Practical analysis for investment professionals
30 June 2017

Weekend Reads for Investors: Wake Up from the Summer Doldrums Edition

Welcome to the summer season in the Northern Hemisphere.

I am referring more to the lack of financial market excitement than to the effect weather has on our psyche. But amid this lull, let us turn our attention to improving our minds. To that end, I offer up the following stories curated from my reads over the past month.


You may have seen the CFA Institute publication, Future State of the Investment Profession, which yours truly helped to author. In it, we outline four possible scenarios that represent different futures for our industry.

One scenario, “Fintech Disruption,” makes the case that traditional banking and finance institutions could be usurped by newer entrants competing in the financial marketplace. Peer-to-peer (P2P) payment is one such battlefield where the old lions are being challenged by those with less shaggy manes. What has been the response from these longtimers? US banks are launching their answer to a popular P2P payment app. (Reuters)

C. Thomas Howard and I co-authored a series of articles entitled The Active Equity Renaissance because we both believe that the investment management industry has unintentionally handcuffed active managers, limiting their success. Further, the riff and refrain from most of the industry is that active management is doomed. (Enterprising Investor)

Are there any exploitable anomalies left to profit from given the powerful number-crunching of big data combined with machine intelligence-driven algorithms and the massive liquidity behind them? Yes. (Wall Street Journal)

Fixed Income

What’s the most important issue facing US businesses right now, one that very few seem to be aware of? A proposal in the US Congress to repeal the tax deduction corporations receive for the interest paid on debt. If passed, it would have gigantic repercussions throughout businesses, the economy, and abroad. I am certain you understand the ramifications. Let this wake us up from the summer doldrums! (Wall Street Journal)

As a US-based investment professional working for a nonprofit, I sometimes have a difficult time finding information about credit markets in Asia. This is why I appreciate “The Top Five Credit Risks in Asia Pacific.” (FinanceAsia)

One consequence of global central bank largesse over these last many years is the launch of a global search for yield. Junk bonds are now called high-yield bonds, and investors accustomed to the safe yields of sovereigns and investment-grade bonds are plowing gigantic sums into junk bonds. This excessive demand, as it always does, has led suppliers of securities to extract more pounds of flesh from buyers and may have permanently altered junk bonds’ risk-return profile. (Financial Times)

In a story that surprised no one, Germany rejected the idea of common eurozone debt issuance that would allow defaults from one member nation to be covered by all other members. This, of course, does nothing to dispel the idea that the eurozone has become an extension of Germany’s interests. The story did not receive wide coverage, which surprised me since it has potentially large geopolitical ramifications. (Reuters)


Commentators are again pointing out that “China’s Real Credit Risk Lurks in Shadow Finance” activities. My take? Yes, I am concerned. However, to use a purely Western regulatory and policymaker model in China does not make sense. The national government is all-powerful in China, and when it pulls the lever, things change. FAST. My larger worry is whether China’s decision makers actually have transparency into the shadow finance activities. (Financial Times)

I began my research analyst career specializing in oil and natural gas and am a fan of the industry. However, I am certain that this globally crucial industry is trending downward. In the first of several stories, the authors compare the growth projections of the oil companies with those of the International Energy Agency (IEA). The gap is breathtaking, I assure you. (Bloomberg)

While on this subject, I just finished one of the smartest books I have read in years, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets by David E. Spiro. The book is an exhaustively researched exposé into how the United States set up one of its extraordinary privileges, the petrodollar.

To lighten the atmosphere a bit, here is a piece about “How the World’s First Accountants Counted on Cuneiform.” It turns out that researchers believe one impetus for writing was not to detail gods and goddesses, but that other object of veneration — commerce. (BBC)

Behavioral Finance

I found the next story fascinating: It describes research by neuroscientists that shows how amassing more and more personal power tends to shut down the empathetic parts of the brain. If true, this might explain a lot, don’t you think? (The Atlantic)

Environmental, Social, and Governance (ESG)

Those of you who read my articles know that I am a proponent of ESG issues. In particular, I think the United States is on the wrong side of history when it comes to climate change.

I know some of you consider that a semi-blasphemous statement. Perhaps the following piece might persuade you to consider another point of view? It turns out Pentagon officials believe climate change is among the most important scenarios to prepare for. In short, they believe it is the real deal — “If Trump Won’t Fight Climate Change, We Must — For the Troops’ Sake.” (Defense One)

Next is this cool story about scientists who created biodegradable plastic using sugar and carbon dioxide. Wow! (R&D Magazine)


Why classify this article, the second to discuss the demise of big oil, as “Technology”? Because the author believes the convergence of energy-saving technologies, thus far unappreciated by markets, is likely to shift the demand curve for oil hard left. (NewCo Shift)

I serve on the board of a big data analytics company whose CEO is an ace at that twin technology, machine intelligence. His opinion, along with that of his extended network of experts, is that the artificial intelligence (AI) conversation is massively overhyped. This interesting thought piece, my favorite this month, asks, “Can We Quantify Machine Consciousness?” (IEEE Spectrum)

Music I listened to that inspired this article: Tricky, Ken Boothe, Lee “Scratch” Perry, Shriekback, The Group, Lightnin’ Hopkins, Hugh Masekela, The Beta Band, Jeff Buckley, Yellowman, Rose Royce, Charlie Parker, Built to Spill, and Aphrodite. If you are a fan of beautiful singing voices, then I think you will like Ken Boothe.

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

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.

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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. Voss also sub-contracts for the well known firm, Focus Consulting Group. 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: [email protected]

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