Top Reads, Listens, Follows & Takeaways of the week
California's bullet train, trend following, and Steve Smith
Takeaways from my top three:
-California voters first approved a bond issue for the nations’ first bullet train, which would connect Los Angeles and San Francisco, in 2008. It was supposed to be completed by 2020 and the $33 billion cost seemed insane at the time. To no surprise of many observers of government work - construction is just now underway, its cost is now estimated at $105 billion, and it won’t connect LA to SF. It makes you wonder if we can accomplish big audacious infrastructure projects nowadays. How much of the Inflation Reduction Act dedicated to infrastructure spending will be burned by incompetence and poor decision making systems. Will any state governments learn from CA? Read the NYT article on this.
-In a year when most investors are looking at a bloodbath across their portfolio there are a few unloved assets or strategies that are in the green - energy, broad based commodities, trend following. What is trend following? Trend Following is simply buying an asset when it is going up and selling that asset when it is going down - yes you can buy an ETF that will do this for you. It’s counterintuitive, but this isn’t a fad or new strategy. AQR has a famous piece showing the persistence of trend following dating back 100 years. As Ryan Kirlin of Alpha Architect says, “With trend following on asset classes, you seemingly get similar returns as if you bought and held the asset class, but you sometimes can cut your drawdowns”. Who wouldn’t want that? Pairing trend following with traditional buy and hold investing is a great way to diversify your portfolio.
-Watching NFL Films clips on Youtube is one of my favorite things to do. I came across one recently - a career profile of retired Panthers and Ravens wide receiver Steve Smith. He was a true underdog that played with the level of competitive nastiness that you wish every player played with. I’ve always been curious about how players are evaluated in professional sports. When teams draft players they seem to overvalue their potential, and in free agency many teams seem totally backward looking and unable to properly evaluate a player's future contributions. How are teams evaluating intangibles and how do they systematize this process? What is the most important thing when evaluating a player’s character? Why did Cooper Kupp go in the third round? Hunter Renfrow in the fifth? When looking at busts the red flags seem so obvious in retrospect, likewise with the obvious misses. Competitive nastiness has to be up there for me as a top intangible that teams don’t evaluate well. Ice Up Son.
Reads:
California’s bullet train failure (here)
The Fed Has to Keep Tightening Until Things Get Worse (here)
Venture investor Bill Gurley on the current environment for building businesses (here)
Bill Gross - Carry On (here)
Lyn Alden’s October newsletter, bond markets and energy supply constraints (here)
Ozempic, the ‘Hollywood drug’ (here)
What is trend following? (here)
Ben Horowitz of Andreessen Horowitz (here)
A Rafting Trip in Utah (here)
Listens:
Howard Marks’ memories of the Great Financial Crisis (here)
Louis-Vincent Gave on macro and the case for emerging markets (here)
Does the Future of Streaming Look More Like Cable? (here)
Freakonomics - are MBAs to blame for wage stagnation? (here)
Border City - a Tijuana profile (here)
Adam Wyden on small cap investing (here)
Follow, Watch & Other great content:
Do Your Job Well: The Road to the Patriots Super Bowl XLIX Win (here)
Steve Smith career profile - “Ice Up Son” (here)
Sanibel Island, FL in the aftermath of hurricane Ian (here)
Life in Taiwan with China bearing down (here)
Paul Tudor Jones on economic cycles and his estimate for the 2020s (here)
Jamie Dimon on the energy dilemma (here)