2.40 - Look Up 🙄
2.40 - Look Up 🙄
“If you want to go fast, go alone. If you want to go far, go together.” - African Proverb
News and Numbers
Markets this Week:
S&P 500 is down 0.5%.
NASDAQ 100 is up down 1.5%.
Bitcoin-USD is down 6%.
Ethereum-USD is down 8%.
Headlines from this Week:
Turkey-Syria earthquake death toll passes 28,000.
U.S. fighter jet shoots down unidentified cylindrical object over Yukon, Canada; it was smaller than the Chinese balloon shot down off South Carolina's coast a week ago.
Netflix has broadened its crackdown on password sharing, revealing it will roll out the updates in more countries including Canada, New Zealand, Portugal, and Spain.
Disney will lay off 7,000 workers as the company seeks to slash $5.5 billion in costs and restructures the organization into three core business segments: (1) Disney Entertainment, (2) ESPN, and (3) Disney Parks, Experiences and Products.
Subversive Capital went live with ETFs that allow investors to put money behind a portfolio that approximates the holdings of Capitol Hill lawmakers such as NANC (which invests in securities purchased or sold by Democratic members of Congress and their spouses) and KRUZ (which invest invests in securities purchased or sold by Republican members of Congress and their spouses).
Finance
By Vlad
I asked ChatGPT to write about passive investing in the style of Michael Burry
Burry is a well-known figure in the investment world. He recently published an eye-opening tweet, comparing this stage of the US equities market to where we were in 2002, one year before the ultimate bottom. He’s a bit of a scary dude, and loves to generate cataclysm in investors’ minds. But that said, he did time the 2008 crash pretty well and managed to generate outstanding returns since, even through the bull market of the past decade. So, here is what he would say about passive investing (another term for investing X amount of your savings every month into the stock market).
Ladies and Gentlemen,
I hope this letter finds you in good health and high spirits. As you may know, I am a value investor and have a strong stance against passive investing. In this letter, I would like to share my thoughts and concerns about the unseen risks of passive investing, a trend that has taken the investment world by storm in recent years.
Passive investing, in its simplest form, is the practice of investing in a basket of securities that track a market index. The idea behind it is to achieve the market return with lower fees and less hassle. However, the growing popularity of passive investing has led to a dangerous assumption that passive investing is a one-size-fits-all solution, an assumption that is not only false but also poses significant risks to investors.
One of the biggest unseen risks of passive investing is market concentration. As more and more investors flock to passive strategies, the market capitalization of certain stocks grows disproportionately, leading to a highly concentrated market where a handful of stocks dominate the index. This concentration increases the systemic risk of the market and makes it vulnerable to sharp sell-offs if any of these dominant stocks experience a downturn.
Another risk of passive investing is that it encourages complacency. With passive investing, investors are not required to actively monitor their investments or make any changes to their portfolios. This can lead to a false sense of security and prevent investors from taking action during market disruptions.
Finally, passive investing can also perpetuate market inefficiencies. By simply tracking the market index, passive investors are effectively endorsing the pricing of all the securities in the index, regardless of their fundamental value. This can lead to overvaluation of certain stocks and create market bubbles that eventually burst, causing significant harm to passive investors.
In conclusion, passive investing may seem like a simple and straightforward solution, but it is far from it. Investors need to be aware of the unseen risks associated with passive investing and must be vigilant in managing their portfolios. As Benjamin Graham, the father of value investing, once said, "The investor's chief problem and even his worst enemy is likely to be himself."
I hope this letter has been informative and thought-provoking. As always, I am available for any questions or comments you may have.
Warm regards,
Michael Burry, MD, PhD.
TLDR: Burry ain’t a fan of DCA.
This is not financial advice and you should always do your own research before investing in any securities or cryptocurrencies. The trading strategies mentioned above are only my opinion. I am not a public equities analyst, and you're following these tips at your own risk.
Sci-Tech
By Keyann Al-Kheder, Software Engineer
AI Reignites the Search Engine War
I may be biased but it feels like the only thing I use google for these days is to search up the site for chatGPT, because I can never seem to remember the domain ‘chat.openai.com’.
Geek jokes aside, I do still use Google Search, but this week was big for the world’s largest search engines.
Google launched Bard, their competitor product to ChatGPT, and added it to Google Search, but removed it shortly after, because it gave the wrong answer in a promotional video distributed by the company. Their stock shed 8% that day, or approximately $120B in market value.
Meanwhile, Microsoft added chatGPT to their search engine bing and their email service Outlook, in what’s being labeled a big move against Google and its products like Google Search and Gmail.
There’s been speculation for a while as to what might disrupt big tech companies like Google, whose dominance in search engine has been cemented for over a decade after taking over Yahoo, and with the rollout of ChatGPT and Bard that speculation has re-entered the chat, ha.
Some Perspective:
You may recognize Google by their products like Gmail and Google Search, but their business is advertising, which generates over $140 billion a year, and makes up around 80% of their revenue. To get a sense of how much money that is - if you made a $1000/ day since the day the Jesus was born, you wouldn’t even have 1% of that amount. Most of Google’s ad revenue is split between Youtube and Google Search, but, nonetheless, it illustrates the size of this market, as well as Microsoft’s incentive to capture it.
It’s anyones’ guess whether Google will come out on top again like it’s done for years, but one thing’s for sure - the battle is on, and Microsoft is on the other side.
Paradigm Shift
Quiet Quitting
By Roman Kuittinen-Dhaoui, BBA (Hons.), CPHR Candidate
According to Investopedia, quiet quitting refers to doing the minimum requirements of one’s job and putting in no more time, effort, or enthusiasm than absolutely necessary. As such, it is something of a misnomer, since the worker doesn’t actually leave the organization and continues to collect a pay cheque.
Pros
Quiet quitting is fine if you’re comfortable with your job, the pay, the company, etc. If you’re content with where you’re at in your career, then why exert extra energy if you’re not pursuing a promotion? Why spend the additional time if you’re satisfied with your pay? You probably know that the ROI on discretionary effort isn’t worth it.
Alternatively, you’ve created clear boundaries between your work time and your own time. You value that you don’t “take your work home with you” (meaning mentally and emotionally considering that many now work from home in some capacity). You view your work as just a job; nothing more. It’s enough to pay the bills and fund your lifestyle, but it doesn’t drive you. It’s good enough.
Cons
From an employee perspective, quiet quitting behaviour is unlikely to lead to accelerated career earnings and advancement (i.e., promotions). Quiet quitting likely builds up resentment towards the organization for whatever reason. For example, maybe you got passed up for a promotion, or maybe you feel unpaid so you retaliate by withholding your best effort.
From an employer perspective, quiet quitting is extremely costly. It’s a sign of disengagement which leads to reduced productivity, higher absenteeism, and lower profitability as employees don’t engage in organizational citizenship behaviours such as staying late, showing up early, going the extra mile for a client or project, etc.
TLDR: quiet quitting means doing your job, nothing more or less than necessary. Whether it’s a good approach for you depends on your situation and your goals.
(Head)Space
By Roman
Closed Book Exams
Throughout high school and university, I always questioned why most exams were closed book; meaning during tests, students were banned from having access to outside materials like the textbook, lecture notes, etc. I understand that the exam is aimed at testing your individual performance thus schools wouldn’t want students getting help from others. However, basic memorization questions of facts or where you need to remember a formula to calculate something is unnecessary. It doesn’t test your level of understanding, but rather your memory, and, to some extent, your dedication to being prepared for the exam.
The pandemic transformed the way people approach and think about education due to online learning. Schools scrambled to install software that detected if a student was cheating rather than change their systems. For example, if ChatGPT can ace the Wharton MBA Exam, the Bar, and the US Medical License Exam, then maybe it’s time to re-think examinations? Why are so many tests closed book and under time constraints? If AI can be used to easily cheat at school, how difficult are the classes? What value do these classes ofter?
When I was in my fourth year business classes, things changed. The courses no longer had final exams, and rarely had tests. The majority of our grades were based on group projects and assignments; which aren’t closed book, aren’t individual, and aren’t bound by as much time pressure. I think this is because the schools understood that in our careers, we wouldn’t be doing tests under the same conditions at work. Rather our success would be measured by how we utilized resources and collaborated with others.
TLDR: In the future, I hope there are less tests, and more projects at school.
Company of the Week
Addy Technology group is a Vancouver-based Canadian startup that owns AddyInvest, its app that enables investors to invest in real estate with as little as $1. This is a major step towards the tokenization of real-world assets, and although they do not use blockchain technology at the moment, it brings about a revolutionary way for people to get exposure to the asset class in an economy where only the highest earners can afford the luxury of owning highly sought after real estate.