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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 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.

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 25 July 2021:

1. The Highest Forms of Wealth – Morgan Housel

Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough.

The highest forms of wealth are measured differently.

A few stick out:

1. Controlling your time and the ability to wake up and say, “I can do whatever I want today.”

Five-year-old Franklin Roosevelt complained that his life was dictated by rules. So his mother gave him a day free of structure – he could do whatever he pleased. Sara Roosevelt wrote in her diary that day: “Quite of his own accord, he went contently back to his routine.”

There’s a difference between working hard because you want to and working hard because someone else told you you had to, and how to do it, and when to do it. Even if you’re doing the same work, the independence of doing it on your own terms changes everything in the same way that sleeping in a tent is fun when you’re camping but miserable when you’re homeless.

To me, the highest form of wealth is controlling your time.

Wealth can lead to time independence, but it’s never assured. It can be the opposite, as whatever created the wealth – whether a company or an inheritance – creates a claim on your time in equal proportion to its financial reward. A great number of CEOs fall into this category: They have an abundance of wealth and not a moment of free time or scheduling control even when it’s desired, which is its own form of poverty.

Charlie Munger summed it up: “I did not intend to get rich. I just wanted to get independent.” It’s a wonderful goal, and harder to measure than net worth.

2. How to Predict a Market Crash – Ben Carlson

I’m not actually sure if Dent believes each one of his predictions but his latest interview provides some clues as to how the most preeminent market soothsayers are able to make market crash predictions over and over again.

Here’s how to predict a market crash without ever admitting you were wrong if it doesn’t come true:…

…Move the goalposts when you’re wrong. Once you’ve gone out on a limb with a prediction for a crash with a specific time frame in mind, eventually you have to pay the piper. Either you’re right or you’re wrong.

And since market crashes are fairly infrequent, if you keep predicting one you’re going to be wrong way more often than right.

You have two options when you make a prediction that turns out to be wrong:

(1) Admit you were wrong.
(2) Move the goalposts.

Let’s see which one Dent went with since he’s been predicting “the biggest crash ever” for years:

[Question] “You told me in an interview this past March that “the biggest crash ever” would likely occur by the end of this June. What are your thoughts on why that didn’t happen?

[Answer] It’s the same old story: We’ve been rebounding since COVID crashed us in March of last year. The stimulus was off the reservation! The central banks said, “We’ll triple down.” But that stresses the system: not letting the economy rebalance, not washing out zombie companies. Twenty percent of large public companies can’t meet their debt service.

So it was massive stimulus and the natural recovery — [Americans] had to hold back [spending] for months. So now we have this bounce.

We’ve been rebounding since COVID crashed us in March of last year. But I don’t think it’s going to last, and the markets don’t think it’s going to last. The bond markets are saying, “Yeah, now we’ve got 3% or 4% inflation, but it’s temporary.”

Governments will keep this bubble going no matter what. So the question is: When does it blow?”

Ah yes, the time-honored tradition of blaming the Fed for your ill-advised predictions. It’s almost like some pundits would like to invest as if central banks don’t exist, when in fact, they do.

3. Mark In The Metaverse – Casey Newton and Mark Zuckerberg

As always, there’s a lot to discuss with you — and the White House is demanding Facebook do more to remove vaccine misinformation, which I know is on a lot of people’s minds right now. I want to get to that, but I want to start with this talk you gave internally at Facebook a few weeks ago, which I recently had a chance to watch. You told your employees that your future vision of Facebook is not the two-dimensional version of it that we’re using today, but something called the metaverse. So what is a metaverse and what parts of it does Facebook plan to build?

This is a big topic. The metaverse is a vision that spans many companies — the whole industry. You can think about it as the successor to the mobile internet. And it’s certainly not something that any one company is going to build, but I think a big part of our next chapter is going to hopefully be contributing to building that, in partnership with a lot of other companies and creators and developers. But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it. And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.

I think a lot of people, when they think about the metaverse, they think about just virtual reality — which I think is going to be an important part of that. And that’s clearly a part that we’re very invested in, because it’s the technology that delivers the clearest form of presence. But the metaverse isn’t just virtual reality. It’s going to be accessible across all of our different computing platforms; VR and AR, but also PC, and also mobile devices and game consoles. Speaking of which, a lot of people also think about the metaverse as primarily something that’s about gaming. And I think entertainment is clearly going to be a big part of it, but I don’t think that this is just gaming. I think that this is a persistent, synchronous environment where we can be together, which I think is probably going to resemble some kind of a hybrid between the social platforms that we see today, but an environment where you’re embodied in it.

So that can be 3D — it doesn’t have to be. You might be able to jump into an experience, like a 3D concert or something, from your phone, so you can get elements that are 2D or elements that are 3D. I’d love to go through a bunch of the use cases in more detail, but overall, I think that this is going to be a really big part of the next chapter for the technology industry, and it’s something that we’re very excited about.

It just touches a lot of the biggest themes that we’re working on. Think about things like community and creators as one, or digital commerce as a second, or building out the next set of computing platforms, like virtual and augmented reality, to give people that sense of presence. I think all of these different initiatives that we have at Facebook today will basically ladder up together to contribute to helping to build this metaverse vision.

And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company. And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators. So there’s a lot to jump into here. I’m curious what direction you want to take this in. But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.

4. New cancer treatments may be on the horizon—thanks to mRNA vaccines – Stacey Colino

Molly Cassidy was studying for the Arizona bar exam in February 2019 when she felt an excruciating pain in her ear. The pain eventually radiated down through her jaw, leading her to discover a bump under her tongue. “I had several doctors tell me it was stress-related because I was studying for the bar and I had a 10-month-old son,” recalls Cassidy, who also has a Ph.D. in education. After continuing to seek medical care, she found out that she had an aggressive form of head and neck cancer that required intensive treatment.

After doctors removed part of her tongue along with 35 lymph nodes, Cassidy went through 35 sessions of radiation concurrent with three cycles of chemotherapy. Ten days after she completed treatment, Cassidy noticed a marble-like lump on her collarbone. The cancer had returned—and with a vengeance: It had spread throughout her neck and to her lungs. “By that point, I was really out of options because the other treatments hadn’t worked,” says Cassidy, now 38, who lives in Tucson. “In the summer of 2019, I was told my cancer was very severe and to get my affairs in order. I even planned my funeral.”

When doctors removed the tumor from her collarbone, they told her that she might be eligible to join a clinical trial at the University of Arizona Cancer Center that was testing an mRNA (messenger ribonucleic acid) vaccine—similar technology to the Pfizer and Moderna COVID-19 vaccines—in combination with an immunotherapy drug to treat colorectal and head and neck cancers. Whereas the COVID-19 vaccines are preventative, mRNA vaccines for cancer are therapeutic, and Cassidy jumped at the opportunity to participate. “I was at the right place at the right time for this clinical trial,” she says….

…Some mRNA vaccines for cancer take an off-the-shelf approach: These ready-made vaccines are designed to look for target proteins that appear on the surface of certain cancer tumors. How well they work is a matter of speculation right now, but some experts have concerns. “The question is: What is the target? You always have to have the right thing to target for the vaccine to be effective,” says David Braun, an oncologist at the Dana-Farber Cancer Institute and Harvard Medical School who specializes in immunotherapies. After all, with cancer, there isn’t a universal target the way there is with the coronavirus’s spike protein, and DNA mutations in cancer cells vary from one patient to another.

This is where personalized mRNA cancer vaccines enter the picture—and these may be more promising, experts say. With the personalized approach, a sample of tissue is taken from a patient’s tumor and their DNA is analyzed to identify mutations that distinguish the cancer cells from the normal, healthy cells, explains Bauman, who is also chief of hematology/oncology at the UA College of Medicine-Tucson. Computers compare the two DNA samples to identify the unique mutations in a tumor, then the results are used to design a molecule of mRNA that will go into the vaccine. This is typically done in four-to-eight-weeks—“it’s a technical tour de force to be able to do that,” says Robert A. Seder, chief of the Cellular Immunology Section of the Vaccine Research Center at the National Institute of Allergy and Infectious Diseases.

5. Twitter thread on how the use of Glassdoor could lead to better investing results – Impact Growth 

Glassdoor a worthwhile tool for forecasting stock returns?

🧩 I recorded the following data for all Nasdaq constituents to find out 

– ✨ Current Rating

– 📊 # of Reviews

– 🗣️ Rec to a Friend? 

– 👔 Approve of CEO? 

– 📈 Rating 2yrs ago

1) Do overall ratings correlate with stock returns?

✅ Yes!

📈 There exists a clear relationship between how highly employees rate a company and how well the stock does

2) Do stock returns correlate with 2yr rating changes? 

✅ Yes, but only over the longer-run

Avg 1/3yr returns when ratings are up/down over the last 2yrs:

📈 +35% / +107%

📉 +34% / +77%

3) The better the CEO, the better the stock?

Yes!

A clear relationship between CEO rating and long-run stock performance

6. Infinity Revenue, Infinity Possibilities – Packy McCormick

From an internet cafe in Cabanatuan City, Philippines, a 22-year-old named Howard described the game he plays to make a living as innocent-looking but strategic. That game, Axie Infinity is a Pokémon-like game built on the Ethereum blockchain in which people buy digital pets, called Axies, as NFTs, and breed, battle, and trade them. It’s cute. It’s unassuming…

…Axie’s cuteness obfuscates an absurdly fast-growing business, one counterintuitively trying to vertically integrate in a web3 ecosystem known for composing modularly. Beyond the business, it has a wildly bold master plan to reshape economic policy and local governance by showing what’s possible when people work in the Metaverse. In its whitepaper, Axie developer Sky Mavis explicitly says, “You can think of Axie as a nation with a real economy.”

That’s the grand plan. Right now, most of the focus on Axie centers around its eye-popping growth… Axie Infinity is picking up players and revenue at a nearly-unprecedented clip…

…In April, Axie did about $670k in revenue.

In May, it did $3.0 million.

In June, $12.2 million.

In July, just 18 days into the month, it’s already at $79 million.

Delphi Digital projects that it will close this month at $153 million. 

The Axie protocol generates revenue by taking a 4.25% fee when players buy and sell Axie NFTs in its marketplace, and by charging fees for breeding Axies to create new ones in the form of its tokens, Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). AXS and SLP are denominated in ETH, which has been cut by more than half since May; Axie has grown USD revenue even in the face of falling ETH prices.

7. Software Beyond the Stratosphere: Loft Orbital Launches World’s First Commercial Ride-Share Satellites – Ubiquity Ventures

On June 29, 2021, Loft Orbital activated the world’s first two commercial ride-share satellites in orbit around Earth. The missions were called YAM-2 and YAM-3, where YAM stands for “yet another mission”. Prior to Loft Orbital, it would take 5 to 10 years to design, build, and launch a satellite containing a single dedicated payload to Earth orbit where it can carry out its work such as transmitting signals like satellite TV or internet, snapping photos for Google Maps, etc.

Instead, Loft Orbital’s satellites bring several different customers’ payloads to orbit at the same time. These two particular Loft Orbital satellites are carrying 10 different customer payloads, spanning many different industries:

• Established space: Eutelsat (Europe’s largest satcom provider)
• Government: DARPA and the UAE space agency
• Newspace: Totum and others

These customers are utilizing their sensor payloads for a variety of use cases including IoT connectivity, weather data, flying space autonomy software, precision positioning, and more. Future Loft Orbital missions have already signed up customers including Honeywell, NASA, and the US Space Force.

For each of these customers, Loft Orbital is the fastest and simplest path to space…

…Loft makes it simple and fast for more people to utilize space.

By doing so, Loft is unlocking a massive amount of demand from potential space users who may not have had the knowhow, resources (typically billions of dollars for a sovereign government) or time (typically 10+ years) to get to space. To accomplish this, Loft Orbital designed these satellites leveraging their plug-and-play payload adapter, attached various customer payloads, booked launches on rockets, coordinated regulatory certifications, tested the completed satellite (thermal, vibration, and more), and integrated these satellites onto a rocket. From here, Loft Orbital will manage these satellites in orbit using their Cockpit mission control software and downlink data from these customer payloads for the next few years. Loft Orbital customers get to focus on their payload and leave everything else to Loft.

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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 Facebook. 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 18 July 2021:

1. Think different: 10 unconventional lessons from owning Apple shares for 10 years – Chin Hui Leong

3. Unconventional wisdom

The world plunged into a financial crisis in 2008. When it comes to recessions, conventional wisdom suggests that you should rotate out of discretionary into non-discretionary stocks.

Yet, Apple’s strong business performance during this period puts a dent in this belief. Sales of its devices, which are often deemed to be discretionary in nature, propelled the firm’s revenue up by over 52 per cent between 2007 and 2009.

In contrast, non-discretionary stocks such as Proctor and Gamble (NYSE: PG) only managed a tepid 5.6 per cent revenue growth in that period.

Conventional wisdom does not always hold up. Look for real-life evidence.

4. Unimaginable growth

When I bought Apple shares in 2010, the company generated a little under US$43 billion in revenue for fiscal year 2009. By 2012, its topline had exceeded US$156 billion. In just three years, sales more than tripled, a phenomenal feat by any measure.

As investors, we should recognise that we can only project what we can imagine. When it comes to great companies such as Apple, you are better off leaving plenty of leeway to be surprised on the upside. From my experience, they often do.

5. Internet-scale businesses

In 2010, there were no trillion-dollar companies; today, there are five such companies. A big reason is smartphones, which have helped to increase the global population with Internet from 1.8 billion in 2010 to over five billion today.

Connectivity has made it possible to reach billions of customers today, a scale that did not exist a decade ago.

As investors, we should expect to see more trillion dollar, Internet-scale companies in the future.

6. A different future

If you plan to buy an innovative company, be ready for the business to look different a decade from today.

Case in point: At the end of fiscal year 2009, Apple was a product-focused company. Sales of iPhones, iPods and Macs made up well over 80 per cent of its revenue. Software and services accounted for less than 6 per cent.

By fiscal 2020, services had grown to almost a fifth of all its revenue and over a third of its gross profits. For a sense of scale, Apple’s services revenue alone is more than twice what Netflix (NASDAQ: NFLX) makes in a year.

7. Value you can’t see

Apple has introduced new products over the past decade. The Apple Watch was introduced in 2014, followed by the debut of Airpods two years later . In 2017, HomePod was launched.

Thing is, much of its roadmap was not visible in 2010.

Therefore, if you valued Apple’s business a decade ago, you would not have known the future value these products would create.

Again, innovative companies tend to surprise on the upside.

2. What Is CRISPR? – CB Insights

CRISPR is a defining feature of the bacterial genetic code and its immune system, functioning as a defense system that bacteria use to protect themselves against attacks from viruses. It’s also used by organisms in the Archaea kingdom (single-celled microorganisms).

The acronym “CRISPR” stands for Clustered Regularly Interspaced Short Palindromic Repeats. Essentially, it is a series of short repeating DNA sequences with “spacers” sitting in between them. 

Bacteria use these genetic sequences to “remember” each specific virus that attacks them.

They do this by incorporating the virus’ DNA into their own bacterial genome. This viral DNA ends up as the spacers in the CRISPR sequence. This method then gives the bacteria protection or immunity when a specific virus tries to attack again.

Accompanying CRISPR are genes that are always located nearby, called Cas (CRISPR-associated) genes.

Once activated, these genes make special proteins known as enzymes that seem to have co-evolved with CRISPR. The significance of these Cas enzymes is their ability to act as “molecular scissors” that can cut into DNA.

To recap: in nature, when a virus invades bacteria, its unique DNA is integrated into a CRISPR sequence in the bacterial genome. This means that the next time the virus attacks, the bacteria will remember it and send RNA and Cas to locate and destroy the virus.

While there are other Cas enzymes derived from bacteria that cut out viruses when they attack bacteria, Cas9 is the best enzyme at doing this in animals. The widely-known term CRISPR-Cas9 refers to a Cas variety being used to cut animal (and human) DNA.

In harnessing this technology, researchers have added a new step: after DNA is cut by CRISPR-Cas9, a new DNA sequence carrying a “fixed” version of a gene can nestle into the new space. Alternatively, the cut can altogether “knock out” of a particular unwanted gene — for example, a gene that causes diseases.

One way to think about CRISPR-Cas9 is to compare it to the Find & Replace function in Word: it finds the genetic data (or “word”) you want to correct and replaces it with new material. Or, as CRISPR pioneer Jennifer Doudna puts it in her book A Crack In Creation: Gene Editing and the Unthinkable Power to Control Evolution, CRISPR is like a Swiss army knife, with different functions depending on how we want to use it.

CRISPR research has moved so fast that it’s already gone beyond basic DNA editing. In December 2017, the Salk Institute designed a “handicapped” version of the CRISPR-Cas9 system, capable of turning a targeted gene on or off without editing the genome at all. Going forward, this kind of process could ease the concerns surrounding the permanent nature of gene editing.

3. Let the bullets fly for a while – Lillian Li

There’s a symbiotic relationship between old public institutions and rising new digital institutions in China. Didi cleaned up the grey market for black cabs, Meituan and Ele.ma act as de facto restaurant inspectors. Every content platform carries out content moderation on behalf of the party. The government is pragmatic. In the fragmented authoritarian governance structure of China, the agents that can introduce and maintain legibility stay. 

With these hybrid governance structures experiencing hypergrowth, it is not obvious what should be regulated and how. Despite the absence of a blueprint, there is a regulator cadence that I term “let the bullets fly for a while”…

…To fully grok China, one needs to watch the brilliantly dark film called Let the Bullets Fly. Since its release in 2010, the tale about a robber-turned-pretend governor in the feudalist Goosetown has become a Chinese cyberspace meme staple. Ladened with things said and unsaid about the rules and boundaries of power, money and lawfulness in China, it is a cultural touchstone.

In the midst of pivotal scenes —bewildering battles where nothing is clear — subordinates ask the robber-governor what to do. Inevitably, he responds with the infamous line “Let the bullets fly for a while.” Meaning, let the chaos run; who knows what issues resolve themselves without intervention, or when the tide will turn. Inaction is an asset during uncertainty. Calling things too soon shuts down possibilities.

My love of Chinese Internet memes aside, this turn of phrase has resonance amongst regulators and economists. It’s been a favourite catchphrase in conversations when they are asked to describe the Chinese regulatory approach. This is also borne out by macroeconomic theory3, when markets experience high future uncertainty (as is the case in new emerging markets) where regulators have inadequate regulatory tools, bias towards inaction is a dominant strategy.

Deng’s slogan of “crossing the river by feeling the stones” captures the subtle pragmatism needed to navigate brave new worlds. Partly due to imperfect information and partly due to the lack of consensus on the regulatory approaches to take, Chinese regulators have historically taken an-observe-then-act approach. 

4. Scale: Rational in the Fullness of Time – Packy McCormick

When Wang and co-founder Lucy Guo founded Scale out of Y Combinator in 2016, the company was called Scale API and its value prop was essentially that it was a more reliable Mechanical Turk with an API. They started with the least sexy-sounding piece of an incredibly sexy-sounding industry: human-powered data labeling.

Customers sent Scale data, and Scale worked with teams of contractors around the world to label it. Customers send Scale pictures, videos, and Lidar point clouds, and Scale’s software-human teams would send back files saying “that’s a tree, that’s a person, that’s a stop light, that’s a pothole.”

By using ML to identify the easy stuff first and routing more difficult requests to the right contractors, Scale could provide more accurate data more cheaply than competitors. Useful, certainly, but it’s hard to see how a business like that … scales. (I’m sorry, but I also can’t promise that will be the last scale pun).

Scale’s ambitions are obfuscated by its starting point: using humans to build a seemingly commodity product. A bet on Scale is a bet that data labeling is the right starting point to deliver the entire suite of AI infrastructure products.

If Wang is right, if data is the new code, the biggest bottleneck for AI/ML development, and the right insertion point into the ML lifecycle, then the brilliance of the strategy will unfold, slowly at first then quickly, over the coming years. It will all look rational in the fullness of time.

Scale has a high ceiling. It has the potential to be one of the largest technology companies of this generation, and to usher in an era of technology development so rapid that it’s hard to comprehend from our current vantage point. But it hasn’t been all clear skies to date, and the future won’t be easy either. It will face competition from the richest companies and smartest people in the world. It still has a lot to prove.

In either case, Scale is a company you need to know. It’s also an excellent excuse to dive into the AI and ML landscape and separate fact from science fiction. It’s looking increasingly likely that AI will find itself in the technology impact pantheon alongside the computer, the internet, and potentially web3.

5. Lessons in Low Ego Leadership with DocuSign CEO Dan Springer – Mathilde Collin and Dan Springer

Mathilde Collin: Great. I’ve heard from many people that you’re a great leader and I think you’ve already spent twenty five years in leadership positions. And I’m curious if you have any philosophy on leadership that you’d like to share with our audience.

Dan Springer: Yeah, I mean there’s a slightly geeky term that I like to use to sort of simplify how I evaluate leaders in the company or when I’m interviewing people about potentially bringing in a company which is sort of combining three different factors that I think are really critical.

The first one is whether people have the right sort of skills and smarts to be effective in their job. The second one is, are they able to manage their ego and so that they’re able to be manager, you go well, folks on the teams results as opposed to their individual results and credit analysis is simply how hard they work and how much they apply themselves.

And the formula that I like to use with those three things is I take the S or the smarts and skills divide that by the ego. Did you want to do a better job minimizing that and then raise that quotient to the power of how hard you work and you can play around with numbers like one to five and do your own assessment. And so to see this sort of interesting things, you do play around with the math. But the key thing for me is to realize that to some extent you can get smarter and you can develop more skills. But we’re all sort of given some certain level of capabilities that we have and some better for some jobs. Once you have that, the parts you can really control with how you manage your ego and how you really apply yourself and how hard you work. And so I try to encourage people to say that’s where you should put your focus and developing yourself as an individual contributor, but particularly as a manager is are you going to be successful by those two variables you can control?

Mathilde Collin: And I’m curious, how do you teach people or help people work on their ego?

Dan Springer: So that’s the part that’s interesting because sometimes it’s easy for people, some people naturally have high cues. Their personality is to be supportive of other people. They get their joy out of watching people develop. So it’s easy for them to do it. And some people, it’s really, really difficult. And the thing I would tell you is that we’re all on a journey. And when I try to talk to people about ego management, if you will, I try to go back and say, hey, let me tell you, I think today I’ve gotten to a point on a one to five scale, which is I’ve gotten to about four. I think I do a pretty good job of putting the organization first. Customers first. The other employees first over myself.

But when I was twenty three, a young person I go, I probably was a one or two on ego. I you know, I was very focused on my own career. I was competitive, I was ambitious. And, you know, I was not great at that. I had some early management jobs where it wasn’t, I don’t think, very good as a manager and very sensitive. I was managing people much older than I was, and I just didn’t have an awareness of how to do that.

Well, so you sort of start off and say, I’ve been there is someone struggling, I’ve been where you are. It takes some work. But what it mostly takes is awareness and focus. And so that’s what I try to tell them stories about. Here’s places that I wasn’t aware of. So not just me, so I could be other stories of other people. And here’s what they did to be more successful, because that’s one. And the second big thing is giving people feedback. And I would say feedback is a gift and you need to be able to explain to people why you see them underperforming on the ego dimension and say, this is how I saw you interact with your teammates. And this is what other people say when they come out of interactions with you and why they maybe feel bruised or not supported whatever it might be, and giving people that direct, you know, and really critical feedback on how they’re showing up is, I think the only way you can really help if it’s not about book learning. I mean, you can read stories, but it really is about that intensely personal development.

6. Commentary: Chinese fashion giant Shein has taken over the world. It has just met its match – Patrick Reinmoeller, Mark Greeven, and Yunfei Feng

With fast fashion firms under pressure to stay ahead of fashion cycles and entertain customer desire for the newest styles, there’s a growing countertrend that questions its breakneck speed.

The global fashion industry generates about 4 to 10 per cent of total greenhouse gas emissions, more than all international flights and maritime shipping combined.

According to the World Bank, the fashion industry uses 93 billion cubic metres of water every year, an amount that 5 million people could use for consumption instead.

The industry also produces about 20 per cent of wastewater worldwide through dyeing and treating fabrics. It dumps microfibers that amount to about 50 billion plastic bottles into the ocean and disposes 87 per cent of total fibre input annually.

These negative effects of fashion are predicted to increase by 50 per cent by 2030, as more buy into the ethos of fast fashion: Buy fast, buy new, and dispose prematurely. According to the Ellen MacArthur Foundation, the average person today buys and discards about 60 per cent more clothing compared to 2000.

Fast fashion leaders have launched initiatives that boost their sustainability record, though they’ve been met with scepticism. Although H&M has started already in 2010 with its Conscious Collection emphasising organic and sustainable fabrics, the Norwegian Consumer Authority said information provided about the clothing, such as the amount of recycled material in each item, is insufficient.

A rejection of overconsumption in favour of essentials and basics, espoused by brands like Patagonia, fares better with those concerned about fashion’s environmental impact.

New models are emerging fast. Business models of vintage, recycled clothes are quickly losing their stigma in the West.

7. Too Smart – Morgan Housel

What’s boring is often important and the smartest people are the least interested in what’s boring.

Ninety percent of personal finance is just spend less than you make, diversify, and be patient.

But if you’re very intelligent that bores you to tears and feels like a waste of your potential. You want to spend your time on the 10% that’s mentally stimulating.

Which isn’t necessarily bad. But if your focus on the exciting part of finance comes at the expense of attention to the 90% of the field that’s boring, it’s disastrous. Hedge funds blow up and Wall Street executives go bankrupt doing things a less intelligent person would never consider. A similar thing happens in medicine, a field that attracts brilliant people who may be more interested in exciting disease treatments than boring disease prevention.

There’s a sweet spot where you grasp the important stuff but you’re not smart enough to be bored with it.

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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, DocuSign, Meituan, and Netflix. 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 11 July 2021:

1. The Beginning of Infinity – Naval Ravikant and Brett Hall

Brett Hall: Hello Naval, it’s great to be here. You’ve raised so many interesting aspects of The Beginning of Infinity, which has become a real passion of mine. Like a lot of people who enter science, when I was at school I thought, “Well, I want to be an astronomer, so I’ll go to a university and do a physics degree, then do an astronomy degree, and then become a professional astronomer.”

One day I picked up David Deutsch’s The Fabric of Reality in a bookstore and started reading it. The first chapter described what I was trying to achieve in my life. It was putting into words what I felt my university studies and my general outlook on life was about.

Deutsch says that the ancient philosophers thought they could get an understanding of the entire world. As time passed, though, modern science made it seem as though this was an impossible project. There’s no way you could understand everything about reality. There’s too much to know.

How could you possibly know everything?

At the beginning of The Fabric of Reality, David Deutsch presents this idea that you don’t need to know every single fact to fundamentally understand everything that can be understood.

He presents this vision that there are four fundamental theories from science and outside science: quantum theory, the theory of computation, evolution by natural selection, and epistemology—which is the theory of knowledge. Together they form the worldview, or lens, through which you can understand anything that can be understood…

…Brett: Deutsch’s worldview is that reality is comprehensible. Problems are solvable, or “soluble,” as he writes. It’s a deeply rationally optimistic worldview that believes in good scientific explanations and progress.

Progress is inevitable as long as we have these good explanations. Good explanations have tremendous reach. They are acts of creativity.

Humans are problem solvers and can solve all problems. All sins and evil are due to a lack of knowledge. One can be optimistic about constant progress. That’s what the title refers to: We’re at the beginning of an infinite series of progress.

It’s a very optimistic take. It states that we are at home in the universe and the universe is ours as a resource to learn about and exploit; that material wealth is a set of physical transformations that we can affect; that everything that is not forbidden by the laws of physics is eventually possible through knowledge and knowledge creation.

He also writes about how humans are universal explainers, that anything that can be known and understood can be known and understood by human beings in the computation power of a human system.

Everything is knowable by humans. We’re at the beginning of an infinity of knowledge.

We understand things using good explanations and constantly replace old theories with better ones. There’s no endpoint in sight. There’s no perfection. Every theory can be falsified eventually and improved.

We are on our way to being able to do everything that is not forbidden by the laws of physics…

…Naval: Does probability actually exist in the physical universe, or is it a function of our ignorance? If I’m rolling a die, I don’t know which way it’s going to land; so therefore I put in a probability. But does that mean there’s an actual probabilistic unknowable thing in the universe? Is the universe rolling a die somewhere, or is it always deterministic?

Brett: All probability is actually subjective. Uncertainty and randomness are subjective. You don’t know what the outcome’s going to be, so you roll a die. That’s because you individually do not know; it’s not because there is uncertainty there deeply in the universe. What we know about quantum theory is that all physically possible things occur.

This leads to the concept of the multiverse. Rather than refute all of the failed ways of trying to understand quantum theory, we’re going to take seriously what the equations of quantum theory say. What we’re compelled to think about quantum theory, given the experiments, is that every single possible thing that can happen does happen. This means that there is no inherent uncertainty in the universe because everything that can happen actually will happen. It’s not like some things will happen and some things won’t happen. Everything happens.

You occupy a single universe, and in that universe, when you roll the die, it comes up a two. Somewhere else in physical reality, it comes up a one, somewhere else a three, a four, a five, and a six.

Naval: If I’m rolling two dice, then the universes in which they sum up to two is less than the number of universes in which we roll a seven, because that can be a three and a four, a five and a two, and so on. So the number of universes still does correspond to what we calculate as the probability.

2. A Framework for The Metaverse – Matthew Ball

The Metaverse is often mis-described as virtual reality. This is like saying the mobile internet is the iPhone. The iPhone isn’t the mobile internet; it’s the consumer hardware and app platform most frequently used to access the mobile internet.

Sometimes the Metaverse is described as a virtual user-generated content (UGC) platform. This is like saying the internet is Yahoo!, Facebook, or World of Warcraft. Yahoo! is an internet portal/index, Facebook is a UGC-focused social network, World of Warcraft is an MMO. Other times we receive a more sophisticated explanation, such as ‘the Metaverse is a persistent virtual space enabling continuity of identity and assets’. This is much closer to the truth, but it too is insufficient. It’s a bit like saying the internet is Verizon, or Safari, or HTML. Those are a broadband provider that connects you to the entire web, a web browser that can access/render all of the internet’s webpages from a single screen and IP identifier, and a markup language that enables the creation and display of the web. And certainly, the Metaverse doesn’t mean a game or virtual space where you can hang out (similarly, the Metaverse isn’t now ‘here’ just because more of us now are hanging out virtually and/or more often).

Instead, we need to think of the Metaverse as a sort of successor state to the mobile internet. And while consumers will have core devices and platforms through which they interact with the Metaverse, the Metaverse depends on so much more. There’s a reason we don’t say Facebook or Google is an internet. They are destinations and ecosystems on or in the internet, each accessible via a browser or smartphone that can also access the vast rest of the internet. Similarly, Fortnite and Roblox feel like the Metaverse because they embody so many technologies and trends into a single experience that, like the iPhone, is tangible and feels different from everything that came before. But they do not constitute the Metaverse.

3. Twitter thread on how Facebook uses user-data – Jesse Pujji

Is Facebook listening to your conversations? No, they are not. They are doing something MUCH more effective! Here’s how it works

The two most valuable pieces of software on earth are: 1) the $FB pixel and 2) the $FB newsfeed. When you wonder, how come FB is worth $1T and Twitter is only $55BN, those two pieces of software are your answer.

The FB pixel is a tiny piece of code that nearly every website on the planet has embedded. It feeds data back to FB (in aggregate, anonymized) for the list of websites visited, how much time was spent, did you buy or not, etc.

The newsfeed algo looks at that as a signal as well as hundreds of other things (your age, who your friends are, what ads you screenshot) to determine which ad to place in front of you. Again, all of this is done in groupings. Not personal.

When they get it right: right message in front of right person at right time….everyone wins. A brand finds a new customer. You find a product you want. FB makes $.

And this is a good thing. You get value from this all the time. You’re shopping for a mattress. You go to Casper’s website. Then back to FB/IG. You start getting ads for other mattress companies and even a mattress comparison site. You find the right choice, you buy!

4. Money Rules – Morgan Housel

The formula for how to do well with money is simple. The behaviors you battle while implementing that formula are hard.

“Save more money and be more patient” is too simple for most people to take seriously, but it’s the best solution to most financial problems.

Expectations move slower than reality on the ground, so it’s easy to become frustrated when clinging to the economic trends of a previous era.

Everything is relative. John D. Rockefeller was asked how much money was enough and said, “Just a little bit more.” Everyone, at every income, tends to feel the same. 

5. Doing Nothing is Hard Work – Ben Carlson 

If you watch all 10 penalty kicks you begin to notice a theme in the strategy by the goalies — they like to dive. In fact, each goalie dove on every penalty kick attempt. And as luck would have it, this strategy worked on the very last kick.

I’m not exactly a soccer expert, but there are a few obvious reasons the goalies dive like this.

The striker has the advantage since the goal is so large and they get to kick from a relatively short distance. And since they can kick the ball with such force the goalie has to make a split-second decision.

But it also looks really cool.

Saving a ball that’s kicked right at you is boring. A diving save, on the other hand, makes you look like a hero. And so it was in yesterday’s match.

It’s hard to argue with this strategy considering it won Switzerland the game.

There is an alternative to the horizontal diving save, though. The goalie could simply stay put in the middle.

Researchers in Israel studied nearly 300 penalty kicks from various leagues and championship matches over the years to gain a general sense of the strategy for both goalies and strikers.

They found the goalkeeper dove left or right nearly 94% of the time, meaning the other 6% of the time they basically just stayed in the middle hoping the kick would come right down the pipe…

…Strikers were five times more likely to kick it down the middle than goalies were to stay in the middle waiting for a direct kick.

We humans simply have a bias towards action over inaction.

Goalies admitted they felt worse about themselves if they stayed put in the middle and there was a goal kicked to the right or left. It’s easier to stomach a ball kicked right down the middle if they dove left or right because it showed their effort.

We want to have our hands on the steering wheel to give us a sense of control, even when that control is an illusion.

The illusion of control applies to investing as well.

Successful investing tends to be boring and long-term in nature but it’s hard to look cool with a boring, long-term strategy. Where’s the fun in that?

In many areas of life, the harder you work, the more you are rewarded for your efforts. This rule of thumb does not apply to the markets. Much of the time the more you press the worse your results when it comes to the markets.

A bias towards action at all times when investing opens you up to all sorts of mistakes, many of which are of the avoidable or unnecessary variety.

6. David Velez – Building The Branchless Bank – Patrick O’Shaughnessy and David Velez

Patrick: [00:04:26] What do you think are the most important differentiators between what we’ll call the incumbent banks that maybe Berkshire invested in more traditionally, versus Nubank? What are the largest important differences for those out there, listening to understand?

David: [00:04:40] I think the first one is, the consumer obsession and a culture that is based on consumer obsession. I don’t think this is necessarily specific to financial services. I think one common denominator of incumbent industries, either financial services, or if you look at insurance or even in media or transportation, is that after let’s say six, seven decades of traditional capitalism, you ended up with a number of players, oligopolies, where four or five companies effectively own the market. Whenever you see another golf police structure, you find that there are abnormal returns and you also find a lot of complacency among incumbents. That complacency, ultimately ends up translating into taking customers for granted when it should be the actually opposite. Ultimately, you win because customers choose you. What you find in Latin America and a lot of emerging markets and a little bit of the US, is that there are five banks that have won, let’s say banking 1.0, and they will become complacent and they forgot about customers.

There are a number of different things that we’re doing differently. But I would say the number one is having a culture that is obsessed about customers and doing the right thing for the customers, from doing the right decisions, to giving the right customer service, to building products that are really actually good for them. I would say that’s number one. Then there is all the tactical advantages that being a technology company at heart provides. Obviously from being a fully digital company and not needing to have a full offline distribution, very expensive backend branches, that allows us to have about 50X more customers per human, than traditional banks. Just being in total detail, we have one building here in Sao Paulo and have 40 million customers different 5,570 Brazilian cities in the Amazons, in the south, we have customers in Mexico city, obviously, and Columbia. That gives us a huge operational efficiency.

Ultimately, that translates into significant cost efficiency, that we can pass to the end consumer via lower fees. We don’t need to charge so many fees. We don’t charge any fees. Then there’s all the other advantages of being a tech company from a data first, analytics infrastructure, to be able to use a lot of data to make a lot of different decisions. All of these different advantages, add up to building a type of offering that is very hard for the traditional incumbents to match.

Patrick: [00:07:11] Maybe you could just level set for us, today in the markets where you operate, if I was about to become a new Nubank customer, what does that traditionally feel like? What is the model customer doing with you and how do they sort of get on board to begin?

David: [00:07:24] 90% of our customers come through word of mouth, completely referred by other friends. We’ve been really growing fully by word of mouth, no customer acquisition costs since 2014, when we launched. And our latest cohort last month, is exactly the same as our first cohort in 2013. It’s been viral, which is unexpected for a financial services product. You don’t see a credit card has no virality characteristics. There’s no real network effects when you think about it. It’s not Facebook. It’s not Instagram, where if all your friends are there, you want to be there. Here, you will have a loan product that doesn’t necessarily make it better for your friends. I’ll provide a little bit more nuance then later on because in effect that’s one of the things that we’ve done differently. But in general, most people will hear from us through a friend, will download the app or will be invited by a friend. The friend will send you an invitation via WhatsApp or email or Facebook or any type of channel. You accept the invitation. You download the app. And in a few seconds or a few minutes, you have a bank account open. You have a credit card, a virtual credit card working. We’ll send you a physical credit card to your house in one or two days it’s there.

Then you get access to a number of different products that we have. You can get an insurance product, you kind of start investing your money in a number of your funds, and also equities through Easynvest, a company we bought last year. If you have any questions, you can ask any questions via the chat that we have in our app. And all your interaction is fully digital through the app. The last thing I’ll add is, one of the big pains in this market is, over 40% of the population are blacklisted in the consumer bureaus. They are outside of the credit system. If you want to credit, you do not pay the average 500% APR. You pay 1000% APR. Because there are a couple of institutions that will lend you money at that rate. Most traditional institution will not lend you if you are black listed in one of the bureaus. Just because there was no FICO score. There was no positive credit information, only negative.

I’ll give you an example. In my case, I moved apartments and the cable company still send me a bill for $10 and I never got that bill. So I became a delinquent for them. They sent me to one of these credit bureaus. If I needed a loan from one of the big banks, I would have had been rejected. A lot of the opportunity here was for us to build new credit methodologies, build our own FICO, proprietary. Allow us to underwrite most of the population, both the banked and the better. One of the big variables in our model is, who invites you? Since 90% of our customers come through referrals, we use the credit information of their referral as an input into our credit model. It turns out, it is very predictive and it has allowed us to underwrite two people on lower costs that never had access to any type of credit product.

7. The Elon Musk Productivity Email – Elon Musk

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

– A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

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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), Facebook, and Tesla. Holdings are subject to change at any time.