Weekend Reads for Investors: Happy New Year Edition
I hope 2017 is a prosperous year for each of you.
To kick it off, I would like to highlight a CFA Institute member product that will help make you a better investor: our newly released Meditation Guide for Investment Professionals. Also, check out our LinkedIn group for CFA Institute members who are meditators. Evidence demonstrates that meditation can upgrade your mind, so more related content is in the works.
There are many boundary-pushing, thoughtful pieces for me to share with you this month, so let me get to it.
Investing
I advocate for quality investment consulting. However, I believe that many investment consultants’ methodologies need updating and lead to unintentional and detrimental outcomes for clients — and for active managers, too. This piece addresses many of these points and argues that better investment consulting is long overdue. (Enterprising Investor)
A recent study found that CEOs should focus on the long-term. Big surprise. How often must this trumpet be sounded before businesses, economists, professors, and investors all take action? (Wall Street Journal)
My next story comes courtesy of one of India’s ace investors, Navneet Munot, CFA. Unless you spend time in India, you would not understand Munot’s import. Here is the most recent of his well-known Person of the Year series that reviews the year just ended and names the person who had the largest effect on investors. This year’s pick is unusual but not surprising. Read on to find out why. (India Association of Investment Professionals)
This excellent infographic shows the anatomy of the vast infrastructure of the United States. Though not discussed in this piece, one of the most important features is that the nation has both north-south and east-west river infrastructure, which permanently lowers the cost of transporting goods. (Washington Post)
Behavioral Finance
Nudge economics is one of the methods considerate economists use to take advantage of human behavioral biases. This piece documents the latest nudge efforts in Canada. (VOX)
There are only two important tasks for investment managers: See the world for what it is, not what you would prefer it to be, and be decisive with that understanding. The latter action is especially hard. How do you make decisions when the future is uncertain? Here is some insight from that scion of business thinking, Peter Drucker, as well as a cadre of successful businesspeople on decision making. (The Drucker Institute)
A LinkedIn connection, Rob Lake, shared this piece that maintains that scarcity may not be about economics so much as psychology. (Bank Underground)
Many pundits believe that the Brexit vote and US presidential election were influenced by that plague — fake news. Here are a couple pieces that take a deep dive into the issue. The first selection shows that students do not usually know when news is from fake. You may shrug this off as irrelevant to an investment manager’s ability to identify fake news, but there are more similarities than differences in the samples. The second piece is about the global efforts to “hack” fake news using artificial intelligence (AI) technologies. (Wall Street Journal, Financial Times)
Quantitative Methods
No quant hedge fund group is more famous than Renaissance. But it is also the most impenetrable. To paraphrase musician Tom Waits, “What are they building in there?” Here is the most comprehensive description of the kind of tinkering that takes place inside the hedge fund to end all hedge funds. (Bloomberg)
I believe in the vast potential of what I call “natural intelligence.” The problem is few investors make use of their full mental capabilities as much as they do their technological capabilities. Ideally, investors should spend time on both. The preceding selection may show my hand with regard to the following story about another quant shop doing its very best to excise the human. This is undoubtedly the near future of our business. (The New York Times)
Technology
This extremely useful piece parses AI into four categories. Another explores AI’s simple economics and its likely proliferation into numerous areas of our lives. (R&D Magazine, Harvard Business Review)
Fun Stuff
Quantum physics is a passion of mine, while I am suspicious of Newtonian physics. This excellent infographic maps all of physics — “both kinds” — in easily understood format. Speaking of questioning macro physics, look at this overview of the work being done to dismantle yet more of the Newton/Einstein universe. (New Scientist, R&D Magazine)
And last I draw your attention to two of the most fun stories I have read in a long time. The first evaluates the question of why train seat fabric is so ugly. The second has to be my favorite piece in a long, long while — though its relevance is perhaps of limited value. It evaluates the building and ongoing daily cost of operating the Death Star of Star Wars fame. Enjoy! (BBC, Fortune)
Music
Music that inspired this post: Kishore Kumar and Asha Bhosle, Nirvana, Mulatu Astatke, Red Lorry Yellow Lorry, The Nazz, The Clash, Blondie, The Rolling Stones, Cracker, and Tricky.
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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/Photoevent
