed generationally, which augurs a strong political reaction against it.

The term Marko Papic uses for the political transition we are going through is a move from the Washington Consensus –laissez-faireeconomic policies –towards a Buenos Aires Consensus –populism akin to Argentina.

Gone are the prudent fiscal and monetary policy. What replaces them is effectively MMT.

Notice how today is different from 2008/2009?

Worth watching Marko’s interview with Mike Green if you want to go deeper here.

C. A Few Things Worth Checking Out:

1. People argue about Amazon a lot, and one of the most common and long-running arguments is about profits. The sales keep going up, and it takes a larger and larger share of US retail every year (7-8% in 2019), but it never seems to make any money. What’s going on?

2. David Rubenstein of Carlyle talks leadership skills of Buffett, Gates, Oprah, and other moguls in his new book: How To Lead.