Investment Management

Failure Is An Opportunity The status quo is sticky. Incumbent politicians have reelection advantages, for example. The same is often true for the policies people vote into place. The reason is simple: change is hard. It takes effort and it introduces uncertainty. Big changes typically only occur in the face of a crisis. In Argentina’s case, its own repeated failures…

Yesterday the Fed cut the overnight rate by 50bps from 5.5% to 5%. This sets a pace and precedence for the last two meetings of 2024, Nov 7th and Dec 18th. Two more 50bp cuts would bring short term rates down to 4%. Two 25bp cuts would bring us to 4.5%. Mega cap tech has had the upper hand over…

Rates Next week the Fed will almost certainly issue its first rate cut, likely 25bps, which will bring the rate between 5-5.25%. There are many takes on historical rate cut precedence, what has happened to markets in the past during rate cut cycles, but I am going to focus on just a few variables that I think are important or…

Exponential Impact Investing philosophy and research invariably comes with a certain degree of mild and persistent anxiety. There’s always a fear that growth has topped out and can’t possibly go any further. It’s helpful to keep in mind that technological progress (human ingenuity) is the ultimate driver of continued growth regardless of where you might see slowing growth. GDP growth…

AI Ping Pong Is An Analogy DeepMind recently published a paper on a robot that uses AI, computer vision and an articulating arm to play competitive ping-pong against opponents of various skill levels. Here is a link to the videos. Two things stood out to me. First, they chose to build the robot using a fairly standard articulating robotic arm…

Keeping it short this week. Inflation Global shipping rates went parabolic during Covid (10x). Two years later those rates fell -90% snapping back to pre-Covid levels. After two years of normal prices, shipping rates have spiked once again up 5x compared to their historical norms. This is partly due to industry specific issues, but also heavily influenced by war, particularly…

Big Week By now you’ve probably seen many detailed recounts of the Japanese carry trade that rocked markets this week. Too many people put too much money into the same trade. The problem with overcrowded trades is there are always leveraged buyers who end up as forced sellers. That’s why panic selling looks so brutal, investors are unloading assets at…

Too much time is spent talking about price. Fundamentals are ultimately what drive equity prices higher over time. To say this another way, a company’s stock price can’t continue to rise unless it continues to be successful. The famous quote by Warren Buffett is, “In the short run, the market is a voting machine, but in the long run, it…

Cheap Solar Panels All market prices are fundamentally governed by supply and demand forces. The market for solar panels today is far oversupplied, and that’s creating serious financial instability for suppliers. Access to cheap energy is the bedrock of economic growth, so while this is problematic for the suppliers, it’s generally beneficial for everyone else. To add context, 80% of…