Jeff Bezos' Shareholder Letter - Jeff Bezos just wrote what looks to be his last shareholder letter since he is transitioning out of the CEO role.
All of Jeff Bezos’ letters are worth reading since he is one of the best innovators and capital allocators of our time but I thought this letter was one of his better ones.
Here are some of the topics Jeff discuses in his last letter to shareholders:
- He shares a touching letter from a shareholder who only could afford two shares of Amazon back in 1997 but has held on since.
- He discusses all the value that Amazon has created for all its stakeholders over the last two decades.
- He commits to two big new goals for Amazon.
- He briefly addresses some of the news reports about the treatment of their employees.
- He discusses climate change
- And he finishes with a metaphor on how Amazon must never be average.
It’s well worth your time.
Have a read by following this link to the full letter:
You can also read the summary that I created here:
Your Life Journey Exercise - In this post, Ray Dalio discusses an exercise that he created to help people put their life and the lives of the people they care about into perspective and to help them get what they want by planning for what is to come in the future.
To do this, he created a life arc which consists of three very different phases and lasts on average about 80 years.
Phase 1 — under the care of your parents and in school.
Phase 2 — others are dependent on you and you’re working.
Phase 3 — you’re out of work and free from all of the challenges that you face in the 2nd phase so you can enjoy the end of your life and pass away.
A lot of this post isn’t really anything new but it does organize life into a way to help you better reflect on it and understand what is coming in the future.
Ray mentions that the more you visualize your life over the next 10 years, the better it is more likely to be.
And here is a link to the full article:
And here is a summary that I created:
How A Handful Of Chip Companies Came To Control The Fate Of The World - This month’s Best Read of the Month is from Brinton Johns and Jon Bathgate of NZS Capital who do an amazing job discussing the semiconductor industry and how it got to be so important to the world.
Almost every industry in the economy runs on computer chips in one way or another whether it is airlines, food delivery, health, military, transportation and agriculture.
Computer chips have become so important to the economy that if some of the biggest players in the chip market like Taiwan Semiconductor Manufacturer (TSMC), ASML, Lam Research, Cadence, Synopsis and KLA-Tencor were to cease operations then the global economy would very likely experience a huge setback in growth.
And here are some of the factors that could pose a risk to the semiconductor industry:
Almost all of those computer chips are manufactured on an island (Taiwan) whose sovereignty is in dispute.
One organization named ASML has a huge lead in photolithography*.
Almost all memory (95%) is made by only three companies (Samsung, SK Hynix and Micron).
It’s almost impossible to design a chip without using the software of only two companies — either Cadence or Synopsis.
Here is a link to the full whitepaper:
And a summary that I created for you to read:
What Paul Graham Worked On - Paul Graham is one of the founders of a very popular and successful seed accelerator called Y Combinator which has been an early investor in many successful companies such as Airbnb, Stripe, Instacart, Coinbase, Dropbox, Twitch, Reddit, DoorDash and many others.
He also founded Viaweb which was eventually bought out by Yahoo.
At the end of Paul’s tenure at Yahoo, Paul had an interesting conversation with his boss that he describes in this essay where his boss thought he was lying to him about why he was leaving Yahoo which Paul later realized was because his boss was afraid that he was going to start another company to compete with Yahoo. Keep in mind this was during the Dot Com bubble.
Here is how Paul describes this encounter:
“When I said I was leaving, my boss at Yahoo had a long conversation with me about my plans. I told him all about the kinds of pictures I wanted to paint. At the time I was touched that he took such an interest in me. Now I realize it was because he thought I was lying. My options at that point were worth about $2 million a month. If I was leaving that kind of money on the table, it could only be to go and start some new startup, and if I did, I might take people with me. This was the height of the Internet Bubble, and Yahoo was ground zero in it. My boss was at that moment a billionaire. Leaving then to start a new startup must have seemed to him an insanely, and yet also plausibly, ambitious plan.
But I really was quitting to paint, and I started immediately.”
Paul is also very widely known for his great writings that he’s done on his website, paulgraham.net, and for starting the website Hacker News.
In this essay Paul talks about his journey from college as an undergrad all the way to right after he transitioned out of his leadership role at Y Combinator.
It’s a very interesting journey and is filled with lots of great advice from his experiences.
Something of Value - Howard Marks’ memos are one of my favorite writings to read.
I always look forward to reading his memos as soon as they come out and this one I thought was one of his more informative ones.
In this memo, he discusses value investing and growth investing, and I think it’s one of his more informative ones not only because it’s packed with so much great experience and knowledge from Howard’s career but also because I can sense a shift in his perspective a little bit.
His stance toward the high growth stocks today and Bitcoin I believe would have been different ten years ago.
Ten years ago I think he would have dismissed them a lot more based on the traditional value measures such as P/E and P/S but today he is taking a lot more of an open mind and not dismissing them outright.
I wasn’t expecting this which led me at first to wonder if this was a sign of a top in a bull market that has seen a rapid rise from its bottom back in March 2020.
I then wondered that since he was having this discussion with his son that it was making it harder for him to be unbiased but in my opinion I don’t think this is the case.
Although in my opinion the market has seen a rapid rise from it’s March 2020 low and there are probably some areas of the market that are trading at excess valuations and could pose the risk of being in a bubble, I think that there are also some tech companies that do have large total addressable markets and require a lot less capital to grow to capture these markets therefore they aren’t as limited as companies in the past that traded at high valuations but required lots of capital to grow so there high valuations could be justified to an extent.
Howard mentions this important aspect in his memo and he also does a good job defining what value investing is and describing its history going back to Benjamin Graham.
He then delves into Warren Buffett and how he embraced using value investing to invest in growth stocks and that there is no difference between value stock investing and growth stock investing since value investing is buying an asset for less than what it’s worth and all investments — whether growth stocks or value stocks — should be bought at a price that is less than what they are worth.
Howard then goes on to mention many discussions he has had with his son that I felt were very informative because these are two very knowledgeable investors who have opposite views on certain stocks and are factoring each other’s point of view in order to make the correct decision.
One of the informative discussions they had was on when to sell or trim a position even if that position has gone up a lot.
This memo is one of Howard’s longer memos but also one of his best ones so I highly recommend giving it a read, especially if you’re interested in picking stocks.
Here are some great quotes I gathered from Howard’s investment memo:
“When you find an investment with the potential to compound over a long period of time, one of the hardest things is to be patient and maintain your position as long as doing so is warranted on the basis of prospective return and risk. Investors can easily be moved to sell by news, emotion, the fact that they’ve made a lot of money to date, or the excitement of a new, seemingly more promising idea. When you look at the chart for something that’s one gone up and to the right for 20 years, think about all the times a holder would have had to convince himself not to sell.”
— — — — —
“Thus, to me the essential underlying principles of value investing are these:
— the understanding of securities as stakes in actual businesses,
— the focus on true worth as opposed to price,
— the use of fundamentals to calculate intrinsic value,
— the recognition that attractive investments come when there is wide divergence between the price at which something is offered in the market and the actual fundamental worth you’ve determined, and
— the emotional discipline to act when such an opportunity is presented and not otherwise.”
1,500 People Give All The Relationship Advice You'll Ever Need - I’ve included Mark Manson in my Best Reads of the Month list before and I’m going to do it again because he does another fabulous job in writing this article.
Mark Manson crowdsourced a relationship guide by asking his readers who have been married for 10+ years and are still happy in their relationship to share what lessons they learned and what is working for them.
He also asked people who were divorced what didn’t work for them.
The results he got were incredible and he did notice a pattern in the lessons that repeated themselves so he compiled those lessons that many successful couples (and those lessons on what didn’t work from people who were divorced) and he created this article.
The lessons that Mark found on what make a great relationship are:
1. Be together for the right reasons
2. Have realistic expectations about relationships and romance
3. The most important factor in a relationship is not communication, but respect
4. Talk openly about everything, especially the stuff that hurts
5. A healthy relationship means two healthy individuals
6. Give each other space
7. You and your partner will grow and change in unexpected ways — embrace it
8. Get good at fighting
9. Get good at forgiveness
10. The little things add up to big things
11. Be practical, and create relationship rules
12. Learn to ride the waves
“Trust is like a china plate — if you drop it and it breaks, you can only put it back together with a lot of work and care. If you drop it and break it a second time, it will split into more pieces and it will require more time and care to put back together again. But drop and break it enough times, and it will shatter into so many pieces that you will never be able to put it back together again, no matter what you do.”
— — — — —
“[John] Gottman has been able to narrow down four characteristics of a couple that tend to lead to divorces (or breakups). He has gone on and called these ‘the four horseman’ of the relationship apocalypse in his books.
Criticizing your partner’s character (“you’re so stupid” vs “that thing you did was stupid.”)
Defensiveness (or basically, blame shifting, “I wouldn’t have done that if you weren’t late all the time.”)
Contempt (putting down your partner and making them feel inferior.)
Stonewalling (withdrawing from an argument and ignoring your partner.)”
— — — — —
“Don’t ever be with someone because someone else pressure you to. I got married the first time because I was raised catholic and that’s what you were supposed to do. Wrong. I got married the second time because I was miserable and lonely and thought having a loving wife would fix everything for me. Also wrong. Took me three tries to figure out what should have been obvious from the beginning, the only reason you should ever be with the person you’re with is because you simply love being around them. It really is that simple.
APIs All The Way Down - I’ve been very interested in APIs due to their growing importance as we continue to proceed through this current transition to a more digitalized economy.
You’ve probably interacted with many APIs in your daily life without even knowing it since they make up such a crucial part of the tech stack that is part of the apps we use on a daily basis.
API stands for application programming interface and it is really just a bunch of code that is wrapped up into an easy- to-use interface.
The best example I like to use when trying to explain what an API is by talking about Uber because Uber is really just a bunch of APIs working together.
The three main functions that Uber uses to carry out its ride-hailing service are text/call, maps/GPS and payments, and it is these functions that are all carried out by APIs that are part of Uber’s tech stack.
Those APIs are:
Twilio — Twilio’s API is what makes it possible for you to make a phone call or send a message on the Uber app.
Google Maps — Google’s APIs for its map are what allows you to track where the driver is located, what his path is to picking you up and then dropping you off.
Stripe — Stripe’s API is what is used to process payments.
These 3 APIs make up the bulk of Uber and are all carried out by APIs which have become a very important part of our lives.
It would take hundreds of millions of dollars and years of work for Uber to develop their own code to build a payments processor or a map or a way to send messages on their app so by using Twilio, Google and Stripe it saves them lots of money and time.
This allows them to build an app for ride-hailing much faster than if Twilio, Google and Stripe didn’t have these APIs to essentially allow Uber to “outsource” these basic functions to make their app work seamlessly.
APIs have allowed lots of new applications and software to be created which have all made a big difference in our lives in making it more convenient.
As defined by Sean Stannard-Stockton of Ensemble Capital in this article, “the Overton Window is a concept named for Joseph Overton [where] Overton argued that the range of political policy possibilities was not directly related to any politician’s individual preferences, but rather by the range of options that are politically acceptable to mainstream voters. This range of politically acceptable outcomes changes over time, but at any given moment, only policy options that fall within the Overton Window have any hope of becoming reality.”
There are so many policies that have shifted recently and Sean does a fabulous job in this article discussing the Overton Window and some of the big policy changes that have happened recently that would have been thought of as almost impossible last year.
One of those policy shifts he discusses is a meeting he had on March 9th when it was still at the time thought of as not thinkable to cancel a client meeting until only one week later when San Francisco locked down the state in response to the coronavirus pandemic and canceled all in person meetings.
Ever since then, the Overton Window has shifted and not meeting clients in person has been deemed acceptable and policy.
Another shift in Overton Window is the Fed’s decision to seek an average of 2% inflation and to allow inflation to run above 2% for a period of time if necessary.
Here is Sean on inflation:
“The fed no longer views any inflation of over 2% as a signal that they must reduce their support for the economy. Rather they see getting inflation over 2% as a sign that they are succeeding and do not plan to start tightening monetary support unless evidence builds that inflation is shifting towards a persistent 2%+ level.”
Just one year ago, allowing inflation to run above 2% wasn’t their policy or allowable but with so much struggle to generate inflation in the U.S. economy and with the backdrop of the pandemic creating deflation in many areas including travel, entertainment, real estate and retail the Fed decided to shift their policy.
Sean discusses other shifts occurring today in the Overton Window such as working from home, modern monetary theory and unemployment insurance.
Monopolies Are Distorting The Stock Market - There is a lot of discussion going on with what to do with the monopolies in big tech, especially with the Department of Justice musing about breaking up the big tech companies, but what is less talked about is the market power of the companies in many other industries including beer, washer and driers, mayonnaise, corn seed, dialysis center, cell phone providers and many more.
When you look closer at these industries and many others you notice a very large market share concentrated in very few names and sometimes it’s hard to notice because a lot of the brands are all owned by one corporation but are marketed under different names.
For example, Proctor and Gamble owns several consumer brands such as Crest toothpaste, Oral B, Tide detergent, Bounty paper towels, Pampers, Pepto-Bismo and several other household names. In other words, Proctor and Gamble and a few other companies have a heavy concentration of market share in most of their industries and they’ve enjoyed this for decades… well, until recently.
There is one thing that is different today than the past 30 years and that is direct-to-consumer selling and the rise of social media marketing that has taken down the barriers for new companies to enter markets and allowed new companies to sell directly to the consumer. And Harry’s razors is probably the best example of why companies like Proctor and Gamble aren’t being looked at by the Department of Justice despite owning several brands in a concentrated industry.
Companies like Proctor and Gamble don’t pose as much of a threat because of new technology that has greatly weakened the barriers-to-entry and it’s most likely that new technology gets better in the future whereas it looks like the big tech companies will enjoy their monopolistic power for decades to come.
In this great article, Kai Wu takes a deeper look at the monopoly power of companies in several industries including some where you probably didn’t even realize how concentrated the industry really is. He also discusses how they gained their monopoly power and the ramifications of it.
Everything is Fucked But Hope Springs Internal - Matthew Castel from Logos LP give his thoughts on what’s currently going on in the markets, the economy and with the virus. He also shares some very interesting images related to pandemic deaths, Europe’s 2nd coronavirus, who owns the most U.S. debt and which countries have the most STEM grads.
He then shares an interesting thought from Mark Manson’s book Everything is Fucked: A Book About Hope on the importance of hope. He explains that we all need hope that the future will be better and if we have no hope then anxiety, mental illness and depression can set in.
In other words, chronic anxiety is a crisis of hope.
“[Mark] Manson reminds us that, hopelessness is the root of anxiety, mental illness and depression. It is the source of all misery and the cause of all addiction. Chronic anxiety is a crisis of hope. It is the fear of a failed future. Depression is a crisis of hope. It is the belief in a meaningless future. Should we be surprised that such mental illnesses are on an eighty year upswing among young people and a twenty year upswing among the adult population?”
He then furthers these thoughts on hope and mental illness to the pandemic that is shattering hope all over the world.
It’s a great read that I really enjoyed.
Is This The End For America’s Mom-And-Pop Stores? - Coronavirus has continued to ravage small businesses across the United States, including town favorites such as 38-year-old toy store The Dragon’s Nest in Newburyport, Massachusetts.
This Financial Times article (might be behind a paywall but if you google “is this the end for America’s mom-and-pop-stores”, then click on the article and answer some survey questions from Google then you should be able to read it) tells the story of a mom-and-pop toy store and the challenges local businesses face during coronavirus.
In addition to threats from online competition like Amazon and coronavirus, The Dragon’s Nest also faces economies-of-scale challenges that big companies like Walmart have but small businesses don’t. For example, Legos are a favorite toy for kids to play with but the manufacturer of legos, The Lego Group, requires a minimum order of $15,000 per year which can be a lot of capital for a small toy store to have tied up in a year for just one toy.
There have been many small businesses who have survived many recessions including the Great Recession but the coronavirus unfortunately has been too much to bear from all kinds of small businesses ranging from toy stores to restaurants to barber shops.
Big corporations have already had big advantages over small businesses for reasons such as economies of scale but another big advantage that has come to be of paramount importance during the coronavirus recession has been access to capital. It’s been very difficult for small businesses to get access to affordable capital, yet alone any capital at all, and this will likely continue to push the US economy into a continuing trend of a smaller percentage of small businesses compared to big chains.
The Big Cycle of the United States and the Dollar Part 1 and The Big Cycle of the United States and the Dollar Part 2 - This month’s best read of the month is a history of the United States empire and how it started to slowly gain power starting in the late 1800’s to how it began to eventually become the dominant country in the world right after World War II.
It is written by Ray Dalio who I’ve written about before due to his vast knowledge and experience of markets and economic history.
Ray focuses on the short-term debt cycles that happened in the US starting from 1930 and leading up to today in part 2 and in part 1 he discuses the US dollar and the economic war from 1930–1939 which led to the shooting war from 1939–1945.
Here are some great quotes I’ve highlighted below from both parts:
“Deflationary depressions are debt crises caused by there not being enough money in the hands of debtors to service their debts. They inevitably lead to the printing of money, debt restructurings, and government spending programs that increase the supply of, and reduce the value of, money and credit. The only question is how long it takes for government officials to make this move.
In the case of the Great Depression, it took from the October 1929 peak to Roosevelt’s March 1933 action to make the move. From that point until the end of 1936 — the year the Federal Reserve tightened monetary policy and caused the recession of 1937–38 — the stock market returned over 200%, and the economy grew at an average real rate of about 9%!”
“In China, Mao Zedong’s death in 1976 led Deng Xiaoping to come to power in 1978, which led to a shift in economic policies that included capitalist elements like private ownership of businesses, the development of debt and equities markets, entrepreneurial technological and commercial innovations, and even the flourishing of billionaire capitalists — all under the strict control of the Communist Party. This shift in Chinese leadership and approaches, while seemingly insignificant at the time, was going to germinate into the biggest single force to shape the 21st century.”
“During this period [from 1990 to 2008] debt and non-debt liabilities like pension and healthcare liabilities grew a lot in the US and debts were used to finance speculations leading up to the dot-com bubble of 2000 and the mortgage bubble of the mid-2000s that led to busts that were stimulated out of by the creation of more money and debt. These debt cycles are both undesirable and understandable because there is a tendency to favor immediate gratification over long-term financial safety, particularly by politicians.
Most people pay attention to what they get and not where the money comes from to pay for it, so there are strong motivations for elected officials to spend a lot of borrowed money and make a lot of promises to give voters what they want and to take on debt and non-debt liabilities that cause problems down the road. That was certainly the case in the 1990–2008 period.”
What Will Certain Activities and Industries Look Like in a Post Coronavirus World - Sean Stannard-Stockton is the President and Chief Investment Officer of Ensemble Capital. I have been attending some of his firm’s virtual conference calls and reading a lot of his writing lately and I’ve found that he has a very bright way of thinking about markets, companies and the economy.
In this blog post on Ensemble Capital’s website, Sean discusses some of the changes that may take place in the future following the coronavirus pandemic. He writes about the obvious ramifications and the less obvious ramifications of remote life, supply chains, e-commerce, digital payments, health care, housing and the baby boom.
Sean demonstrates some very good ideas of the second order consequences that can happen as he mentions different scenarios that could likely happen.
For example, first order thinking may lead one to believe that the coronavirus will decrease miles driven by car a lot because people will stay home and travel less, and they will also work from home more instead of doing to the office.
But interestingly car sales increased a lot in China following the reopening of their economy after they got the coronavirus under control and it is possible that car sales can increase in the US due to people using public transportation less and taking more local vacations once the economy opens up as opposed to taking vacations that would require flying on crowded airplanes.
Therefore, predicting how certain activities will play out in a post coronavirus world aren’t as obvious as they may seem at first and do require some deeper thought.
The Three Sides of Risk - Morgan Housel has mentioned before how our life experiences can have a strong effect on our risk tolerance but in this great article Morgan gives an actual experience of his own that has had a huge effect on the risks he takes in investing.
The story was very well written and suspenseful as it had my eyes glued the whole time. In the end, we learn the 3 sides of risk which are:
1. The odds you will get hit.
2. The average consequences of getting hit.
3. The tail-end consequences of getting hit.
And after reading this we cant help but reflect on our own personal experiences and how those have affected our own risk tolerance.
Money, Credit and Debt - Last month I wrote about the first chapter from a new book that Ray Dalio is writing for my Best Reads of the Month about the changing world order and what makes an empire rise and fall. As much as I tried to refrain from adding another piece of writing by Ray Dalio in back to back months, this month he came out with another chapter in the book that was a lot better than the first chapter so I couldn’t resist adding it.
In this chapter, Ray talks about what money, credit and debt are; the vital role they play in economies; how they influence the short-term debt cycle (recessions) and the long-term debt cycle and he also discusses the different types of backing that countries use for money and why they use them.
The US dollar is currently the world’s reserve currency today but it wasn’t always the world’s reserve currency which we learned in chapter 1. The reserve currency used to be the British pound but coming out of World War II the U.S. had the strongest economy and it more importantly owned the majority of the gold in the world. This set the tone for the U.S. dollar to become the world’s reserve currency and it also ushered in the end of the previous long term debt cycle and the start of a new long term debt cycle that is still going on today.
In 1944 the US dollar would be backed by gold until a large amount of government spending in the U.S. throughout the 1960's led to countries trading in their dollars to redeem gold so the U.S. started to quickly run out of gold. This then led to the closing of the gold window by Richard Nixon in 1971 which meant the dollar would no longer be backed by gold. This established a new monetary system which is the one that we use today — Fiat money.
Ray Dalio expands on this and goes into even more in depth in chapter 2 of his new book The Changing World Order.
Here are some other interesting takes from the chapter:
“This whole 1971–1991 cycle, which affected just about everyone in the world, was the result of the US going off the gold standard. It led to the soaring of inflation and inflation-hedge assets in the 1970s, which led to the 1979–1981 tightening and a lot of deflationary debt restructuring by non-American debtors, falling inflation rates, and excellent performance of bonds and other deflationary assets in the 1980s. The entire period was a forceful demonstration of the US having the world’s reserve currency — and the implications for everyone around the world of how that currency was managed…. After the 1980s debt restructurings were completed in the 1990s new global increase in money, credit, and debt began again, which again produced a prosperity that led to debt-financed purchases of speculative investments that became the dot-com bubble, which burst in 2000. That led to an economic downturn in 2000–2001 that spurred the Federal Reserve to ease money and credit, which pushed debt levels to new highs and created another prosperity that turned into another and bigger debt bubble in 2007, which burst in 2008, which led the Fed and other reserve currency countries’ central banks again eased, leading to the next bubble that just recently burst.”
“History has shown us that we shouldn’t rely on governments to protect us financially. On the contrary, we should expect most governments to abuse their privileged positions as the creators and users of money and credit for the same reasons that you might do these abuses if you were in their shoes. That is because no one policy maker owns the whole cycle. Each one comes in at one or another part of it and does what is in their interest to do at that time given their circumstances at the time.”
“Central banks want to stretch the money and credit cycle to make it last for as long as they can because that is so much better than the alternative, so, when “hard money” and “claims on hard money” become too painfully constrictive, governments typically abandon them in favor of what is called “fiat” money. No hard money is involved in fiat systems; there is just “paper money” that the central bank can “print” without restriction. As a result, there is no risk that the central bank will have its stash of “hard money” drawn down and have to default on its promises to deliver it. Rather the risk is that, freed from the constraints on the supply of tangible gold or some other “hard” asset, the people who control the printing presses (i.e., the central bankers working with the commercial bankers) will create ever more money and debt assets and liabilities in relation to the amount of goods and services being produced until a time when those who are holding the enormous amount of debt will try to turn them in for goods and services which will have the same effect as a run on a bank and result in either debt defaults or the devaluation of money.”
The Changing World Order - Ray Dalio is the chief investment officer of Bridgewater which is the largest hedge fund in the world with $160B in assets under management as of 2019. He is also a best-selling author of the book Principles and he has written many informative research papers on his website about the economy and markets.
Most recently, he has been studying empires and how they rise and fall. He just started to publish his ideas into a book that he has been posting on his LinkedIn page chapter by chapter. He aims to publish one chapter a week and so far the introduction and the first chapter have been posted.
Ray sees that there are various factors that affect whether an empire will rise or fall with some of these factors being more important than others. Eight of the factors he finds are education, competitiveness, technology, economic output, share of world trade, military strength, financial center strength and reserve currency with education being a leading indicator and the reserve currency being a lagging indicator. The reason the reserve currency is a lagging indicator is because it is the last indicator to show whether an empire is rising or falling. For example: the United States was rising in all of the other factors throughout the late 1800’s and early 1900’s but it wasn’t until 1944 (after World War II) that the dollar became the reserve currency of the world since the U.S. held 80% of the world’s gold after the war.
As one factor - whether it be education, competitiveness, military strength or any of the others - starts to improve (decay) it can create a flywheel effect for the empire to rise (fall). For example: better education leads to a better understanding of how to manufacturer goods and engineer systems and this leads to better technology and ultimately to a stronger financial center as more countries from abroad want to loan and invest their capital in the country that is rising and has the prospect for greater returns.
Below are links to the introduction and the 1st chapter. In the introduction, Ray introduces what led him to want to do this research and also how he did the research and how it will help him and Bridgewater.
In the first chapter, Ray discusses a lot of the factors that lead a country to rise and fall and he uses examples from the last 3 empires which were the Dutch Empire, the British Empire and the current one which is the United States Empire. He also mentions the current rising empire which is China.
It’s a great read and I look forward to the remaining chapters.
How Will You Measure Your Life - Clayton Christensen was a consultant and a professor at Harvard Business School. He is the author of many books including The Innovator’s Dilemma, The Innovator’s Solution, Competing Against Luck, and others including How Will You Measure Your Life which is related to what this month’s Best Read of the Month is based on.
Clayton gave a speech about personal life to Harvard students of the graduating class of 2010 at their request. The students were worried because when they entered Harvard in 2006 the economy was doing very well but just as they were graduating and getting ready to enter the job market, a lot changed.
The economy in 2010 was starting to just pull out of the worst economic period since the Great Depression and although it was starting to recover, it wasn’t obvious at the time. So in order to help those students navigate that tough time they looked to Clayton for guidance and he didn’t disappoint.
Clayton gives a lot of practical advice that can be learned from their business studies but applied to their personal lives. He talks about culture, work, marriage, children, faith, work and more.
Here are some quotes I enjoyed reading:
“On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys — but something in their lives sent them off in the wrong direction.”
— — — — —
“Over the years I’ve watched the fates of my HBS classmates from 1979 unfold; I’ve seen more and more of them come to reunions unhappy, divorced, and alienated from their children. I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.”
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“Had I instead spent that hour each day learning the latest techniques for mastering the problems of autocorrelation in regression analysis, I would have badly misspent my life. I apply the tools of econometrics a few times a year, but I apply my knowledge of the purpose of my life every day. It’s the single most useful thing I’ve ever learned. I promise my students that if they take the time to figure out their life purpose, they’ll look back on it as the most important thing they discovered at HBS. If they don’t figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, and the five forces.”
The Coolest Things I Learned in 2019 - The beginning of the New Year is when a lot of writers write about some of the coolest or best or biggest ideas that they learned during the previous year. I read a lot of these articles because they are a great way for one to learn a lot of new ideas. There is a lot one can learn during a year but there are usually only a couple of ideas that really have an impact on the way we think.
One author who I’ve included on my Best Reads of the Month list before wrote a great one of these articles for 2019. His article is called The Coolest Things I Learned in 2019 and is written by David Perell.
I included some interesting ideas that I learned from David’s post below by starting off with one by Kobe Bryant.
What Kobe Bryant Reads:
“I made a point of reading the referee’s handbook. One of the rules I gleaned from it was that each referee has a designated slot where he is supposed to be on the floor. If the ball, for instance, is in place W, referees X, Y, and Z each have an area on the court assigned to them.
When they do that, it creates dead zones, areas on the floor where they can’t see certain things. I learned where those zones were, and I took advantage of them. I would get away with holds, travels, and all sorts of minor violations simply because I took the time to understand the officials’ limitations.”
Between 2011 and 2013, China used 50% more cement than the United States in the 20th century.
Of the world’s 100 highest bridges, 81 are in China, including some unfinished ones.
In 2016 alone, China added 26,100 bridges on roads, including 363 “extra large” ones with an average length of about a mile, government figures show.
China opens around 50 high bridges each year. The entire rest of the world opens ten.
China also has the world’s longest bridge, the 102-mile Danyang-Kunshan Grand Bridge, a high-speed rail viaduct running parallel to the Yangtze River, and is nearing completion of the world’s longest sea bridge, a 14-mile cable-stay bridge skimming across the Pearl River Delta, part of a 22-mile bridge and tunnel crossing that connects Hong Kong and Macau with mainland China.