Pods & Recs: No. 126
Today we have Burton Malkiel on all things finance, what 195 years of data says about value returns, the story of the early days at Uber, and the entrepreneur building the Venmo of Africa.
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Business
***Must Listen*** The Long View: Burton Malkiel: ‘I Am Not a Big Fan of ESG Investing.’ Investing legend Burton Malkiel offers his thoughts on tons of topics in this episode. He addresses the low bond yields and why investors should look at preferred stocks and high quality stocks with sustainable dividends. He also emphasizes the use of a multi-factor approach instead of focusing on one factor, and even though he knows small cap and value are cheap now, it’s hard to go all in and not second guess yourself. Interestingly, he talks about studies he’s conducting on horse racing that show people over-bet on favorites and under-bet on long-shots, just like people do in the stock market. Other topics he covers include why indexing isn’t making the market less efficient and why he doesn’t believe in either ESG outperformance or the actual implementation. [August 5, 2020–58 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
To the extent you want to do factor investing, I think you’ve got to do it with a multi-factor approach because it’s not simply low correlations among the factors. It’s that you get some negative correlations.
EconTalk: John Kay and Mervyn King on Radical Uncertainty. John Kay and Mervyn King talk about their book, Radical Uncertainty: Decision-Making Beyond the Numbers, which is all about rationality and decision-making under uncertainty. They discuss the importance of making predictions with a range of outcomes instead of a single-point estimate, how to fight our biases and acknowledge we aren’t rational beings, and why we shouldn’t over-rely on models and algorithms. [August 3, 2020–1 hour, 14 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
We live in a world of radical uncertainty where the laws that are governing behavior are not stationary; they are changing all the time, so we shouldn’t expect to be able to predict.
The Acquirers Podcast: Two Centuries: Mikhail Samonov on 195 years of value returns and crashes. Samonov is the Founder and CEO of Two Centuries Investments and joins the episode to talk about his massive undertaking to analyze factor returns over 195 years. He talks about the difficult process of gathering all the data and why he wanted to take such a long-term view of returns. He explains why it has led him to believe values’ current underperformance will eventually turn around and revert to the mean. He also explains what he learned about other factors over time, especially momentum. [August 3, 2020–54 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
We all know things are not normal in finance; even the basic S&P 500 returns are not perfectly normal. If you look at left tail, which is what we’re worried about, the crashes, we know they’re not normal. So, if we just look at short history, we’ll totally miss them, most likely.
The Meb Faber Show: #242 — Ham Serunjogi, Chipper Cash — Africa Has The Highest Cost Of Sending Money In The World. Serunjogi is the founder of Chipper Cash, which is essentially the Venmo of Africa. He saw the lack of peer to peer transfer of money in areas outside the U.S. and that led him to leave his role at Facebook and start the company. He talks about going from zero to one in Africa with payments, which has lifted a lot of people out of poverty. His team has now built their payment platform out in seven countries and even have a merchant offering. [August 5, 2020–50 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Village Global’s Venture Stories: Building Startups in the New Normal, Supporting Founders Using a Beginner’s Mind with Steve Jang. I’d listen to this from 11:00–20:00 when Jang talks about the founding of Uber. He was an early advisor/employee for the company and explains it started as a side project and their goal was just to get a prototype built. Founder Travis Kalanick was unsure if he wanted to stop angel investing to focus on the company. It all changed when the city of San Francisco sent a cease and desist letter and they realized they had a game-changing product. His point is that companies have myths of great starting points, but many start as side-projects. [August 4, 2020–1 hour, 15 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
The origin story for a lot of companies is that it was really well thought out, well planned from the beginning and that’s just not true. And Uber is an example of that where it was a side project that no one wanted to work on full time.
The Twenty Minute VC: Steve Jurvetson on 20 Years of Friendship with Elon Musk, How To Analyze Market Timing, Why Venture Does Not Scale & Why He Has Never Sold A Share In Any Company He Holds. Jurvetson is the Co-Founder of Future Ventures, who announced their debut and flagship $200M Fund in 2019. His portfolio includes SpaceX, Tesla, Planet, Memphis Meats, and Hotmail. He’s known as being a futuristic investor and talks about what he looks for in founders and companies who are looking to change the world (like Tesla and SpaceX). He explains he looks for an inflection point where it’s the right time for a technology to take off, something he timed right with Tesla and EV but was too early with quantum computing. He also discusses his close relationship with Elon Musk and what he thinks makes Musk such a visionary entrepreneur.[August 3, 2020–55 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Resolve’s Gestalt University: Lars Kestner: The Intrepid Quant. This episode is all about quantitative investing and the guest offers a variety of takeaways on optimizing the implementation of quantitative strategies. Kestner is a Managing Director at a European investment bank and wrote the book Quantitative Trading Strategies, a cutting edge text on systematic trading. They discuss the portfolio construction process and balancing the decay of diversification with layering on additional strategies. Additionally, they talk about the psychological impact on portfolio construction and how the optimal portfolio for someone may be the one they stick with versus the one that is best on paper but harder to handle over time. [July 29, 2020–58 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Newsletters
The James Altucher Show: SIDE HUSTLE FRIDAYS — The First Episode! Online Newsletters. Altucher does the best deep-dive into starting a newsletter I’ve heard on a podcast. He talks about the importance of just starting and creating an email audience, the different ways to make money (paid, advertising, affiliate links), and different ways to structure it (daily, weekly, bundled). He offers tons of ideas for topics, platforms to use (Substack and Mailchimp), and how to scale it over time. If you are building a newsletter, this is a must-listen. [July 31, 2020–1 hour, 3 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Out of Hours: The Podcast: Benedict’s Newsletter: Building a newsletter, with Benedict Evans. Evans is a venture capitalist (previously with a16z) and has grown his own personal newsletter on tech and media to over 150,000 subscribers (I’ve subscribed for over a year and love it — you can subscribe here). While the episode above is more about the ins and outs of a newsletter and how to build and monetize it, this is more about the benefits of starting one. He argues everyone should write about something because although you may think everyone knows that already, he’s learned with his own newsletter they don’t. He also explains how it can benefit you professionally and turn into a second career or a side-hustle. [July 16, 2020–34 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker
Sports
The Peter King Podcast: Lamar Jackson & John Harbaugh. Listen to Lamar Jackson from 8:00–28:00 — Jackson’s mindset is incredible for a guy who just won the MVP. He brushes off all praise and any acknowledgement Peter King gives him for winning MVP and credits his teammates for everything. He constantly repeats that he isn’t satisfied because the team came up short in 2019 and that’s all that matters, and his humility, selflessness and drive to win is really impressive. He even talks about being miserable after the playoffs and so upset he couldn’t watch the Super Bowl or enjoy receiving the MVP award in his hometown. After his interview ends, Peter King interviews Ravens head coach John Harbaugh, who talks about handling the pandemic and preparing for a season with lots of distractions, hoping to rebound from their disappointing playoff performance last year. [August 5, 2020–58 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker
Peter King: You were awarded the MVP basically in your home town. How did that feel?
Lamar Jackson: It felt good but I really didn’t want to be there because I wanted to be somewhere else, preparing for the Super Bowl instead of winning the award.
RECOMMENDATIONS
Books
Cameron Porter (Venture Architect, AlleCorp):
Steve Jurvetson (Co-Founder, Future Ventures):
- Out of Control: The New Biology of Machines, Social Systems, & the Economic World by Kevin Kelly
- The Age of Spiritual Machines: When Computers Exceed Human Intelligence by Ray Kurzweil
Mike Novogratz (CEO, Galaxy Digital):
