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We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 29 August 2021:

1. What I Learned While Eavesdropping on the Taliban – Ian Fritz

When people ask me what I did in Afghanistan, I tell them that I hung out in planes and listened to the Taliban. My job was to provide “threat warning” to allied forces, and so I spent most of my time trying to discern the Taliban’s plans. Before I started, I was cautioned that I would hear terrible things, and I most certainly did. But when you listen to people for hundreds of hours—even people who are trying to kill your friends—you hear ordinary things as well…

…In 2011, about 20 people in the world were trained to do the job I did. Technically, only two people had the exact training I had. We had been formally trained in Dari and Pashto, the two main languages spoken in Afghanistan, and then assigned to receive specialized training to become linguists aboard Air Force Special Operations Command aircraft. AFSOC had about a dozen types of aircraft, but I flew solely on gunships. These aircraft differ in their specifics, but they are all cargo planes that have been outfitted with various levels of weaponry that range in destructive capability. Some could damage a car at most; others could destroy a building. In Afghanistan, we used these weapons against people, and my job was to help decide which people. This is the non-euphemistic definition of providing threat warning.

I flew 99 combat missions for a total of 600 hours. Maybe 20 of those missions and 50 of those hours involved actual firefights. Probably another 100 hours featured bad guys discussing their nefarious plans, or what we called “usable intelligence.” But the rest of the time, they were just talking, and I was just eavesdropping.

Besides making jokes about jihad, they talked about many of the same things you and your neighbors talk about: lunch plans, neighborhood gossip, shitty road conditions, how the weather isn’t conforming to your exact desires. There was infighting, name-calling, generalized whining. They daydreamed about the future, made plans for when the Americans would leave, and reveled in the idea of retaking their country…

…All this bullshitting flowed naturally into the Taliban’s other great verbal talent, the pep talk. No sales meeting, movie set, or locker room has ever seen the level of hyper-enthusiastic preparation that the Taliban demonstrated before, during, and after every battle. Maybe it was because they were well practiced, having been at war for the majority of their lives. Maybe it was because they genuinely believed in the sanctity of their mission. But the more I listened to them, the more I understood that this perpetual peacocking was something they had to do in order to keep fighting.

How else would they continue to battle an enemy that doesn’t think twice about using bombs designed for buildings against individual men? This isn’t an exaggeration. Days before my 22nd birthday, I watched fighter jets drop 500-pound bombs into the middle of a battle, turning 20 men into dust. As I took in the new landscape, full of craters instead of people, there was a lull in the noise, and I thought, Surely now we’ve killed enough of them. We hadn’t.

When two more attack helicopters arrived, I heard them yelling, “Keep shooting. They will retreat!”

As we continued our attack, they repeated, “Brothers, we are winning. This is a glorious day.”

And as I watched six Americans die, what felt like 20 Taliban rejoiced in my ears, “Waaaaallahu akbar, they’re dying!”

It didn’t matter that they were unarmored men, with 30-year-old guns, fighting against gunships, fighter jets, helicopters, and a far-better-equipped ground team. It also didn’t matter that 100 of them died that day. Through all that noise, the sounds of bombs and bullets exploding behind them, their fellow fighters being killed, the Taliban kept their spirits high, kept encouraging one another, kept insisting that not only were they winning, but that they’d get us again—even better—next time.

2. Cancer patients’ own cells used in 3D printed tumours to test treatments – Rami Ayyub, Rami Amichay and Rinat Harash

The scientists extract “a chunk” of the tumour from the brain of a patient with glioblastoma – an aggressive cancer with a very poor prognosis – and use it to print a model matching their MRI scans, said Professor Ronit Satchi-Fainaro, who led the research at Tel Aviv University.

The patient’s blood is then pumped through the printed tumour, made with a compound that mimics the brain, followed by a drug or therapeutic treatment.

While previous research has used such “bioprinting” to simulate cancer environments, the Tel Aviv University researchers say they are the first to print a “viable” tumour.

“We have about two weeks (to) test all the different therapies that we would like to evaluate (on) that specific tumour, and get back with an answer – which treatment is predicted to be the best fit,” Satchi-Fainaro said.

A treatment is deemed promising if the printed tumour shrinks or if it lowers metabolic activity against control groups.

3. Mike Maples Jr. – A Playbook for Startups – Patrick O’Shaughnessy and Mike Maples Jr.

Patrick: [00:03:09] So Mike, I’ve been really looking forward to this one since our first conversation. I like to dive right in. We’ll get to your fascinating history and all the things you’ve done, but I like to start with ideas. One of the ideas that really struck me when we talked last was this notion of forcing a choice and the power of forcing a choice in business. Can you explain in detail what you mean by this and why it’s so powerful?

Mike: [00:03:29] I like to say that there’s two fundamental fields of business that are animating the economy. There are scalable corporations, and then there are scalable startups. And a scalable startup only has one opportunity to succeed. And that is if they offer a choice in the direction towards a different future. People don’t want something incrementally better from a startup, because human beings are conditioned to like things. And if you’re too much like what they already know, there’s not room in their head to believe that you can credibly do a better job than a very large incumbent as a startup.

So what a startup needs to do is offer a choice of a different future. So if everybody in the world is selling bananas, you don’t come in and say, I have 10 times better banana, you say I’m the world’s first apple. You may not want my apple, that’s okay, but you can’t reconcile an apple and a banana. The set of people who value the advantage of apples, a hundred percent of them should flock to your apple. To me, a startup that creates a breakthrough has to force that choice because they’re trying to create a movement. They’re trying to move people to a different future of their design. People don’t move because of a comparison, they move because they see something radically different, not incrementally better.

Patrick: [00:04:43] How do you decide what might be an apple? I mean, it’s obvious when you use the fruits as examples versus like a much tastier, more ripe banana or something like that. But how do you know, you’ve done this a lot, you’ve got a million reps, when you find a team or something really early that might have that apple quality?

Mike: [00:05:00] So I’d say that there’s really two markers. At a high level, the markers are inflections, which lead to breakthrough secrets about the future. And then there’s teams that assemble in a collaborative structure that’s different from a typical corporate organization. If we take the first part, inflections, an inflection is a sea change that creates the opportunity to create a breakthrough that changes the subject of the future and changes the way we, the people, think and act. What are some examples of inflections? Lyft, a company we invested in. GPS locators got bundled in with smartphones. And so another inflection was that smartphone adoption, we believed was going to go from 10% to greater than 50%. And so you say, hmm, if you marry those inflections, you could envision a world where in the near future, lots of people would have smartphones that can find each other.

And so then you could imagine applying the ideas of Airbnb and the sharing economy to cars. To me, that’s the first step. And this is the step that a lot of people skip. I call it insight development. In insight development, you use a technique We call backcasting to identify a secret that will lead to a different future. That will be a breakthrough different future. And then after that, you iterate that insight to product market fit, using techniques like customer development and others. And then after that, you do growth hack. So there’s this breakthrough sequence. There’s the insight breakthrough, the product breakthrough, then the growth breakthrough.

And so you need a team that’s able to do that, because a secret about the future, it reminds me of the movie, Ocean’s Eleven. It’s not enough that you just know that there’s money in the Bellagio safe, you have to rob it. These breakthrough movements, you have to have the courage to be disliked. You’re making people uncomfortable. You’re getting people out of their comfort zones. You’re selling people the way you think of the world now is about to be replaced by radically different way of thinking about the world.

And so as a result, the reason I liked the metaphor of Ocean’s Eleven is you’ve got the guy that can pick the safe and you got the acrobat. You have the person that cuts the lights in Vegas. You have the person that drives the SWAT van. You have George Clooney masterminding it all. Startup teams are a lot more like that. The great startup teams are engaging in an optimistic conspiracy theory to change the future, and so they need people that are different from a traditional org chart. They need people that are going to take out the critical risks that exist between them right now, and that different future that they want to design.

4. The Semiconductor Heist Of The Century | Arm China Has Gone Completely Rogue, Operating As An Independent Company With Inhouse IP/R&D – Dylan Patel

Arm is widely regarded as the most important semiconductor IP firm. Their IP ships in billions of new chips every year from phones, cars, microcontrollers, Amazon servers, and even Intel’s latest IPU. Originally it was a British owned and headquartered company, but SoftBank acquired the firm in 2016. They proceeded to plow money into Arm Holdings to develop deep pushes into the internet of things, automotive, and server. Part of their push was also to go hard into China and become the dominant CPU supplier in all segments of the market.

As part of the emphasis on the Chinese market, SoftBank succumbed to pressure and formed a joint venture. In the new joint venture, Arm Holdings, the SoftBank subsidiary sold a 51% stake of the company to a consortium of Chinese investors for paltry $775M. This venture has the exclusive right to license Arm’s IP within China. Within 2 years, the venture went rogue. Recently, they gave a presentation to the industry about rebranding, developing their own IP, and striking their own independently operated path.

This firm is called “安谋科技”, and is not part of Arm Holdings.

Before we get to the event they held and the significance of it, let’s do a recap. In 2020, Arm and a handful of the investors agreed to oust Allen Wu, the CEO of Arm China. He was ousted for using his position as the CEO of Arm to attract investments in his own firm, Alphatecture…

…Removing Allen Wu has proven to be very difficult. Despite a 7-1 vote by the Arm China board, the company seal was still held by Allen Wu. In China, the seal is a stamp which authorizes the person in possession to bind a company and its representatives with rights and obligations. Retrieving this seal and the business license would be a multiyear drawn-out legal process. Furthermore, it would mean at least some investors besides Arm must be along for the ride. The Chinese court system would need to agree with ousting an executive in favor of one that was hand selected by western influencers.

5. What is China’s common-prosperity strategy that calls for an even distribution of wealth? – Andrew Mullen

Chinese economists were quick to move to ease fears that China’s drive for common prosperity signals aggressive policies are afoot that will seize money from the rich to close the country’s yawning wealth gap.

“Robbing the rich to give to the poor” would only result in “common poverty,” said Zhang Jun, dean of the School of Economics at Fudan University in Shanghai, in an interview with The Paper at the end of August.

“The prerequisite of common prosperity is that the pie must continue to get bigger,” he added.

Li Daokui, a former adviser to China’s central bank, also emphasised the campaign to help more people enjoy economic well-being was a long-term goal.

“It cannot be expected that progress on a variety of indicators be made in the short term, for example five years,” Li said in an interview with Phoenix Television.

“We must be vigilant against ‘common prosperity’ becoming a Great Leap Forward, a risky endeavour, or something that drags down economic development and affects efficiency.”

Li, now chief economist at the New Development Bank, said it was “harmful” to equate common prosperity with making everyone’s income equal, and emphasised the campaign should not be equated with the anti-monopoly crackdown.

6. Xi’s Dictatorship Threatens the Chinese State – George Soros

Relations between China and the U.S. are rapidly deteriorating and may lead to war. Mr. Xi has made clear that he intends to take possession of Taiwan within the next decade, and he is increasing China’s military capacity accordingly.

He also faces an important domestic hurdle in 2022, when he intends to break the established system of succession to remain president for life. He feels that he needs at least another decade to concentrate the power of the one-party state and its military in his own hands. He knows that his plan has many enemies, and he wants to make sure they won’t have the ability to resist him…

…Although I am no longer engaged in the financial markets, I used to be an active participant. I have also been actively engaged in China since 1984, when I introduced Communist Party reformers in China to their counterparts in my native Hungary. They learned a lot from each other, and I followed up by setting up foundations in both countries. That was the beginning of my career in what I call political philanthropy. My foundation in China was unique in being granted near-total independence. I closed it in 1989, after I learned it had come under the control of the Chinese government and just before the Tiananmen Square massacre. I resumed my active involvement in China in 2013 when Mr. Xi became the ruler, but this time as an outspoken opponent of what has since become a totalitarian regime.

I consider Mr. Xi the most dangerous enemy of open societies in the world. The Chinese people as a whole are among his victims, but domestic political opponents and religious and ethnic minorities suffer from his persecution much more. I find it particularly disturbing that so many Chinese people seem to find his social-credit surveillance system not only tolerable but attractive. It provides them social services free of charge and tells them how to stay out of trouble by not saying anything critical of Mr. Xi or his regime. If he could perfect the social-credit system and assure a steadily rising standard of living, his regime would become much more secure. But he is bound to run into difficulties on both counts.

To understand why, some historical background is necessary. Mr. Xi came to power in 2013, but he was the beneficiary of the bold reform agenda of his predecessor Deng Xiaoping, who had a very different concept of China’s place in the world. Deng realized that the West was much more developed and China had much to learn from it. Far from being diametrically opposed to the Western-dominated global system, Deng wanted China to rise within it. His approach worked wonders. China was accepted as a member of the World Trade Organization in 2001 with the privileges that come with the status of a less-developed country. China embarked on a period of unprecedented growth. It even dealt with the global financial crisis of 2007-08 better than the developed world.

Mr. Xi failed to understand how Deng achieved his success. He took it as a given and exploited it, but he harbored an intense personal resentment against Deng. He held Deng Xiaoping responsible for not honoring his father, Xi Zhongxun, and for removing the elder Xi from the Politburo in 1962. As a result, Xi Jinping grew up in the countryside in very difficult circumstances. He didn’t receive a proper education, never went abroad, and never learned a foreign language.

Xi Jinping devoted his life to undoing Deng’s influence on the development of China. His personal animosity toward Deng has played a large part in this, but other factors are equally important. He is intensely nationalistic and he wants China to become the dominant power in the world. He is also convinced that the Chinese Communist Party needs to be a Leninist party, willing to use its political and military power to impose its will. Xi Jinping strongly felt this was necessary to ensure that the Chinese Communist Party will be strong enough to impose the sacrifices needed to achieve his goal.

Mr. Xi realized that he needs to remain the undisputed ruler to accomplish what he considers his life’s mission. He doesn’t know how the financial markets operate, but he has a clear idea of what he has to do in 2022 to stay in power. He intends to overstep the term limits established by Deng, which governed the succession of Mr. Xi’s two predecessors, Hu Jintao and Jiang Zemin. Because many of the political class and business elite are liable to oppose Mr. Xi, he must prevent them from uniting against him. Thus, his first task is to bring to heel anyone who is rich enough to exercise independent power.

That process has been unfolding in the past year and reached a crescendo in recent weeks. It started with the sudden cancellation of a new issue by Alibaba’s Ant Group in November 2020 and the temporary disappearance of its former executive chairman, Jack Ma. Then came the disciplinary measures taken against Didi Chuxing after it floated an issue in New York in June 2021. It culminated with the banishment of three U.S.-financed tutoring companies, which had a much greater effect on international markets than Mr. Xi expected. Chinese financial authorities have tried to reassure markets but with little success.

Mr. Xi is engaged in a systematic campaign to remove or neutralize people who have amassed a fortune. His latest victim is Sun Dawu, a billionaire pig farmer. Mr. Sun has been sentenced to 18 years in prison and persuaded to “donate” the bulk of his wealth to charity.

7. Quantum Computing Startups Draw Record Investment – Sarah Krouse

Capital invested in global companies focused on quantum computing and technology—including initial public offerings, mergers and acquisitions, venture capital and private-equity fundraising—has reached $2.5 billion so far this year, according to financial data firm PitchBook. That’s up from $1.5 billion in all of 2020…

…While traditional computers use bits that store data as zeros or ones, quantum computing relies on quantum bits, or qubits, which can be a zero, a one or a combination of both at the same time. That increases the complexity of the computations quantum computers can handle. But qubits are extremely fragile and their surrounding environment can easily disrupt how they work, which makes them prone to errors.

Today’s quantum computers “are not yet at a scale that’s useful to solve problems,” said John Morton, founder and chief technology officer of Quantum Motion, said Tuesday at an industry webinar. Quantum Motion, run by academics from University College London and Oxford, focuses on using qubits based on the silicon in chips that currently power smartphones and laptops.

The startups drawing investment include those building quantum computers that rely on a range of materials and methodologies to help computers scale and become more accurate, as well as firms focused on components of quantum computers and quantum algorithms.

They include Atom Computing, which raised $15 million in July and is building scalable quantum computers out of atoms, and Palo Alto, Calif.–based PsiQuantum, which is working to build a commercially viable large-scale, error-corrected quantum computer.

Also among them is Quantum Generative Materials, a company seeking to use quantum computing technology to develop new materials for batteries and mining. It is partially owned by Comstock Mining, which in June said it was investing $15 million in an initial seed round.

The path to commercialization for quantum computing–focused companies is generally long, and many operate at a loss, betting that their research and development breakthroughs will deliver big payoffs longer term.

IonQ, a company developing quantum computers that announced plans earlier this year to go public via a special purpose acquisition company, revealed in regulatory filings that it has “incurred significant operating losses since inception” and expects to continue losing money for the foreseeable future. It lost $15.4 million in 2020 and said it is in the early stages of generating revenue from a quantum computer it makes available through cloud services like AWS, Google Cloud and Microsoft Azure. After the deal, which is expected to close later this year, IonQ “will be well capitalized, with the ability to fully fund its growth strategy and deliver on its business model—creating long-term value for shareholders,” a spokesperson said.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Alphabet (parent of Google Cloud), Amazon (parent of AWS), Microsoft (parent of Microsoft Azure). Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 22 August 2021:

1. 40 Things I Don’t Know by Age 40 – Ben Carlson

I turn 40 today.

I’ve seen lots of people share the wisdom they’ve gained over the years on their milestone birthdays.

I still have plenty of stuff to learn so here are 40 things I don’t know at age 40:

1. I don’t know why sports losses still put me in a bad mood. You don’t get to pick your sports allegiance as much as you’re born into it. I was born into a Michigan family. I love Michigan football.

I don’t watch sports nearly as much as I once did because little kids don’t have the patience for it but a bad loss (and there have been many) still stings.

It’s a horrible emotional investment yet all sports fans subject themselves to it.

Why do we care about this stuff so much?…

…6. I don’t know what took me so long to start eating healthy. Growing up I never watched what I ate. At all.

I played sports, lifted weights and had a relatively fast metabolism. Well, 2 out of those 3 dropped off as I got older.

I really overhauled my diet once twins were in the picture for us. I knew I was going to need more energy. I still eat junk food and carbs but typically only on the weekends or vacations.

The result is I feel healthier at age 40 than I did at age 30…

…11. I don’t know if the internet has been a net negative or positive on humanity. The internet has been a huge net positive for me personally. It’s changed the trajectory of my career. It’s allowed me to meet new friends, colleagues and business partners.

It’s given me the opportunity to work from West Michigan for a company headquartered in New York City. This would have been impossible 15-20 years ago.

For others, the internet has broken their brains or made their lives miserable.

The internet makes it far easier to communicate, do business, work and connect with people all around the globe.

It also makes it easier to compare yourselves to others, spread hate, troll and say things to others you wouldn’t dare say in normal life.

12. I don’t know what kind of person I’m going to be at age 60. In some ways, I’m the same as when I was 20. In other ways, I’m a completely different person.

Life is bizarre in that the older you get the more you feel like you’re done improving or changing yet it just keeps happening…

…19. I don’t know how much help you can actually provide as a parent when shaping your children. We have boy-girl twins. They have both grown up in the same household, with the same parenting at the exact same time.

Yet they couldn’t be more different, whether it’s their looks or personality or behavior.

Most of us would like to believe we’re shaping lives as parents but I wonder how much control we even have. I guess the best you can do is try to avoid teaching them the worst behaviors and support whoever they turn out to become.

2. Fusion experiment breaks record, blasts out 10 quadrillion watts of power – Tom Metcalfe

Scientists used an unconventional method of creating nuclear fusion to yield a record-breaking burst of energy of more than 10 quadrillion watts, by firing intense beams of light from the world’s largest lasers at a tiny pellet of hydrogen.

Researchers at the Lawrence Livermore National Laboratory in Northern California said they had focused 192 giant lasers at the National Ignition Facility (NIF) onto a pea-size pellet, resulting in the release of 1.3 megajoules of energy in 100 trillionths of a second — roughly 10% of the energy of the sunlight that hits Earth every moment, and about 70% of the energy that the pellet had absorbed from the lasers. The scientists hope one day to reach the break-even or “ignition” point of the pellet, where it gives off 100% or more energy than it absorbs.

The energy yield is significantly larger than the scientists expected and much greater than the previous record of 170 kilojoules they set in February…

…Modern nuclear power plants use nuclear fission, which generates energy by splitting the heavy nuclei of elements like uranium and plutonium into lighter nuclei. But stars can generate even more energy from nuclear fusion, a process of smashing together lighter nuclei to make heavier elements.

Stars can fuse many different elements, including carbon and oxygen, but their main energy source comes from the fusion of hydrogen into helium. Because stars are so large and have such strong gravity, the fusion process takes place at very high pressures within the star.

Most Earthbound efforts to generate energy from fusion, such as the giant ITER project being built in France, instead use a doughnut-shaped chamber called a tokamak to confine a thin plasma of hot, neutron-heavy hydrogen inside strong magnetic fields.

Scientists and engineers have worked for more than 60 years to achieve sustainable nuclear fusion within tokamaks, with only limited success. But some researchers think they will be able to sustain fusion in tokamaks within a few years, Live Science previously reported. (ITER is not projected to do this until after 2035.)

The method developed at Lawrence Livermore National Laboratory is one of a few ways of achieving nuclear fusion without using a tokamak.

Instead, the NFI uses an array of laser-light amplifiers the size of three football fields to focus laser beams on hydrogen fuel pellets in a 33-foot-wide (10 meters) spherical metal “target chamber.” These lasers are the world’s most powerful, capable of generating up to 4 megajoules of energy.

The method was originally designed so that scientists could study the behavior of hydrogen in thermonuclear weapons — so-called hydrogen bombs — but scientists think it could also have applications for generating energy from nuclear fusion.

3. The Metaverse is a Dystopian Nightmare. Let’s Build a Better Reality – John Hanke

As a society, we can hope that the world doesn’t devolve into the kind of place that drives sci-fi heroes to escape into a virtual one — or we can work to make sure that doesn’t happen. At Niantic, we choose the latter. We believe we can use technology to lean into the ‘reality’ of augmented reality — encouraging everyone, ourselves included, to stand up, walk outside, and connect with people and the world around us. This is what we humans are born to do, the result of two million years of human evolution, and as a result those are the things that make us the happiest. Technology should be used to make these core human experiences better — not to replace them.

Some might argue that we ought to ditch technology completely and return to a simpler way of life. But we don’t think that’s the answer either. Technology isn’t going away. The benefits of connecting us with information, friends, and family are simply too great. But over the last decades, those benefits have taken a huge toll, increasingly cutting us off from the experiences that we enjoy the most. It’s all too easy to get lulled into a routine of Zoom calls, online shopping, gaming, and scrolling through our social feeds. It encourages behavior toward one another that we would never tolerate in person, and is dividing our society by algorithmically pushing people into bubbles which reinforce the most extreme views.

At Niantic, we ask the question: what if technology could make us better? Could it nudge us get us off the couch and out for an evening stroll or a Saturday in the park? Could it draw us into public space and into contact with neighbors we might never have met? Could it give us a reason to call a friend, make plans with our families, or even discover brand new friends? Collectively, could it help us discover the magic, history, and beauty hiding in plain sight?

If this fresh perspective is the goal, what are we doing to achieve it? For us, it starts with a technology that connects the real world (the atoms) with the digital one (the bits). You could call it the ‘real world metaverse’ to distinguish it from the virtual videogame version, but honestly, I think we are just going to experience it as reality made better: one infused with data, information, services, and interactive creations. This has guided our work to date, both in terms of our first attempts to incorporate these concepts into products like Field Trip, Ingress, and Pokémon GO, and in terms of inventing critical technology to enable them. The core of this isn’t only the computer graphics challenge of adding annotations and animations to the physical world; it’s also — maybe even mainly — about the information, services, and experiences where digital meets physical.

Building the real world metaverse lies at the intersection of two major technical undertakings: synchronizing the state of hundreds of millions of users around the world (along with the virtual objects they interact with), and tying those users and objects precisely to the physical world. The first exists today in the Niantic Lightship platform, which underpins Pokémon GO and all of our products and supports hundreds of millions of users around the world. It means that those millions of users can create, change, and interact with digital objects in the physical world and that experience is consistent and shared by everyone. In the world of software, we call that a ‘shared state’ — we are all seeing the same thing, the same enhancements to the world. If you change something it’s reflected in what I see, and vice versa, for the millions of participants using the system.

Tying all of that precisely to the physical world is an even bigger project. It requires a new kind of map, similar in concept to something like Google Maps, but different because this map is built for computers, not people. It requires an unprecedented level of detail so that a phone or headset can recognize its location and orientation in a highly accurate way anywhere in the world. It is designed to enable the ultimate kind of digital wayfinding and coordination. Think of it as a kind of GPS, but without the satellites and a much higher level of accuracy. Niantic is building that map, in collaboration with our users. This is one of the grand challenges of augmented reality, and it’s the key to making it work the way we want it to — to make the real world come alive with information and interactivity.

Other big opportunities and challenges lie in semantically understanding the world. What are those pixels: an oak tree, a pond? A park bench, a cafe, or a historical building? Human cartographers have been doing this for hundreds of years. The new twist is in using computer vision to do this more or less automatically. Think of the opportunity as an analog to the web crawlers that search the web for pages to be indexed by Google. Today, computer vision powered by deep learning algorithms can provide a basic version of this in real time. In the future, offline processing can extend this to a much higher degree of fidelity and persistently tie this understanding to an ever-evolving AR map of the world. Niantic is pursuing these and other capabilities within the Lightship platform.

4. Other People’s Mistakes – Morgan Housel

But Daniel Kahneman mentions a more important truth in his book, Thinking, Fast and Slow: “It is easier to recognize other people’s mistakes than our own.”

I would add my own theory: It’s easier to blame other people’s mistakes on stupidity and greed than our own.

That’s because when you make a mistake, I judge it solely based on what I see. It’s quick and easy.

But when I make a mistake there’s a long and persuasive monologue in my head that justifies bad decisions and adds important context other people don’t see.

Everyone’s like that. It’s normal.

But it’s a problem, because it makes it easy to underestimate your own flaws and become too cynical about others’.

I try to stop myself whenever my explanation for other people’s behavior – financial or otherwise – is “well, they’re not very smart.” Or greedy. Or immoral. Yeah, sometimes it’s true. But probably less than we assume. More often there’s something else going on that you’re not seeing that makes the behavior more understandable, even if it’s still wrong.

5. Masters of Scale: Rapid Response Transcript – Francis DeSouza – Bob Safian and Francis DeSouza

DESOUZA: Illumina, for the first decade plus of our existence, we used to sell genomic analysis tools into the research market. And then in 2013, we entered the clinical market for the first time through the acquisition of a company called Verinata that did noninvasive prenatal testing.

Now, the way GRAIL started was, we were processing samples from pregnant mothers in our noninvasive prenatal testing lab. One of our scientists, this incredibly brilliant woman, noticed that although the fetal DNA in the blood was normal and healthy, there was something unusual about the maternal DNA. And so, she alerted us, we alerted the doctors to say, “Look, something seems to be off with the mothers here.” The doctors got back to us and said, “No, all the moms are fine, but we’ll stay in touch with them and see how they do.” In all of those cases, the mothers went on to find that they had cancer and didn’t know it.

I remember clearly the meeting at Illumina, and I still get goosebumps when I think about it, where we realized that we could be seeing the signals of cancer in a blood test. And so, we quickly put a team on it in Illumina. This was in the 2014, 2015 timeframe. They worked for over a year and came back and said, “Yeah, it looks like we’re seeing signals for cancer, but there is a lot of work that needs to be done between where we are now and actually having a safe test that we can bring to market. We need to do some very large clinical studies, and we need to hone the test to understand what specifically are we looking for in the blood.”

We knew that would take huge investment, and so we spun out the technology into a company called GRAIL. We put over 40 Illumina people into GRAIL, and we raised, ultimately, over $2 billion. And that’s one of the reasons we wanted to spin it out, to get access to the capital to move this technology as quickly as it could. The GRAIL team worked for a few years, and in the fall of 2019, they published their results. And the test they developed is truly extraordinary. This is a blood test that can identify 50 types of cancers across all stages.

Now, we know cancer kills 10 million people a year around the world, 600,000 here in the U.S. alone. We also know that if you catch cancers early, the patients have a much higher chance of survival. In a lot of cancers, you’ll see the odds of survival can get higher and up to 90 plus percent if you catch it in stage 1 or stage 2. The challenge is that 71% of people who die of cancer, die from cancers that have no screen. In fact, 45 out of the 50 cancers that GRAIL screens for have no screen today, like pancreatic cancer, for example. And so, there’s no ability to catch it early.

And so, when GRAIL published their data at the end of 2019, we realized this was a huge breakthrough and that this would save a lot of lives. That’s sort of how we initiated the process to acquire GRAIL. What we want to do is bring the GRAIL test to market as fast as possible to people around the U.S. and around the world. GRAIL has a terrific technology, and Illumina, we have the commercial presence in over 140 countries around the world. We have the teams that can work on reimbursement and regulatory approval, and so we can dramatically accelerate getting this test into the hands of people whose lives it could save

6. Enterprise Metaverses, Horizon Workrooms, Workrooms’ Facebook Problem – Ben Thompson

I wrote at the end of Metaverses earlier this month:

This is why I don’t think it is absurd that Nadella was the first tech executive to endorse the metaverse as a strategic goal. There is likely to be good business in building private metaverses for private companies, in a not-dissimilar way to Stephenson’s Franchise-Organized Quasi-National Entities made it easy for small-scale entrepreneurs to set up their own franchise-states.

Facebook’s goal is more audacious: the company already serves 3.5 billion users, which means creating a shared reality for over half of the world is a plausible goal. That reality, though, will likely sit alongside other realities, just as Facebook the app sits alongside other social networks. This metaverse is universal, but not exclusive.

What I am skeptical of is the idea of there being one Metaverse to rule them all; we already have that, and in this case the future is, in William Gibson’s turn of phrase, here — it’s just not very evenly distributed. I speak from personal experience: for two decades I have lived and worked primarily on the Internet; it’s where I experience friendship and community and make my living. Over the last year-and-a-half hundreds of millions of people have joined me, as the default location for the work has switched from the office to online (that “online” is primarily experienced at home does not mean that home is intrinsic to the work — “work from home” is a misnomer). This too is an inverse of Snow Crash, where most jobs are in the real world, and recreation in the Metaverse; the future of work is online, and the life one wants to live in the reality of one’s choosing.

I’ve been looking for an opportunity to come back to this point; much of that article was focused on the fact that while Snow Crash had a dystopian real world defined by walled gardens, along with a universal Metaverse, it is the Internet that is in fact defined by walled gardens, while the real world is our shared universal reality. Snow Crash had it backwards. That wasn’t the only thing that was backwards though: in Snow Crash “most jobs are in the real world, and recreation in the Metaverse”, but, thanks in part to COVID, reality is turning out to be something different.

The reason this matters is that the adoption of new technologies requires some sort of forcing function. PCs, for example, were first adopted by enterprises because of the productivity gains they afforded, and then later on by consumers who had already experienced a PC at work (generally speaking of course; there are always exceptions). This is how Microsoft, which has no real idea of how to build a consumer product, briefly became a consumer computing powerhouse: the PC monopoly gifted to them by IBM meant that Windows PCs were the obvious choice for the home.

Smartphones went in the opposite direction: by 2007 almost everyone had a mobile phone of some sort (usually a dumb phone), then Apple came along and offered a compelling consumer product that, under subsidy, wasn’t that much more expensive, and much more useful and entertaining. Only then did consumers demand to use those phones at work.

To date most assumptions about VR — the most obvious manifestation of the metaverse concept — have focused on the consumer use case, primarily gaming. This is why I have long been relatively bearish on virtual reality, especially relative to augmented reality. I wrote about CES 2016 in a Daily Update:

I think it’s useful to make a distinction between virtual and augmented reality. Just look at the names: “virtual” reality is about an immersive experience completely disconnected from one’s current reality, while “augmented” reality is about, well, augmenting the reality in which one is already present. This is more than a semantic distinction about different types of headsets: you can divide nearly all of consumer technology along this axis. Movies and videogames are about different realities; productivity software and devices like smartphones are about augmenting the present.

I argued in The Problem with Facebook and Virtual Reality that this made VR less valuable:

That is the first challenge of virtual reality: it is a destination, both in terms of a place you go virtually, but also, critically, the end result of deliberative actions in the real world. One doesn’t experience virtual reality by accident: it is a choice…

That is not necessarily a problem: going to see a movie is a choice, as is playing a video game on a console or PC. Both are very legitimate ways to make money: global box office revenue in 2017 was $40.6 billion U.S., and billions more were made on all the other distribution channels in a movie’s typical release window; video games have long since been an even bigger deal, generating $109 billion globally last year.

Still, that is an order of magnitude less than the amount of revenue generated by something like smartphones. Apple, for example, sold $158 billion worth of iPhones over the last year; the entire industry was worth around $478.7 billion in 2017. The disparity should not come as a surprise: unlike movies or video games, smartphones are an accompaniment on your way to a destination, not a destination in and of themselves.

That may seem counterintuitive at first: isn’t it a good thing to be the center of one’s attention? That center, though, can only ever be occupied by one thing, and the addressable market is constrained by time. Assume eight hours for sleep, eight for work, a couple of hours for, you know, actually navigating life, and that leaves at best six hours to fight for. That is why devices intended to augment life, not replace it, have always been more compelling: every moment one is awake is worth addressing.

In other words, the virtual reality market is fundamentally constrained by its very nature: because it is about the temporary exit from real life, not the addition to it, there simply isn’t nearly as much room for virtual reality as there is for any number of other tech products.

The point of invoking the changes wrought by COVID, though, was to note that work is a destination, and its a destination that occupies a huge amount of our time. Of course when I wrote that skeptical article in 2018 a work destination was, for the vast majority of people, a physical space; suddenly, though, for millions of white collar workers in particular, it’s a virtual space. And, if work is already a virtual space, then suddenly virtual reality seems far more compelling. In other words, virtual reality may be much more important than previously thought because the vector by which it will become pervasive is not the consumer space (and gaming), but rather the enterprise space, particularly meetings. 

7. Low Rates, More Risk – Michael Batnick

Lower interest rates encourage people to take more risks, in general. There is little question about this.

By taking short-term interest rates to zero, which I had no objection to, the federal reserve “forced” me to find better ways to allocate my cash…

…Okay, wait a minute. If everyone is taking more risk, then who plowed $17 billion into fixed income ETFs in July? And if everyone is taking more risks, then how do we explain this?…

…For years, we’ve seen massive flows into bond funds and ETFs, even with rates low and getting lower. And simultaneously, even with stocks high and going higher, we’ve seen massive flows out of stocks funds and ETFs.

Are lower interest rates pushing up the valuation of stocks? Without a doubt. Are lower interest rates pushing people into SPACs? Eh, I don’t know about this one. People were doing crazy shit with their money in the 90s when the 10-year was at 6%.

I’m taking more risks in an area of my portfolio that I would prefer to have no risk. That’s a direct result of the fed taking rates to zero. But I’m not taking even more risks with areas of my portfolio that are already at risk. I continue to buy index funds every two weeks in my 401(k) and every month in my taxable account. I’m not YOLOing into call options on SPACS. I’m not going all-in on Pudgy Penguins. I’m taking risks, but I’m not sniffing glue.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Apple, Facebook, Illumina, and Microsoft. Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 15 August 2021:

1. Hanging By A Thread – Morgan Housel

Robert E. Lee had one last shot to escape Ulysses Grant’s troops and regroup to gain the upper hand in the Civil War. His plan was bold but totally plausible. All he needed was food for his hungry troops.

An order was put in to have rations delivered to a Virginia supply depot for Lee’s men.

But there was a communication error in Richmond, and the wagons delivered boxes of ammunition but not a morsel of food.

Lee said the mishap “was fatal, and could not be retrieved.” His troops were starving. The Civil War ended two days later.

History hangs by a thread…

…Finance professor Ellroy Dimson says, “risk means more things can happen than will happen.” An important point here is that if none of these big events occurred, something else just as wild and unpredictable could have taken their place. Even when some part of the outcome is the same, the context and little bits of trivia are different in a way that can totally change the final story. America may have joined World War I without the Lusitania’s sinking, but its participation could have been less, or later, or not as popular. That could have shifted how the interwar period in the 1920s and 1930s played out, which would have impacted how World War II occurred, which would have altered the course of the most promising inventions of the 20th century … on and on, endlessly.

I try to keep two things in mind in a world that’s this fragile to chance.

One is to base your predictions on how people behave vs. specific events. Predicting what the world will look like in, say, 2050, is just impossible. But predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations and social persuasion in the same way is a bet I’d take.

Another – made so starkly in the last year and a half – is that no matter what the world looks like today, and what seems obvious today, everything can change tomorrow because of some tiny accident no one’s thinking about. Events, like money, compound. And the central feature of compounding is that it’s never intuitive how big something can grow from a small beginning.

2. How Millennial Investors Lost Millions on Bill Ackman’s SPAC – Michelle Celarier

Last fall, he started hearing about the boom in SPACs, and Ackman’s Tontine stuck out: It was the largest, with more than $4 billion to shop for a company. Ackman, a legendary hedge-fund manager who’d just made $2.6 billion on a timely Covid short bet, was behind the SPAC, and he claimed it was the most investor-friendly one ever.

In November, when Ackman told investors in his hedge fund that he expected to be able to announce a deal with a target company by the end of the first quarter, the psychiatrist jumped in. 

The SPAC market was red hot, with SPACs sponsored by venture-capital guru Chamath Palihapitiya and former Citigroup investment banker Michael Klein also soaring. In early February, Ackman tweeted a rap video about SPACs minting money, and Redditors went crazy. “That video literally single-handedly caused the stock to rise 10 percent,” recalls the psychiatrist.

The sense of urgency was palpable. “It was like, okay, this is coming very soon. If you don’t get in now, you’re going to miss it,” he says. “There’s just that frenzy of wanting to get in on the ground floor. It’s like getting in an IPO at the ground level” — something that is unavailable to retail investors and a key reason why they buy shares of SPACs before deals are announced.

By March, the psychiatrist was plunking all of his capital into call options on Tontine, which goes by the stock symbol PSTH. “Whatever money I had, I pretty much was putting it all into buying more of it,” he says.

At one point, his stake in Tontine was worth over $1 million on paper. He lost it all when his June 18 calls — with a strike price of $25 — expired worthless; the stock was around $23 at the time.

The Reddit gang had convinced themselves that Ackman’s Tontine was going to merge with a unicorn like Stripe, the online payments processor, or Elon Musk’s Starlink — largely because Ackman himself had joked about “marrying a unicorn” when he launched his SPAC last July. The media was also obsessed with the unicorn theme. But most everyone seemed to ignore the fact that Tontine’s prospectus listed unicorns as just one type of company that Ackman was chasing.

And when a deal was finally disclosed on June 4, Tontine’s partner wasn’t a unicorn, the moniker for a private startup valued at more than $1 billion. Moreover, there would be no merger. In a highly unusual move, Tontine had agreed to take a 10 percent stake in the upcoming spinoff of Universal Music Group from French conglomerate Vivendi. There would be money left over for another deal and a chance to get in on the ground floor of a third vehicle. 

The structure was too complicated for both investors and their brokerages to quickly unpack, and the stock, along with the warrants and options attached to it, tanked. Within weeks, the Securities and Exchange Commission stunned Ackman, essentially killing the deal by telling his lawyers that it did not meet the New York Stock Exchange’s requirements for a SPAC — even though Ackman said on CNBC that the NYSE had given him the go-ahead months earlier.

By the time the deal fell apart, the psychiatrist’s savings had already evaporated. He is now scrambling to make quarterly tax payments to the IRS, while owing $350,000 in student loans.

“I considered this a safe, calculated bet,” he says. So did a lot of people, including 16 others II interviewed by phone, Zoom, direct message, or in person. But as they all learned, there is little safety in SPACs — especially in the call options on those that haven’t found a partner. 

3. Magic beans – Josh Brown

Imagine the chutzpah it takes to say to yourself that you know definitively what the global economy is going to look like in six months. Now imagine thinking you could take this certainty about the future and use it to predict exactly which investment markets would rise and fall as a result – so not only can you see the economy’s future, but you can predict how all of the other investors will react to it!

Now imagine saying you could do this sort of thing consistently, out loud in front of other people.

Now imagine charging them money for it.

At this point, you’re selling magic beans. A talking dog. A singing frog. A goose that lays golden eggs. You’re a medicine show.

When I explain like this, the whole notion sounds crazy. Crazy sells.

The internet is filled with people who will believe nearly anything they read, if presented in the right circumstances. In part, it’s because they don’t spend a lot of time considering how unlikely it is that someone is willing to sell you the future for twenty dollars a month. In part, it’s because they do know better, but deep down they still want to believe. So if you speak with enough conviction, and don’t get asked too many questions about whether or not you’ve been right about these predictions historically, you can make a lot of money. The outcome doesn’t matter, you’re filling a void of rampant doubt with the opiate of your professed certainty and confidence.

So what’s the right answer? For me, it’s always been accepting the limitations inherent in trying to understand the future and arranging your bets in such a way that you can succeed despite a multitude of potential outcomes. Building durable portfolios, expecting risk to eventually be rewarded and accepting the fact that there will be good times and bad.

4. Sebastian Mejia – Mastering On-Demand Convenience – Patrick O’Shaughnessy and Sebastian Mejia

Patrick: [00:08:43] Can you talk about the early network dynamics where you had to go get couriers, convince them to log into the app and you had to go get demand? What was that like? What literally was the first city or first few order? This free text thing sounds extremely unique and different than the structured inventory that you saw from basically every other app. How did that work? How did you figure out how much you needed to pay the couriers? All the basics of like the unit economics must’ve been fascinating to figure out on the fly, how did you do that? What was it like?

Sebastian: [00:09:12] Previously, we had experience building companies, but it was more enterprise. And we were basically selling software to supermarket. So we got some sort of idea of how the industry worked, but we wanted to do something completely different, focused on the customer. So we basically started building and initially, that convenience product had a very limited assortment. I’m talking about 1,000, 2,000 SKUs. And basically said, “Well, we already have this consumer-facing app, it’s going to be very easy to build all of the logistics behind it.” And of course, that’s not the case. When we initially launched, we had no traction whatsoever. So it was literally us trying to understand what was going on with the customers, why they were not engaging with the product. So Rappi from the beginning, had this DNA of being very hyper-local and very guerrilla. And that meant that we literally went out to get customers onboarded and talking to customers. And we were basically offering donuts in exchange of downloads.

And that was our customer acquisition costs. And we also had to do the same thing on the courier front. And what are they interesting insights is that although eCommerce is still very small and it was way smaller back then, you had a culture of delivery. You had a culture of calling the restaurant, calling the store, and there were couriers already working. There were just completely disconnected. There was no network bringing them together, making them productive, making them more efficient in the way they routed. So we didn’t have to go against, let’s say culture. We didn’t have to go and educate couriers and even go ahead and educate deeply the customers, because they already understood that delivery was this thing that existed. We just applied technology to organize all of these agents and these add on let’s say, in the physical world to make them function more efficient.

I remember us doing the deliveries early on. I remember I was being scooters, making drops, testing the courier app. And from there, we started to evolve the product and we started to also engage couriers to make it better. For us, part of the mission was super critical on how are we going to make these guys not only more efficient, but we’re going to make sure that they are paid very well, and that they’re making significant more than their minimum wage. And I’m only talking about two sides of the marketplace, right? If you introduced the merchant side of the marketplace, it adds another layer of complexity. And at the beginning, when we launched, we really didn’t understand how to integrate with catalog of a supermarket. How do you actually integrate with a 30,000 SKU store? How do you make sure that you have relevant inventory on real time? How did you integrate with a restaurant?

Rappi, when we launched, we didn’t even have tablets. We didn’t have integrations with POS systems. So it was literally us going placing the order as if it was a random customer. A lot of the things were built as we learn. And many of the things had to be built from first principles very early on, because it’s not that you have a lot of tech stack or logistics stacks that you can just jump on and use to launch. It’s one of the challenges of building in the emerging market. But I also think it’s an advantage because you get to build these very core competencies that tomorrow are going to be very valuable business, right? I see ourselves doing all sorts of services on top of these piece of the stack, whether it’s logistics, whether it’s customer service, marketing tools, etc.

Patrick: [00:12:37] When I talked to the founders of Loft, they had an interesting, similar experience where there’s no MLS system. So there was no proper database of apartments or homes or something they could tap into. They basically had to build it themselves. I’ve got this obsession with companies that make previously non legible data legible to some system tend to do really, really well. And so I’m really interested how you solve that problem in these specific cases. So that 30,000 SKU supermarket, or if there’s a restaurant with 200 menu items, literally, what was the process of getting that legible to your software in your platform? How did you do?

Sebastian: [00:13:11] The supermarket and the restaurant business is quite different. I think in the restaurant, you basically have two options to actually integrate with what happens inside the business. You can use a tablet or you can use an integration with the POS. So you’re basically getting as close as possible to the kitchen that gives the restaurant owner the ability to actually update the menu, the ability to pick the cooking time and selected depending on the dish that you’re cooking. So you’ve got to go really deep in the operations of the restaurant. Then when you’re going through the supermarket space or the retailers, we’re dealing with inventory per store, you’re dealing also with inventory levels. So you need to make sure that you have the assortment, but you also need to have some sort of measurement or way of identifying where certain products are being stocked out. And that’s a big, big challenge that has a lot of different angles that you can tackle it from machine learning to project; what are going to be the products that are stocked out with more probability, to just better integrations with the supermarkets.

Not all of these companies have a proper API where you can actually connect with and understand what is the assortment that they have in the store. So you basically end up using flat files, and you need to have data that is coming in. You have to clean that data in so it connects actually with your core catalog, which is the nervous system of any type of eCommerce business. So that represents a lot of different challenges. Today Rappi is operating with more than 200,000 points of sale from restaurants to retailers of all sorts. So that data challenge, I think, is very, very intriguing. It’s something that we are investing a lot of energy and time. And I wouldn’t say we are fully on that plays where we can say, “Look, this is something that we mastered,” because there’s a lot of complexity. Bt I also think it’s one of the most interesting aspects of this business because local means that you’re integrating such a deep way with the local economy that you’re creating all of these modes and all of these integrations that are just very hard to replicate.

Patrick: [00:15:21] Is there a good example of that? I want to understand what you mean by local. Is it measured in blocks? Is it measured in the equivalent of a zip code? What is local and how different might one unit be from a neighboring unit and in what ways?

Sebastian: [00:15:34] We could be talking about two kilometer radius for a specific zone. And then it’s not only how you actually draw the zone in a city. You also have Latin America with a lot of income disparity. So it’s like your perfect Manhattan. It’s much more mixed, and you can have a very wealthy neighborhood next to a neighborhood that is not wealthy at all. So you have to navigate all of that hyper locality aspect. And then once you set those polygons, you’re basically delivering inside those zones. And then what I mean by local is that you also have to integrate with the stores inside that specific zone. You have to position the couriers inside that specific zone.

But once you do that, the marketplace starts to thrive because the customer experience is amazing. 10, 30 minute delivery. The courier experience is amazing because they’re super productive. You don’t have to do a lot of long distance. Structurally, that also means that you can deliver in a very affordable way. As a customer, you’re paying $1 to $1,50, then you’re still allowing the couriers to make two times the minimum wage. So the model works really, really well. And then you have to have all of the dimension of catalog really, really tied into what you do. And by that, I mean all of those integrations with inventories, with catalogs as real time as possible. So that, in my view, is a very, very hard thing to replicate. That’s why I have this idea that if you look at all of the eCommerce companies in the world, the majority of them that deal with, let’s say, infrastructure or the ones that really thrive in their specific markets tend to be local with very few exceptions. And the exceptions are much more the companies that do drop shipping or that are exporting from China into the world.

But if you really understand that you gotta deliver fast, the companies need to build a local presence, and it’s hard for a foreign company to actually replicate this because of the level of depth at which you need to operate.

5. Eternal Change for No Energy: A Time Crystal Finally Made Real – Natalie Wolchover

A novel phase of matter that physicists have strived to realize for many years, a time crystal is an object whose parts move in a regular, repeating cycle, sustaining this constant change without burning any energy.

“The consequence is amazing: You evade the second law of thermodynamics,” said Roderich Moessner, director of the Max Planck Institute for the Physics of Complex Systems in Dresden, Germany, and a co-author on the Google paper. That’s the law that says disorder always increases.

Time crystals are also the first objects to spontaneously break “time-translation symmetry,” the usual rule that a stable object will remain the same throughout time. A time crystal is both stable and ever-changing, with special moments that come at periodic intervals in time.

The time crystal is a new category of phases of matter, expanding the definition of what a phase is. All other known phases, like water or ice, are in thermal equilibrium: Their constituent atoms have settled into the state with the lowest energy permitted by the ambient temperature, and their properties don’t change with time. The time crystal is the first “out-of-equilibrium” phase: It has order and perfect stability despite being in an excited and evolving state.

6. What’s an API? – Justin Gage

An API is a group of logic that takes a specific input and gives you a specific output. A few examples:

• If you give the Google Maps API an address as an input, it gives you back that address’s lat / long coordinates as an output
• If you give the Javascript Array.Sort API a group of numbers as an input, it sorts those numbers as an output
• If you give the Lyft Driver API a start and finish address as an input, it finds the best driver as an output (I’m guessing)

When engineers build modules of code to do specific things, they clearly define what inputs those modules take and what outputs they produce: that’s all an API really is. When you give an API a bunch of inputs to get the outputs you want, it’s called calling the API. Like calling your grandma.

Inputs

An API will usually tell you exactly what kind of input it takes. If you tried putting your name into the Google Maps API as an input, that wouldn’t work very well; it’s designed to do a very specific task (translate address to coordinates) and henceforth it only works with very specific types of data. Some APIs will get really into the weeds on inputs, and might ask you to format that address in a specific way. 

Outputs

Just like with inputs, APIs give you really specific outputs. Assuming you give the Google Maps API the right input (an address), it will always give you back coordinates in the exact same format. There’s also very specific error handling: if the API can’t find coordinates for the address you put it, it will tell you exactly why. 

7. Jim Ling – Chris Tucker

Through the Sixties and early Seventies, conglomerate-in Texas and throughout the country -meant Jim Ling, creator of the huge Dallas-based Ling-Temco-Vought (LTV). How big was LTV? Massive.

At its peak in 1969, Ling’s company controlled Wilson, the nation’s largest producer of sporting goods and its third-largest meatpacker; Jones and Laughlin, America’s sixth-largest steel company; Braniff, the eighth-largest airline; and Vought, the eighth-largest defense contractor. Toss in a string of other companies with their innumerable subsidiaries and you have Ling-Temco-Vought, at the time the 14th-largest company in America.

How big was LTV? So big, some say, that only the U.S. government was big enough to stop it. Calling LTV “a force destructive of competition,” the Justice Department filed an antitrust suit to force LTV to give up Jones and Laughlin. Ling, not his lawyers, devised a settlement to placate the feds.

How big was LTV? So vast, according to some observers, that not even the man who created it really understood its inner workings. And Ling, an idiosyncratic genius, was finally caught up in a swirl of circumstances-market reversals, government harassment, personal conflicts with associates-that led to the famed Palace Revolt of 1970, when Ling was booted out of the company he built.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently do not have a vested interest in them. Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 01 August 2021:

1. China Discovers the Limits of Its Power – Michael Schuman

The dispute between Australia and China has been brewing for years. Like the U.S. and other democracies, Australia embraced engagement with China, and the two economies became entwined in a highly profitable symbiotic relationship: Australia’s treasure trove of natural wealth became indispensable to China’s rapidly expanding industrial machine. The countries even entered into a free-trade agreement in 2015.

The ink had barely dried, however, when Canberra began to grow nervous about Chinese President Xi Jinping’s bellicose foreign policy. Turnbull, who as prime minister from 2015 to 2018 was instrumental in forging Australia’s response, wrote in his book A Bigger Picture that China “became more assertive, more confident and more prepared to not just reach out to the world … or to command respect as a responsible international actor … but to demand compliance.”

Australia more openly criticized China’s encroachments on the South China Sea—vital for Australian shipping—where Beijing built military installations on man-made islands to solidify its contested claim to nearly the entire waterway. Turnbull also grew alarmed by the sums of Chinese money sloshing around Australian politics, spent to sway government policy in China’s favor. That led to new legislation designed to curtail foreign influence. Then in 2018, Turnbull’s government banned Chinese telecom giant Huawei from supplying equipment for Australia’s 5G networks, considering it too much of a security risk to essential infrastructure. Relations really fell off a cliff in April 2020, when current Prime Minister Scott Morrison’s government called for an independent investigation into the origins of the coronavirus outbreak—a prickly issue in Beijing, where such demands are perceived as politically motivated efforts to tarnish China.

Beijing duly went ballistic. (Hu’s chewing-gum comment was part of the angry response.) To force Canberra to back down, the Chinese government unsheathed what has become its weapon of choice against recalcitrant nations: economic coercion. Among other measures, Chinese authorities suspended the export licenses of major Australian beef producers; imposed punitive tariffs on barley and wine; and instructed some power plants and steel mills to stop buying Australian coal. In all, Wilson, of the Perth USAsia Centre, figures that Australia lost $7.3 billion in exports over a 12-month period. Some industries have been hit especially hard: The rock-lobster industry, almost totally dependent on Chinese diners, was decimated after Beijing effectively banned the delicacy.

Canberra wouldn’t budge, though. “We have to simply stand our ground. If you give into bullies, you’ll only be invited to give in more,” Turnbull told me. “There is a lot to be said for nuance and artful diplomacy, but you can’t compromise on your core values and your core interests.”

So far at least, the Australians haven’t had to. Beijing hasn’t been able to inflict sufficient pain to compel Canberra to concede. Wilson notes that the sacrificed exports amount to a mere 0.5 percent of Australia’s national output—not pocket change, but hardly a crisis, either. A few industries have adapted by diversifying their customer bases. Some coal blocked by China was redirected to buyers in India. And there was a limit to how hard Beijing could squeeze: Australian iron ore is the lifeblood of China’s construction industry, and Australian lithium underpins the Chinese electric-vehicle industry.

2. ‘The Ledger and the Chain’ Review: Human Cost – Harold Holzer

Isaac Franklin, already an experienced slave-driver, joined forces in the 1820s with his nephew John Armfield to create a human-trafficking juggernaut. The trans-Atlantic slave trade had been illegal since 1808, but no laws prevented cash-strapped owners from separating families and designating “surplus” men, women and children for deportation to places in the country where demand for forced labor far outstripped supply. The result was a “federally protected internal market for human beings.” By the mid-1830s, Franklin and Armfield’s “slave factory,” as one abolitionist called it, was trafficking up to 1,200 enslaved people each year—with much profit and no regrets. Originally headquartered at an innocuous-looking Alexandria, Va. town house—its high walls concealed outdoor slave pens and a “black hole” dungeon in the cellar—the enterprise grew exponentially as prices soared. Eventually a third colleague, Richmond-based Rice Ballard, helped widen the firm’s reach.

The trio specialized in driving enslaved people into Mississippi and New Orleans, where planters looking to expand their rice, sugar and cotton crops lined up to offer hundreds of dollars each for field hands, house servants and, as Mr. Rothman reminds us, sex slaves. The traders took turns driving coffles of heavily shackled, ill-clad, barely fed chattel as many as 1,000 miles on foot to be sold publicly at outdoor auctions or hotel lobbies. The firm became the first to acquire ships of its own, so that they could transport thousands more from the Chesapeake in stultifying confinement below decks. Those people who took ill in sweltering holding pens, at sea, or on forced marches received only enough attention to preserve their market value. Those who succumbed to death from measles, cholera, smallpox, starvation or exhaustion were left behind like scrap. Along the way, guards intimidated adult males with whips and rifles and routinely dragged women into the woods to rape them.

Mr. Rothman has done an astounding amount of research into period narratives testifying to the brutality endured by trafficking victims. He also uncovered many gruesome period advertisements for “Likely Slaves” and “Fancy” women (translation: candidates for forced sex). The author acknowledges that he often grieved over the material he uncovered, and “The Ledger and the Chain” can be equally painful to read.

The “ledger” part of the narrative presents mind-numbing data on the business side of slave-trading and its reliance on a colluding network of Southern and Northern banks, insurance companies, cotton brokers, judges and sheriffs. One cannot help but be reminded of the compulsive Nazi record-keeping of a century later. Then there are the parallel, tragic stories of the “chain”—the physical and psychological terror that involuntary relocation exacted on defenseless families and individuals. What Mr. Rothman calls “the desperation, and the rage of the enslaved . . . subjected to white whims” still tear at the heart.

Though antislavery newspapers periodically singled out Franklin and Armfield as “Cannibals” who “trade in blood,” the partners survived the period not only unmolested but ultimately in splendor. By the time some Southern states finally began banning domestic slave imports, the three had bought lavish town homes and bucolic plantations, acquired (and mistreated) their own slaves, and in semi-retirement gained community respect equal to their economic power. Seldom mentioned within white society was that, as younger men, each also had used enslaved women for their pleasure, boasting lasciviously to each other about the “hard work” required of their “one eyed men.” When Franklin and Armfield married white women, they simply got rid of their non-consensual sex partners along with the sons and daughters they had produced. How was it possible, asked one anguished rape victim as Rice Ballard arranged for her banishment, “for the father of my children to sell his own offspring?” Such appeals fell on deaf ears.

3. Engineers of the Soul: Ideology in Xi Jinping’s China by John Garnaut – Bill Bishop

In Xi’s view, shared by many in his Red Princeling cohort, the cost of straying too far from the Maoist and Stalinist path is dynastic decay and eventually collapse.

Everything Xi Jinping says as leader, and everything I can piece together from his background, tells me that he is deadly serious about this totalising project.

In retrospect we might have anticipated this from the Maoist and Stalinist references that Xi sprinkled through his opening remarks as president, in November 2012.

It was made clearer during Xi Jinping’s first Southern Tour as General Secretary, in December 2012, when he laid a wreath at Deng’s shrine in Shenzhen but inverted Deng’s message. He blamed the collapse of the Soviet Union on nobody being “man enough” to stand up to Gorbachev and this, in turn, was because party members had neglected ideology. This is when he gave his warning that we must not forget Mao, Lenin or Stalin.

In April 2013 the General Office of the Central Committee, run by Xi’s princeling right hand man, Li Zhanshu, sent this now infamous political instruction down to all high level party organisations.

This Document No. 9, “Communique on the Current State of the Ideological Sphere”, set  “disseminating thought on the cultural front as the most important political task.” It required cadres to arouse “mass fervour” and wage “intense struggle” against the following “false trends”:

1. Western constitutional democracy – “an attempt to undermine the current leadership”;
2. Universal values of human rights – an attempt to weaken the theoretical foundations of party leadership.
3. Civil Society – a “political tool” of the “Western anti-China forces” dismantle the ruling party’s social foundation.
4. Neoliberalism – US-led efforts to “change China’s basic economic system”.
5. The West’s idea of journalism – attacking the Marxist view of news, attempting to “gouge an opening through which to infiltrate our ideology”.
6. Historical nihilism – trying to undermine party history, “denying the inevitability” of Chinese socialism. 
7. Questioning Reform and Opening – No more arguing about whether reform needs to go further.

There is no ambiguity in this document. The Western conspiracy to infiltrate, subvert and overthrow the People’s Party is not contingent on what any particular Western country thinks or does. It is an equation, a mathematical identity: the CCP exists and therefore it is under attack. No amount of accommodation and reassurance can ever be enough – it can only ever be a tactic, a ruse.

Without the conspiracy of Western liberalism the CCP loses its reason for existence. There would be no need to maintain a vanguard party. Mr Xi might as well let his party peacefully evolve.

We know this document is authentic because the Chinese journalist who publicised it on the internet, Gao Yu, was arrested and her child was threatened with unimaginable things. The threats to her son led her to make the first Cultural Revolution-style confession of the television era.

In November 2013 Xi appointed himself head of a new Central State Security Commission in part to counter “extremist forces and ideological challenges to culture posed by Western nations”. 

Today, however, the Internet is the primary battle domain. It’s all about cyber sovereignty. 

4. DeepMind’s AI has finally shown how useful it can be – Grace Browne

Marcelo Sousa, a biochemist at the University of Colorado Boulder, had spent ten years trying to crack a particularly tricky puzzle. Sousa and his team had collected reams of experimental data on a single bacterial protein linked to antibiotic resistance. Working out its structure, they hoped, would help to find inhibitors that could stop that resistance from building. But, year after year, the puzzle remained unsolved. Then along came AlphaFold. Within 15 minutes, DeepMind’s machine learning system had solved the structure.

It’s the kind of result that could soon be repeated in labs across the world. In a paper published in the journal Nature, DeepMind has released over 350,000 predicted protein structures. Included in that is almost the entirety of the human proteome, the proteins that make up the human body. Within these predicted structures could lie key insights into diseases such as cancer and Alzheimer’s, the possibility of new drugs and even better ways to recycle plastic.

To put that number into context, the Universal Protein database, a collection of all the proteins that science has uncovered thus far, contains over 180 million protein sequences. These protein sequences tell us how the amino acids in a protein are ordered, but that’s only the beginning of the puzzle. To really understand how proteins function in the body, we need to know how that sequence determines the 3D structure of the protein – and that is a much more difficult task than simply knowing the right order of amino acids.

Of those 180 million protein sequences, scientists have so far worked out the structure of just 180,000 proteins. DeepMind’s new database provides predictions for more than double the number of known protein structures to date. Now biologists will be able to work on understanding how proteins interact and function – and beyond that, designing new proteins, enabling quicker drug discovery, deciphering disease-causing gene variations and more. “There’s much more to proteins than structure, and so we need to bring it together,” says Janet Thornton, a director emeritus of EMBL’s European Bioinformatics Institute. “It’s one component in that broader understanding of how life works.”

In the coming months, the AlphaFold team plans to release 100 million protein structures. “We’ll go from protein structures being a very precious resource to [them] dropping at every street corner,” says John Jumper, AlphaFold lead researcher.

AlphaFold cracked the protein folding problem back in December 2020, when the DeepMind team won at CASP, the Critical Assessment of Protein Structure Prediction. At the time, the company promised it would make the data and code openly available. Less than eight months later, in July 2021, DeepMind published AlphaFold 2’s full code and methodology in Nature, and now it has announced that it will all be free to use through a partnership with the European Molecular Biology Laboratory (EMBL) in order to share this massive resource, which will be called the AlphaFold Protein Structure Database. “We believe that this represents the most significant contribution AI has made to advancing the status of scientific knowledge to date,” DeepMind’s CEO and co-founder Demis Hassabis said at a press briefing.

5. Twitter thread on how Robinhood’s insiders are enriched during its IPO – Christopher Bloomstran

For those that haven’t read Robinhood’s 360-page S-1 and subsequent registration amendment, some brief observations follow on some of the most egregious aspects of one of the most one-sided, enrich the insider casino offerings I’ve ever seen, and there have been some doozies. 1/…

…Robinhood, who in December paid a $65 million fine (without admitting or denying guilt, wink) for best execution and payment for order flow alleged violations, will raise on the order of $2.3 billion from new shareholders in its upcoming IPO. What does The IPO investor get? 3/

The expected $2.3B brought to the party by new shareholders represents almost 30% of all of capital raised since 2013, including proceeds raised in the offering. For their money these new “investors” will only own 7% of the company and far less voting rights. Dilution, baby. 4/…

…New shareholders will bring $2.3B to the party, over 29% of all of the capital raised since 2103. For their money they will own 7% of the company. Did I already mention dilution? Wait until you see the dilution in book value and evisceration of per share book value. 20/

Cash in the firm will total about $7 billion with the addition of proceeds from the IPO. So how do you get to a ~$34B valuation? On fundamentals, 2020 REVENUES totaled $959m. 3/31 quarterly revs were $522m & 6/30 are estimated by the company at a range of $546 and $574m. 21/

At the midpoint, sequential revenues were up 7.3%, growing fast but decelerating in a hurry…In fact, monthly revenues in March of this year actually declined from February. The company reports $81 billion in assets under custody at March 31 and 18 million accounts. 22/

That works out to a whopping $4,444 per account (the median must be even WAY lower). The company further reports annual revenue per user of $137. No doubt some averaging is involved, but what they don’t report is that $137 in revenues from a $4,444 account is 3% per year. 23/

On those 18 million $4,444 accounts, total assets under custody break down as:
$65 billion in equities (AMC, GME & TSLA for sure)
$2B options
$11.6B crypto (up from $3.5B at 12/31 & $481m a year ago)
$7.6B cash
($5.4B) margin
Total assets under custody total $81B. 24/

14% of customer assets are crypto! You don’t see any bonds. You don’t see any mutual funds. Half of transaction revenue, which are 81% of firm revenues, come from OPTION rebates, while options at market value account for only $2B of customer assets. Tell me its not a casino. 25/

Option trading should definitely be allowed for the inexperienced, small, retail “investor.” This is how you get experience, and initiated. On assets held as crypto, these “assets” can neither be transferred in our ACAT’d out. They must be transacted while in the hood. 26/…

…17% of firm revenues were earned in Q1 from crypto transaction “rebates,” up from 4% in the prior quarter. Wile $HOOD supports 7 cryptos for trading, no less than 34% of crypto revenues were from DOGECOIN! Hilarious reading this. I’m probably wrong about this being a casino. 28/

In the first quarter alone, “customers” traded $88B of crypto against $11.6B held at 3/31 and $3.5B at year-end 2020. Definitely not a casino, but a platform encouraging the long-term ownership of investments. You think new “customers” learn all about the coffee can approach? 29/

6. Thinking About Macro – Howard Marks

In January’s memo Something of Value, I described the way my genetic makeup, early experiences, and success in blowing the whistle on some unsustainable financial innovations and market excesses had turned me into something of a knee-jerk skeptic.  My son Andrew called this to my attention while our families lived together last year, and what he said struck a responsive chord.

The old me likely would have latched onto today’s high valuations and instances of risky behavior to warn of a bubble and the subsequent correction.  But looking through a new lens, I’ve concluded that while those things are there, it makes little sense to significantly reduce market exposure:

• on the basis of inflation predictions that may or may not come true,
• in the face of some very positive counterarguments, and
• when the most important rule in investing is that we should commit for the long run, remaining fully invested unless the evidence to the contrary is absolutely compelling.

Finally, I want to briefly touch on the level of today’s markets.  Over the four or five years leading up to 2020, I was often asked whether we were in a high yield bond bubble.  “No,” I answered, “we’re in a bond bubble.”  High yield bonds were priced fairly relative to other bonds, but all bonds were priced high because interest rates were low.

Today, we hear people say everything’s in a bubble.  Again, I consider the prices of most assets to be fair relative to each other.  But given the powerful role of interest rates in determining those prices, and the fact that interest rates are the lowest we’ve ever seen, isn’t it reasonable that many asset prices are the highest we’ve ever seen?  For example, with the p/e ratio of the S&P 500 in the low 20s, the “earnings yield” (the inverse of the p/e ratio) is between 4% and 5%.  To me, that seems fair relative to the yield of roughly 1.25% on the 10-year Treasury note.  If the p/e ratio were at the post-World War II average of 16, that would imply an earnings yield of 6.7%, which would appear too high relative to the 10-year.  That tells me asset prices are reasonable relative to interest rates.

Of course, it’s one thing to say asset prices are fair relative to interest rates, but something very different to say rates will stay low, meaning prices will stay high (or rise).  And that leads us back to inflation. It isn’t hard to imagine rates increasing from here, either because the Fed lifts them to keep the economy from overheating or because rising inflation requires higher rates in order for real returns to be positive (or both). While the possibility of rising rates (and thus lower asset prices) troubles us all, I don’t think it can be said that today’s asset prices are irrational relative to rates.

7. MUM: A new AI milestone for understanding information – Pandu Nayak

When I tell people I work on Google Search, I’m sometimes asked, “Is there any work left to be done?” The short answer is an emphatic “Yes!” There are countless challenges we’re trying to solve so Google Search works better for you. Today, we’re sharing how we’re addressing one many of us can identify with: having to type out many queries and perform many searches to get the answer you need.

Take this scenario: You’ve hiked Mt. Adams. Now you want to hike Mt. Fuji next fall, and you want to know what to do differently to prepare. Today, Google could help you with this, but it would take many thoughtfully considered searches — you’d have to search for the elevation of each mountain, the average temperature in the fall, difficulty of the hiking trails, the right gear to use, and more. After a number of searches, you’d eventually be able to get the answer you need.

But if you were talking to a hiking expert; you could ask one question — “what should I do differently to prepare?” You’d get a thoughtful answer that takes into account the nuances of your task at hand and guides you through the many things to consider.

This example is not unique — many of us tackle all sorts of tasks that require multiple steps with Google every day. In fact, we find that people issue eight queries on average for complex tasks like this one. 

Today’s search engines aren’t quite sophisticated enough to answer the way an expert would. But with a new technology called Multitask Unified Model, or MUM, we’re getting closer to helping you with these types of complex needs. So in the future, you’ll need fewer searches to get things done…

…Language can be a significant barrier to accessing information. MUM has the potential to break down these boundaries by transferring knowledge across languages. It can learn from sources that aren’t written in the language you wrote your search in, and help bring that information to you.

Say there’s really helpful information about Mt. Fuji written in Japanese; today, you probably won’t find it if you don’t search in Japanese. But MUM could transfer knowledge from sources across languages, and use those insights to find the most relevant results in your preferred language. So in the future, when you’re searching for information about visiting Mt. Fuji, you might see results like where to enjoy the best views of the mountain, onsen in the area and popular souvenir shops — all information more commonly found when searching in Japanese.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Alphabet (parent of Google). Holdings are subject to change at any time.