Weekend Reading #101

Photo by Renee Fisher on Unsplash

This is the hundred-and-first weekly edition of our newsletter, Weekend Reading, sent out on Saturday 16th January 2021.

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What we're doing.

This week we lift the veil. We’re delighted to announce the launch of our software business, Nachas Networks, which aims to provide cloud-based connectivity and allow clients anywhere in the world access to brokers’ low-cost electronic and algorithmic execution regardless of size.

As our business matures, we increasingly come across a range of fund managers big and small, and we’re pleased that we can finally help solve a real pain point for them with our software. If you run a fund yourself, are a broker, or know of anyone that might be interested to try out our product, we would love to speak and hear your feedback, both positive and negative... especially negative, for how else shall we improve?

In the meantime, check out our suite of offerings at www.nachasnetworks.com.


What we're thinking.

We’ve long held the view that an extended period of low interest rates has a distortive effect on the value of time, since an interest rate essentially places a price on deferred gratification – the higher the rate, the higher the reward for waiting. Perhaps the idea of “YOLO” itself could only have happened in a low/zero/negative rate environment, since a negative value of time effectively meant that we should’ve done all of our consumption yesterday when it was worth more than it does today.

Little surprise then when we saw this headline hit: Virgin Galactic shares are taking off after well-known exchange-traded fund provider ARK Investments files to launch a space exploration ETF. In a way, this exemplifies the very tangible effects of low/zero/negative rates and time value. Ideas from decades in the future suddenly become viable, since the discount rates on future cash flows which could literally be light years away recede and make them as valuable (or perhaps even more so?) than cashflows today.

Monetary policy isn’t just a game. Its effects are as real as they come. This in no way diminishes the genius of ARK and Cathy Wood. The success they have found from their domination of the “disruptive innovation” phrase has been spectacular. The approach they have taken to the analysis of the underlying themes is revolutionary, but the real success has been the marketing machine they have built and it will come as no surprise should the space exploration ETF flow to the moon.


What we're reading.

Regular readers will know our views on the digitalisation theme particularly in Southeast Asia, which we see as one of the biggest opportunities out there for investors. Our favourite company to track (and also a large holding in our fund), Sea Limited, has this week made a really interesting acquisition in the form of a small local Indonesia bank called Bank Kesejahteraan Ekonomi. This comes hot on the heels of attaining a digital banking licence in Singapore in recent months. Our view remains that traditional banks do not know what is about to hit them as the dual threat from fintech and Defi in crypto threaten to cripple them. The transformation is happening at rapid speed and is only going to accelerate from here.

Like many readers, our attention was on the “storming of the capitol” last week and this take from Russian opposition leader and recent poisoning survivor, Alexey Navalny, piqued our interest. With the blanket social media ban on Donald Trump being swiftly enacted by all of big tech, Navalny had a rather somber warning for the western system. Navalny is someone who knows a thing or two about censorship and its implications, so it was fascinating to read this thread.

We read a lot of nonfiction. Most is well written, but often-times we find ourselves slogging through reasonably long books of reasonably dry material, searching for either the book’s central premise (usually found in the first or last chapter) or the book's final page. Reading ropy non-fiction can make us yearn for fiction, a good old-fashioned thriller with some pace and guile. And that’s why we’re never reading one book at a time – balancing nonfiction with fiction seems to make both more appealing.

But sometimes we come across nonfiction written so well that it feels like a thriller. These gems are worth searching for as, for us, they are the amongst the finest examples of writing, melding educational non-fiction and magazine journalism, offering entertainment and intellectual nourishment in equal measure. We’d love to hear if you have any recommendations that fit this description.

A book we finished this week that landed in our newly invented literary genre “non-fiction thriller” is Jill Lepore’s, If Then. Lepore is a Harvard historian and staff writer at the New Yorker, and this combo goes some way to explaining why she writes in the way that she does, holding both fact and fun at the front of her mind and on the page.

If Then tells the story of a company founded some 60 years ago, Simulmatics Corporation, a data mining operation, one of the first of its kind, that used the power of computing to target voters, accelerate news, manipulate consumers and destabilize politics, decades before Facebook. As Lepore points out, the scientists of Simulmatics are the grandfathers of Mark Zuckerberg and his algorithm crunchers.

Borrowing from psychological warfare, Simulmatics used computers to predict and then direct human behaviour, deploying their “People Machine” from inside the US and overseas in Vietnam for clients that included JFK’s presidential campaign, the New York Times, and the Department of Defence.These are themes and thinking that are currently dominating the news cycle. Lepore’s book felt like essential, timely reading.

Lepore tells the story of this corporation, and of the characters behind it. Lepore argues that way back in the 1950s, Simulmatics invented the future by building the machine in which the world now finds itself trapped and tormented, algorithm by algorithm. Terrifying and informative in equal measure, this is great non-fiction, the type that we were gutted when we eventually found its end.

Moving over to the world of fiction, we have been reading some short stories. The format is perfectly suited to people who would love to engage with “high” literature, but simply don’t have the time to work their way through entire novels. But where to start?

That Glimpse Of Truth is a great anthology that gathers together “the 100 greatest short stories ever written”. Clearly, that’s pretty subjective, but to be fair, the choice of authors on offer is impressive (Julian Barnes, Anton Chekhov, Roald Dahl, Penelope Fitzgerald, Ian McEwan, Alice Munro, Thomas Pynchon and Muriel Spark to name but a few).

Short fiction is magical, but it is an acquired taste. This anthology provides a great entry point and we recommend giving it a go if you like the sound of stories that are profound, lyrical, shocking, wise – and readable in a matter of minutes.

Finally with all the vaccine conspiracy theories out there, this piece in Nautilus magazine is well worth a read. It attempts to illustrate the risks of taking the vaccine versus the risks of not, and also a little of the science behind how vaccines are made, which is really helpful to a layperson weighing things up.


What we're watching.

We will be brightening up our mornings with a little international cricket this weekend as England are playing Sri Lanka at Galle, one of the world’s most picturesque sporting venues. It’s beautiful to see the stone walls of Galle Fort, the lighthouse and a host of palm trees jutting out of the blue Indian Ocean, not to mention seeing cricket whites on a green-brown outfield.

Throughout COVID, we’ve found live sport on TV to be hugely restorative. Watching it allowed us to pretend that the world was a little more normal. Cricket is one sport that feels less embattled and altered by circumstances than most. Whilst the fans aren’t present, the game looks largely the same. There may not be any singing from travelling English fans enjoying the Galle sun, but the rhythm, feel and sound of international cricket is reassuringly familiar.

And whilst the cricket is good to watch, the sight of Sri Lanka, a wonderful holiday destination, is reassuring too. Hopefully it won’t be too long before we can turn the television off and visit these iconic global sports locations in person once again.

Speaking of more exotic climes, this week we watched the pilot episode of Death in Paradise on Netflix. The show is pretty ancient now, but it’s stood the test of time. British detective Richard Poole (played by Ben Miller) is assigned to investigate the murder of a British police officer on the fictional Caribbean island of Saint Marie. Having solved the case, he is ordered by his superiors to stay on as the head detective inspector of the island. The setup is formulaic, but the execution is good and the twist at the end of the pilot genuinely flummoxed us! We also think the juxtaposition of feel good Carribean vibes and grisly murder is quite compelling and remenicient of our beloved Poirot.

Death In Paradise show is the televisual equivalent of comfort eating… not something to do every night, but once in a while, after a long week at the coal face, it can be fun to watch something a bit silly and light-hearted.

We also did some exploring of great classics, such as Akira Kurosawa’s 1954 epic Seven Samurai. It’s hugely influential, but first and foremost a great and deeply satisfying story, told at a mesmerizing pace in beautiful pictures. At the other end of the spectrum, we overcame our annoyance at the first episodes of The Good Place (and the annoyance is funny in hindsight) and then saw the whole series, which is a fun philosophical joy ride.


What we're listening to.

Ever wondered what the music of Mali sounds like? Well, we hadn’t paid much attention to the subject until we stumbled across an album on Spotify that paired legendary American guitarist, Ry Cooder, with Ali Farka Toure, who we’ve found out now that we’re obsessed with his music is described as “the African John Lee Hooker”.

Toure is legendary in west Africa for his guitar, calabash, bongos and vocals, and the record, Talking Timbuktu, he put out with Cooder in the mid-1990s shot him to global fame, delivering him a Grammy for Best World Music Album. This is the album that has been on constant play this week, accompanying work and play, with our children especially enjoying the melodic beats.

On a dank January morning in London, there are few things more escapist than Toure’s lilting voice and guitar, combined with Cooder’s riff-led and acerbic play. It’s a glorious combo, Mali and America, and one we’re delighted to have stumbled upon.

This week we dived into the Ornstein & Chapman Podcast, one of The Athletic’s many excellent shows. Mark Chapman (who presents the football for the BBC here in the UK) and Matt Slater (football news reporter at The Athletic) discuss the City Football Group, the organisation that controls Manchester City, New York City FC, Melbourne City FC among others. For anyone interested in the intersection of business and sport, this is a must listen.

The All-in podcast featuring Jason Calacanis, Chamath Palihapitiya, David Friedberg and David Sacks has rocketed to the top of our podcast list in recent months due to the sheer intellect on display in each debate. The format is also interesting – as opposed to an interviewer and a guest/guests, it’s more like a free for all debate which is well controlled by a moderator, in this case, Calcanis. This episode discussed the breach of the Capitol and what the implications are for Trump and the entire system. The participants do not always see eye to eye, and it makes for fantastic listening.