Pods & Recs: No. 96

Today we have two episodes with 2020 market outlooks, a couple of great episodes on venture capital, and an episode with David Epstein on his newest book about why generalists will succeed over specialists going forward.

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Business

2020 Market Forecasts

• Exchanges at Goldman Sachs: What’s the Outlook for the US Stock Market in 2020? The episode is split into two parts: The first 5:15 is a recap of 2019 — the S&P 500 started the year at 14.4x earnings and finished at 18.8x earnings, returning 31% during the year. Then, David Kostin, Goldman Sachs Research’s chief US equity strategist, explains what he thinks will happen in 2020. He projects the S&P 500 to finish the year at 3,400, but thinks if a Democrat wins the White House and repeals the tax cut, it could drop to 2,600. He also states he thinks 2020 will have stable monetary policy, the consumer will drive the economy, there won’t be a broad resolution regarding trade, and there will be a 5% decline in stock buybacks YoY. [January 6, 2020–22 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

90 percent of the return to the stock market in 2019 came from valuation expansion, as opposed to earnings growth.

• The Sherman Show: S8 E1 — Talking Markets 2020. This is another episode that discusses the market outlook for 2020 and features three employees from DoubleLine Capital: Jeffrey Sherman (CIO), Samuel Lau (PM) and Jeffrey Mayberry (PM). They talk about where the S&P 500 could end (may surprise to the upside), what global and U.S. indicators are saying, what could happen with the trade war, and why Mr. Sherman says the U.S. cannot have negative rates. [January 9, 2020–57 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

Venture Capital & Start-Ups

• Venture Stories: Mike Maples on Building Successful Startups and Venture Funds. Maples is a partner at Floodgate, a venture capital firm, and host of the new podcast, Starting Greatness, which is about the early days of successful companies. The theme of this episode is that you need mental models specific to startup investing and need to be hungry to learn them and become the best investor (same as Charlie Munger is hungry to apply mental models to public markets). He talks about how the best founders approach entrepreneurship, how important it is for your idea to be non-consensus, and how to know when you have an insight worth pursuing. He also talks about how to take feedback on your ideas and when you should and should not listen to someone, and gives the incredible story of how Reid Hoffman got feedback from Elon Musk on the idea for LinkedIn, and Musk thought it was a bad idea that should not be pursued, but Hoffman decided to anyway because he didn’t believe Musk had enough knowledge of the “idea maze” as he needed. [January 5, 2020–1 hour, 17 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• The Readback: 63: Get Ready to Pay Up, Consumers. Consumers have enjoyed great deals and cheap prices from ride sharing services, food delivery services, and streaming companies, among others. Tae Kim explains (as in his article on Barron’s) that this may come to an end in 2020 as investors begin to demand companies show profitability instead of revenue growth. This will result in higher prices and fewer deals (not as many free returns and one-day shipping) for consumers. What will also be interesting to see is if this takes place in private markets and if VC’s will continue to subsidize private companies offering deals to increase revenue growth. An article on the same topic can be read here. [January 8, 2020–14 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

Morgan Stanley did a study that said 2/3 of fast food delivery orders are under $7, and for each fast food order that is $10, the food delivery companies lose $3.80.

• The Meb Faber Show: #196 — Minnie Ingersoll — I Do Believe That Innovation In Our Country Is The Huge Bright Spot. Ingersoll is a Partner at TenOneTen Ventures, a seed-stage venture capital firm that invests in mostly software and data firms. She begins the episode by explaining how she evaluates potential investments, stating that she must believe in both the idea and the management team. At 13:55, she talks about some of her firms’ existing investments and the stories behind them. She also discusses the mindset required to be a venture investor, how her firm handles follow on investments, and the difference between investing in private and public markets. At 52:50, they talk about her background — going to Stanford and Harvard, working at Google, and starting an online marketplace for used cars (Shift). [January 8, 2020 — 1 hour, 16 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• This Week in Startups: E1016: Substack CEO & Co-Founder Chris Best empowers writers via his email newsletter platform. This is a really interesting episode on a startup providing a platform for writers to send out paid or free newsletters. In this day and age, we are all getting information overload, so subscribing to newsletters for niches that interest you (like this!) is a great way to filter out the noise. This idea led him to start Substack, which recently did a $15 million Series A round from a16z. Best explains the economics of the business (they take 10% of revenue), why they chose the paid-model instead of the ad-model, and where he sees the business going forward. [January 7, 2020–1 hour, 39 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

The Rest

• Recode Decode: David Epstein: Why successful people don’t do only one thing well. Guest David Epstein is the author of Range: Why Generalists Triumph in a Specialized World, which argues the most successful people are more likely to be “dabblers” instead of specialists. The takeaway is that we all need to focus less about becoming overly specialized and become comfortable learning different tasks and abilities over the course of our lives. He explains how our culture came to focus so much on why people need to specialize and that people who receive highly specialized training from an early age actually earn less over their lifetime. He talks about the idea in terms of your career and “grit,” which emphasizes people’s ability to stick with a task of job, but in his eyes, you should only see grit where there is good “fit.” He finishes with saying we need to think of careers like dating and people shouldn’t get stuck in career paths early on. [January 8, 2020–53 minutes] iTunes Podcast | Spotify | Overcast | Breaker

RECOMMENDATIONS

Books

Patrick O’Shaughnessy (CEO, O’Shaughnessy Asset Management):

1. The Body Keeps the Score: Brain, Mind, and Body in the Healing of Trauma by Bessel van der Kolk — Amazing book about the ways in which traumas of varying levels of intensity manifest in the body.

Vlad Magdalin (Co-Founder & CEO, Webflow):

1. Leaders Eat Last by Simon Sinek— Defined his leadership principles.

Kevin Systrom (Co-Founder, Instagram):

1. Getting Things Done: The Art of Stress-Free Productivity by David Allen — He took away that you should always have a “someday-maybe list” of things that you think are really interesting but don’t have enough time for right now. When he left Instagram, he decided to look at his list and took up learning to fly.