I shlepped them home, and now, sitting underneath a beautiful 13' tall Christmas tree, I'm getting to work!
- An interesting article on sovereign wealth funds moving in house - reminded me a bit of some of the general themes from Swenson's Pioneering Portfolio Management. It's a lot easier to say that you're going to build out an exceptional investment team than to actually do it, and it can be hard to compete with Wall Street on an even footing.
- It's inevitable that there are at least some genetic components to most behaviors; researchers recently found some genetic markers for violence. Something I really liked about this article was its discussion of "genome-wide association studies" and the frank discussion of the risk of spurious correlations.
- I'm treading lightly here, because it's a particularly touchy subject, but I found the Economist's take on the rising profile of campus sexual assault particularly well balanced, critiquing some of the statistics that are commonly used and the general practice of using tribunals made up of professors to adjudicate these cases while still clearly reflecting the fact that sexual assault is a real problem that needs to be addressed.
- Drones are coming, just not to the US. This overview runs through a lot of the early stage use cases (farming, delivering medicine, and sports). The AirDog drone profiled in the beginning of the article is particularly cool, but I thought that the piece did a good job acknowledging some of the potential risks (weaponization and hijacking), although I still feel like the FAA ban is too aggressive.
- Reading about banks is always fascinating to me - especially about banks that are struggling and trying to find new revenue streams and patch up after rough years. While I'm not often sympathetic towards them, the more I understand about the complexities of financial markets, the more I can appreciate how difficult it can be to run a really effective multinational bank.
- Well, writing in late December, it's clear that the Republicans did, in fact win the Senate. Looks like we're in for either terrible gridlock, or, more optimistically, some big deals on tax reform and some bipartisan cooperation. Given the things that have happened since then, particularly the President's unilateral decision on immigration, I'm a bit less hopeful, but I do think that if we could get some well-constructed tax reform, that would go a long way towards making the US more competitive when it comes to starting businesses, as well as keeping them.
- It wasn't completely shocking, but I do think that there were some really interesting components of the article about young voters. Compared with the traditional narrative about liberals, close to 70% of us think that government is wasteful and inefficient. Reflecting on the sequester, it seems incredible to me that the a 10% cut across discretionary spending had as small of an impact as it did. In general, though, we're pretty liberal, although we're mostly just pissed off.
- Articles like this one on industrial organization are why I love the Economist, and why I love economics more generally. It ran through the recent Nobel Prize in economics Jean Tirole, specifically for work around regulation, platform economies and some of the more complex parts of modern markets - places where industries, based on their particular economics, are naturally monopolistic. It inspired me to pick up a couple of his books, and also just to think more about complex regulatory situations. One of the more interesting examples the article gave was about giving firms choices as part of their regulatory framework in order to balance the needs of protecting consumers and motivating companies to do the hard work of improving efficiency.
- The Supreme Court is going to hear a case about disenfranchising licensed professionals, and I cannot wait. Basics first - dentists are mad that unlicensed people are cutting into the business of whitening teeth, and want North Carolina to enforce their monopoly on the business. As a techie, I really hope that the Court decides against the dentists. The Economist cites a really well-regarded startup, LegalZoom, as an example of a company that is hampered by this type of regulation, and I am pretty sympathetic to the argument that if companies are providing services with the same level of risk, they should be able to compete on price.
- I swear by ETFs, but according to this article, so does everyone else, which could be problematic! One of my favorite companies, Wealthfront, swears by ETFs, and from everything I've read, ETFs are the cheapest way to gain exceptionally well-diversified exposure to specific asset classes without rigorous analysis of specific securities. Indeed, the more I've read, the more I want to eschew all active management and just hide inside the warm bosom of the ETF. This article has a really nice summary of how ETFs work - their size rises and falls with supply and demand and they can be traded on an exchange rather than once per day, as is the case with mutual funds. However, because the index that an ETF tracks moves really quickly, ETFs would have to execute a ton of trades to mirror it exactly. To help with this, most ETFs us a structure where Authorized Participants (APs), which are often large banks, will help balance supply and demand by basically serving as a caching layer. When normal clients sell way more ETFs than there are buyers, APs buy them and then slowly sell them; when clients buy, APs sell their holdings. In practice, they seem to be focused on minimizing price volatility as a result of large orders and can gain exposure to arbitrage opportunities with the ETF prices and the prices of the underlying assets. The article runs through the risks associated with this structure, and basically comes to the conclusion that because the vast majority of trades happen between clients and do not involve an AP, ETFs are likely not systemically risky. However, it was definitely worth a read; often it's easy to forget that these funds have to rebalance relatively frequently in order to effectively track the index they are targeting.
- Low oil prices are going to be one of the biggest macroeconomic trends of 2015! Demand is down, and thanks to fracking, supply is up. Interestingly enough, shale oil will also become less economical as a result. The most interesting fact in this article was that per dollar of output, farms use 4-5x more energy than manufacturers. I just found that really surprising! A lot of that has to do with price, but it's clear that there is a lot of room for improvement in the agricultural space.
- One of my close friends is incredibly passionate about drug policy and addiction medicine; this article made me think a lot about conversations I've had with her on the subject. Apparently, heroin is starting to become more common in the suburbs, specifically with people who are using other, more expensive opioids. Apparently there are now many people who will sell their prescription painkillers and use the proceeds to buy opium. The good news, though, is that this is making methadone treatment and needle exchanges more politically feasible. It's also helping to reduce the stigma associated with addiction, something that will hopefully help us be more compassionate when it comes to addiction policy.
- Having finished The Unwinding recently, the piece about Atlanta's new transit system resonated with me, especially given that it directly referenced the 2010 Tea Party protests against a similar system in Tampa. I was also really excited to read about the high-speed rail line between Houston and Dallas that is coming online in 2021! While rail is generally an expensive investment, I've always had a soft spot for trains, and I cannot wait to have some truly high-speed railways in the good old US of A.
- In my experience, people in the US are always terrified of Chinese students and continuously worried about being overtaken in higher education. I found this article to be pleasantly contrarian on the subject. Because so many of the smartest Chinese students do graduate school at Western universities and so few return to China, there is a very real brain-drain in China. I also didn't realize that despite their dominance in STEM at the high school letter, there has never been a Chinese winner of a Nobel Prize in any of the STEM fields; this author asserts that this is primarily due to the fact that the incentive structure in China is bureaucratic and mechanical. Overall, it was an interesting lens into a challenge that I didn't realize China had.
- Single payer healthcare is one of the many things that makes my heart warm, but unfortunately, it's generally tough to do well. It's funny reading about the NHS, which apparently is one of the UK's favorite institutions through the lens of American politics, which dogmatically associates it with people dying while they wait for a heart transplant. The reforms discussed are all the things that my medical student friends pine for: coordination between primary care, social services, and hospitals; consolidated costs across hospitals; and encouraging hospitals to send healthcare professionals out to people's homes in order to improve care and reduce emergency room referrals.
- This is just a fun little pithy article about compensation consultants. The title says it all: If you hire them, pay will come. Sounds like I need a compensation consultant myself!
- Alright, this technically wasn't in print, but by god I love Buttonwood! I'm currently going through a bit of a finance phase (there's an upcoming blog post about some books I've been reading on the subject), and the column on active fund management matches my personal opinions, so I figured it must be true! Overall, I liked the way they broke down luck and competency, and I thought that the conclusion was fairly well balanced: because of the fee structure, the odds are stacked against active managers, but the top funds do seem to provide real benefits to investors.
- This is such a super interesting piece on CEO compensation and how the options based compensation that became so popular in the 90s has led towards a very short-term focus from many CEOs, especially in the form of stock buy-backs. I need to learn more about why companies buy back their own stock, but I loved the Buffet quote: buying back stock during a bubble is the equivalent of buying $1.00 for $1.10.
- Looks like my 40-hour dream might not just be selfish! There are a lot of variables, but it's looking like there are hugely diminishing returns to working longer, and it's often much more valuable to focus on having a solid 40 hours of work rather than maximizing for hours. I am curious about whether there are people who can beat the numbers, though; Flounder definitely has an impressively high marginal output! I'll probably come back to this sometime and think about methodologies to force medical residents to work less.
- Awww, democracy is dead. That probably calls for some complex set of emojis, but in general, it does seem like we're really not doing very well when it comes to long-term planning, or planning at all, for that matter.
- Yay!!!! Robots are back!!! I really, really, really hope that this is a trend that continues through 2015 - I'm so ready to be serious, and while I love Silicon Valley, social media isn't necessarily the thing that wakes me up in the morning.
- I've never really understood activist investing, probably because I've never had the money for it. But Icahn's column was really interesting (he does sound a bit desperate for people to follow his tweets, though). Generally, the thesis was that bad management is the primary reason that a lot of companies don't perform at the level that they are capable of, and his passion is driving those bad boards and executives out. I could get behind that!
- I'm doing the personal genome project, which is about the most interesting thing I've gotten involved in for awhile; sounds like there will be more and more uses for my genes in the next couple years! In general, while Silicon Valley has been burned by biotech before, with full-genome sequencing coming down to $1,000 per person, it's possible that the field will finally transform into the data mining race so many companies have been dreaming of.
- I don't really trust bankers - they get paid too much, and as someone whose formative experience was the 2008 Financial Crisis, I tend to assume the worst. In addition, I really struggle to understand why investment banking isn't a commodity and tend to believe that the only reason it's not is because of cartel-like pricing effects. This column acknowledges all this, but then somehow seems to imply that despite these facts, banks in 2015 will become more trustworthy and less mercenary. I'll believe it when I see it.
- And again, cheers to the WLB (work-life-balance). While this column is a bit tongue-in-cheek, I really do hope that the overall themes remain true!
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