Practical analysis for investment professionals
10 June 2016

Weekend Reads for Investors: Very Interesting Edition

Posted In: Weekend Reads

This edition of Weekend Reads for Investors features some of the most interesting stories I’ve read so far this year. In particular, I want to highlight the story about productivity in the United States turning negative for the first time in 30 years. Wow!

Folks, this is a big deal. Productivity is the essence of what economics is all about: getting more from the same set of resources or getting the same from a smaller set of resources. In other words: finding new, more productive uses for factors of production. That this story did not receive global headlines is astonishing. What would the state of the world be without all the central bank actions continually taking place?!

Investing

I am less a fan of news stories that simply update pieces of the information mosaic than I am of those that actually help us see the entirety of that mosaic differently. This gem discussing how growth became the enemy of prosperity does just that. And unlike many skeptics of the present iteration of capitalism, the author actually proposes some ways of fixing the current state of affairs. (Medium)

One of the continually perplexing issues in investing is how to deal with negative interest rates. This piece just might help you wrap your mind around such an odd situation. (FinanceAsia)

Speaking of negative interest rates, we have covered this quandary for many years here on Enterprising Investor, and I want to highlight some posts to round out the discussion:

While on the subject of paradoxes in fixed-income investing, among the results of our unprecedented yield curve is the upending of those who rely on the income part of fixed income. One consequence is that the world’s safest bonds are actually wild risks, as this calculator makes plain. By the way, this is a great link for your clients if you have a client-facing role. Another strange occurrence in fixed-income land is a new product from Credit Suisse: catastrophe bonds for self-inflicted wounds. (Wall Street Journal)

Finally, the US Treasury has disclosed Saudi Arabia’s Treasury holdings. This knowledge is especially important when you fold in geopolitical factors, such as those I discuss below with the anniversary of Sykes-Picot. Finance affects more than just the profit and loss statements of businesses and individuals. What you finance is also important to consider. (Bloomberg)

 Technology

ProPublica broke a story that computer programs designed to evaluate the recidivism rates of criminals massively overestimate the rate for black defendants and massively underestimate that for white defendants. So what’s my point and how does it relates to investing? Algorithms need to be evaluated, and algorithm authors need means and mechanisms for gaining transparency into their own biases. Otherwise algorithms produce what you want them to produce. Put another way: Garbage in, garbage out! (ProPublica)

Environmental, Social, and Governance (ESG)

I am a big fan of unique data representations. It’s worth your while to spend some time with this chart logging global migration flows. These flows are likely to affect the environment in many critical ways. Of particular note is the migration from Latin America to North America. (Der Spiegel)

This piece from al Bawaba, one of my favorite sources of business news in the Middle East, describes the anniversary of a little-known agreement — at least in North America and Europe — that is affecting you at this very moment. I am speaking of the intentional meddling done to the borders of the Middle East by the Sykes-Picot Agreement. (al Bawaba).

Behavioral Finance

Those of you who follow my other writing and work for CFA Institute know that I am a big believer in the capabilities of human beings, as well as a critic of the misuse of mental models. Here is an exceptional piece, by a lifelong researcher into the workings of the brain and mind, that points out the obvious: The brain is not a computer and does not process information like a computer. Unfortunately, this mental model is used so frequently that it may be difficult to imagine the mind as anything else. As this piece makes clear, however, the overemphasis of this mental model is actually detrimental to the understanding and advancement of the science of the mind. (aeon)

Fun Stuff

I love to read about scientific inquiries and frequently seek out the original research that led to the popular pieces in the press. As you might well expect, this means I trudge through some intensely dense material at times. Imagine my delight in finding this excellent website that simplifies and explains the science making the rounds in the news! (One Universe at a Time)

Last comes this remarkable story about scientists who observe “sleeping trees.” Fantastic! (R&D Magazine)

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©iStockphoto.com/Christian Mueller

About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: jason@jasonapollovoss.com

4 thoughts on “Weekend Reads for Investors: Very Interesting Edition”

  1. TOM DECOSTER says:

    great insight to the effects possible with negative rates.

    1. Hello Tom,

      Thank you for taking the time to share your thoughts. It is much appreciated.

      Yours, in service,

      Jason

  2. Maryam says:

    Fabulous links, thanks!

    1. Hello Maryam,

      Yea! I am so glad you found them fabulous!

      With smiles,

      Jason

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