Weekend Reading #120

Photo by Anastasiia Krutota on Unsplash

This is the hundred-and-twentieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 29th May 2021.

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What we're doing.

We got back together as a team this week and ventured into The City for the first time in many moons. It was strangely exciting to be back amongst the suits, spires and towers of the Square Mile. Despite it being incredibly empty when compared to a typical Thursday lunchtime pre-COVID, there were some signs of life, with outdoor tables full at most coffeeshops and restaurants and the old buzz sounding like it might be not far away from returning. We ate burgers, lobsters, and lobster burgers (any guesses where we had our reservation?) followed by churros, drunk lime sodas, and generally had a good catch up in between a busy day of meetings for some of the team. In short, it felt good to be back in some hustle and bustle and reminded us, once again, how good it will be to have a space to call TBC Towers. The starter pistol has officially been fired on our office search as a result. Exciting times ahead, and hopefully lots more lobster and churros. EJP

What we're thinking.

This week we’ve been thinking about time horizons in investing. Everyone is different and that’s what makes a market. But when one gets time horizons confused it can create chaos. One of the challenges of running our investment product is the correct balance between what we like fundamentally and how we interplay that with how we perceive the market at any point in time. We are not buy-and-hold investors in our fund. We aim to return a low-mid double-digit return to investors on average each year with limited scope for downside. For example, one of our largest positions in our fund over the past 9 months or so has been Sea Limited, a transformative, Southeast Asian stock. The company is making enormous strides in evolving its fast-growing ecommerce and gaming businesses. We have entered and exited this position many times during this period as the market conditions have evolved. Each time for a specific risk reward payoff. But each time our size has been far larger than it would have been had we simply held over this period as we have strict exit parameters. For many longer-term investors who stomach the sizeable volatility, they set it and forget it as they say. But for us we size differently and if it breaches our predefined levels we exit as such, knowing full well we can re-enter again should things line up once more.

We have been over the past 6 months or so using a similar approach to our small cryptocurrency book, with varying success. Had we bought and held Ethereum for example we would have made far more money that trading in and out of it as many times as we did. But with what risk parameters would be comfortable to do so? There is no correct answer. Every investor is different. The most important thing is that a manager runs the product in the way which is commensurate with the mandate. Food for thought for all investors. A buyer and a seller of an instrument may both prove to be correct at the same price – only with different time horizons! DC

I have always been very proud of my Scandinavian heritage. Danish society, like its’ Swedish and Norwegian cousins, was modern, egalitarian and forward looking. The interiors of houses, furniture, lamps, stereo systems, yes even door handles and water taps, were sleek and unfussy, from the future rather than from a fusty past. Women’s position in the family and in society was much more on an equal footing, something a small child in the 70s and early 80s could feel. Equality and respect for the individual felt built into this society, maybe at the price of high taxes, but nonetheless a core value. And, a source of huge pride, the Danes had saved nearly the entire Jewish population by taking them to Sweden overnight when the German occupiers were readying to deport them in 1943.
 
In recent years the only thing that somehow jarred with this rosy picture of a futurist model society, was the fact that racism was clearly an issue with regards to immigrants that came to Denmark. The health system that made my old uncle stand in line with a tray to get his lunch, while completely debilitated by chemotherapy, seemed somewhat harsh. And then there is what is called the Scandinavian paradox, the fact that in these societies of gender equality, the percentage of women in senior positions in the private sector is very low. So low that Denmark lags nearly all of Europe, including Italy.
 
The other day however my wife, Margot, was going through the list of owners of a family house from the 12th century on and was surprised the large number of women. Already by the 1300s women in Denmark appear to be much more equal than their counterparts in, say, Germany or the UK. Only, as she realised, “Already” is a misnomer: As she hypothesised this was not about modern conceptions of equality per se, but about the position and function of women in a society were men get into boats and go on long raiding expeditions from which they may or may not return. Scandinavian societies are not modern but Viking. This explains the situation including the paradoxes much better. Women are equal, but there are very traditional ideas about their role and function (which also explains why they go into care roles in the private sector). Healthcare is harsh because deep down somewhere is the idea that old people should jump of a cliff or go into the cold rather than burden their society. And the equality and mutual care for the younger members of society is again not about the value and virtues of care and equality per se, but about the members of the group as opposed to non-members.
 
It shows once again that things are often not quite, or in fact not at all as they seem. All the mythologising of Scandinavian equality, modernism and “Hygge” is a false narrative. This is a very old value system, that of a violent raider society, with a longboat and a battle axe rather than a pretty lamp at its core. LM


What we're playing.
A couple of weeks ago, we mentioned that we were over at North Greenwich Peninsula in South East London to try out the driving range overlooking Canary Wharf. It was a great bit of fun, but this week we decided to try somewhere even closer to home and went out to Birchwood Golf Club in Kent. Having not been to the range here in a good number of years, it was incredible to see how much had changed following the club’s spell of upgrades just a couple years prior. What once was a rundown driving range that was merely a field, now boasted entertainment bays galore and a lively atmosphere with drinks delivered direct to your bay. We played a quick 9 holes, enjoyed a few drives on the range and then proceeded on to the nearby pub, The Horse and Groom for a fantastic dinner and a few pints. HS

This week, Call of Duty Cold War, given the era that it is set in, has launched a special promotion called ‘80s Action Heroes’ in which it has introduced the likes of Sylvester Stallone as Rambo, and Bruce Willis as his character, John McClane. Within which, players of the game can try out limited time game modes, and of course, purchase the skins and associated gear to play with in future. Microtransactions stemming from celebrities have become increasingly common in the past two years, most notably from games like Fortnite whom have managed to encapsulate the likes of Travis Scott who even performed a live concert via the game. Whilst I won’t be purchasing the Rambo skin, the game modes in which you can use him freely for now mix up the content of the game and make for a good laugh. HS

What we're reading.

This article appeared in the Wall Street Journal this week about Uniswap, the decentralised competitor to Coinbase. The article is nice enough but what's more interesting is how up until this article, if you had gone onto the Wall Street Journal website and searched for Uniswap you would have come up blank. The knowledge of what is happening on the ground in the crypto world is fairly limited still to those who are involved in the day to day. And that is what is exciting, whether prices are up this week or not. DC

This week it was Bob Dylan’s 80th birthday. Whether you’re a fan or not, his music will likely have provided, in some shape or form, a little of the soundtrack to your life. For me personally, I’m not his biggest fan, but I do love what I know, especially, unlike some Dylan disciples, his modern music, with albums such as Modern Times, Tempest and Rough and Rowdy being wildly different but a match, to my mind, for any of his earlier works. Through the ages, there’s been something for everyone. And, for me, that’s one of the most remarkable things about Dylan and his enduring talent. He’s updated his sound and worked on his craft throughout his six decade-long career, like a rolling stone, never standing still, moving on from his folksy, whimsical, stream-of-consciousness early days (Blowin’ In The Wind, A Hard Rain's a-Gonna Fall), to a harder, electronically inspired, Vietnam-harranguing 1960s (Highway 61, Blood on the Tracks), right through to the modern, almost-big band sound of his recent releases. He’s covered a lot of musical ground in this time, toured almost non-stop, written a tonne of music (39 albums and counting), stayed as much as possible out of the limelight, and despite forays into new genres, the quality has never faltered, and that makes him a true great. There were many great celebratory pieces written about his remarkable life this week, but this one in The Guardian caught our eye, with the likes of Mick Jagger, Tom Jones and Marianne Faithful talking about their favourite Dylan tracks. The fact the man has influenced so many greats throughout his career is the reason why he sits at the top table in music’s pantheon. And in answer to the question that I know you’re desperate to ask, my favourite, if I could only take one, no, two away with me in my (small) suitcase to a dessert island would be Simple Twist of Fate from the old and Thunder on the Mountain from the new. But that’s just me, and it won’t likely be you, and that’s the beauty and magic of Dylan. EJP
 
When trying to understand what the world will look like in 1/ 10/ 100 years, there are factors that are often so big, so much in plain sight, that they can get overlooked. Population growth, or decline, would fall into that category, with it being so fundamental to the future makeup of our planet and our species that we often just assume, given it's all we've known in our lifetime, that the trend of growth, that saw our population explode from around 1.6 billion in 1900 to 6 billion in 2000, will do nothing but continue to do the same. Not so, and as this excellent long form in the NY Times explores, shrinking populations throughout the globe, especially in population drivers such as China, with its population expected to fall from 1.4 billion now to about 730 million in 2100, should be a concern that will have a huge impact on the world as we know it. Whilst a less densely populated planet may sound appealing, especially given the immense strain that +7 billion souls are placing on Mother Earth’s natural resources, the balance that needs to shift towards a heavily aged population before that point could have disastrous consequences for many nations throughout the world in the near and medium term. Not a cheery read, but it feels like a vital one. EJP

I know that over the past few weeks I’ve shared links to the blog of Bitmex co-founder and galaxy brain, Arthur Hayes and last week’s post was fantastic. But this week’s one is a follow up and for anyone who wants to understand in a nutshell how the macro is shaping up this is a must read. Sure, there is a crypto angle to it but the summary of his macro views applies to everything. It’s compulsory reading. DC
 

What we're watching.

Having browsed what has felt like all of Netflix lately in search of something worth watching, we sat down this week and were absolutely stunned to find that we hadn’t yet watched the Quentin Tarantino classic, Inglorious Bastards. Upon hearing this news, the rest of the team were absolutely gobsmacked that I hadn’t seen it, and I must admit, it was pretty awesome. For those that haven’t seen it, the film is set in Nazi occupied Paris, and follows the adventures of a band of soldiers colloquially known as the ‘Bastards’, predominantly consisting of Jewish escapees led by Brad Pitt as Lieutenant Aldo Raine. They face off against Christopher Waltz’ Hans Landa or the “Jew Hunter” as he is known, in an attempt to take out a number of high profile Nazi officials. As with any Tarantino movie, it isn’t quite as simple, with a couple of intertwined subplots and plot twists that make for a fascinating movie. If you haven’t seen it, it is certainly worth a watch. HS

After ignoring Disney’s Marvel movies for the past decade or so I finally decided it was time to get stuck in. The only benefit of not having watched them before is I now get to binge them in chronological order. Captain America, which was brilliant and Captain Marvel which was pretty explosive. 2 down, 19 to go. After years of not really being too enticed by superhero movies, I’ve now watched series after series and move after movie. While not getting the depth I used to crave when watching films, I find that the enjoyment is far greater. I was wondering though how Superman seems to have missed this modern era of superheroes and then I realised why. Because Disney doesn’t own the rights to it! Nobody does blockbuster films like Disney does. Sheer brilliance and I have hours and hours of fun ahead. DC
 
For the eagle eyed readers of our company update, a recurring theme in recent weeks seems to be a growing love of foreign cinema, and this week did not disappoint. Having studied Mandarin for almost a decade on and off, we have a basic understanding of the language and from time to time enjoy watching a film or two to brush up on our language skills. As such, we stumbled across ‘Crouching Tiger, Hidden Dragon: The Sword of Destiny’ on Netflix. Whilst somewhat confusing at first having not seen the original film, the fast-paced fight scenes starring none other than Ip Man’s Donnie Yen made for an exciting narrative that was easy to watch. HS

What we're listening to.

An intriguing podcast episode we landed on this week was The Knowledge Project’s, Shane Parrish, in conversation with investor Joel Greenblatt, Principal and CIO at Gotham Asset Management. Greenblatt is a legend of the investment world and it was fun to hear him not always talking about investing. He and Shane cover a lot of ground, including a discussion on the differences between luck and skill, traits of successful company and management teams, the life lessons that he’s been lucky enough to learn from Warren Buffett, and a little about what Joel fears most about today’s stock market. It’s a fascinating listen, one of those podcasts where you wished you had one of those brains that could regurgitate everything you learned at your next Covid-compliant dinner party. EJP