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My Favorite Posts This Week

I try to share good posts via Twitter.  A bunch of people were writing solid stuff this week:   A Little Knowledge is Dangerous – Nick Maggiulli – Surprising stat about survival rates for people lost in the wild.  Kids six and under have a surprisingly high survival rate while one of the lowest is for kids seven to twelve.  Younger kids follow their instincts.  Older kids overthink and panic.  This maps over to investing in that knowing a little bit can lead to devastating over-confidence. Is Robert Shiller Right that Passive Investing is Dangerous? – Cullen Roche, Chicken Farmer – This is a sensible layout of one argument in the active/passive debate, pointing out that the sides often aren’t even debating the same points. How to Deal with Market Moving News – Ben Carlson – Binary thinking and single variable analysis are killers to long-term portfolio success. Backtested Strategies:…

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Bitcoin Mine

Moar Bitcoin!

After my last post about Bitcoin, I got a lot of, “So… Bitcoin?”  No one has a concrete opinion on this thing except the evangelists, but everyone wants to discuss it.  Skeptics seem more concerned about staying in their lane than dragging down crypto – they don’t understand it, they don’t need it, and maybe it smells a bit fishy to them. I think crypto is an elegant solution in search of a problem and I am constantly reminded of the early internet.  We didn’t see the use of the internet at first, but today it’s a basic utility.  Here’s how I’m looking at Bitcoin right now. What is the Purpose? It’s a way to store wealth.  This is particularly handy if your centralized currency authority is devaluing/confiscating.  With fewer institutions between transacting parties (basically just the network), Bitcoin is a fast and cheap way to send money to someone…

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Bitcoin

I Changed My Mind On Bitcoin

I changed my mind on Bitcoin a few weeks ago.  A bunch of smart people had made public comments on it, generating buzz.  I was going to write up a short summary for our investment team with pros and cons, ultimately concluding that Bitcoin was garbage.  But then I did some research. I read this Letter to Jamie Dimon which is the best tutorial on crypto-currencies (maybe more accurately crypto-assets) out there. I got sucked in to Patrick O’Shaughnessy’s Hash Power podcast series and have listened to it twice now. I’m convinced that Bitcoin is a real thing that has value.  Is it worth $7,500?  I have no idea and neither does anyone else.  Crypto-assets are an uncharted territory, basically a new paradigm along the lines of the invention of the internet.  Like the internet’s early days, nobody knows where the value lies yet.  The hip thing to say now…

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Congrats

Tone Deaf on ETFs

A couple of major announcements in the Exchange Traded Fund (ETF) world last week: State Street announced that they slashed the expense ratios on a ton of their ETFs and TD Ameritrade added a ton of ETFs to their ‘no-commission’ platform.  At first glance, this is great news.  Cheaper beta is available to more investors.  However, this is actually tone-deaf and a transparent money grab.  Hopefully, investors will show that they know better. Huh? State Street’s fee reductions are late in arriving.  Vanguard and iShares have been eating State Street’s lunch for years, in large part due to lower expenses.  Will investors flock to State Street now that it is the low-cost provider?  Perhaps the dumb ones will.  Investors who have money with Vanguard or iShares likely have huge gains.  Selling these positions to save a couple of basis points would be penny wise and pound foolish. While it is…

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Harvard

Update on Everyone’s Favorite $37 Billion Hedge Fund

It’s Harvard.  The $37 billion hedge fund is Harvard. More specifically, I’m referencing Harvard’s endowment.  When Harvard announced yet another management change last year, I was skeptical.  It seemed to me that Jane Mendillo inherited a mess created by an intellectual mercenary (who left his next employer under undesirable circumstances as well).  This began a management carousel ending with N.P. “Narv” Narvekar most recently taking over as CEO of the Harvard Management Company (HMC).  Reading the latest endowment report, I think Narv might be able to turn this thing around.  He is looking to improve HMC’s culture, structure, and incentives. The Changes Culture is difficult to change in any setting, especially after so much turnover in management.  Narvekar wants to build a singular team rather than insular tribes.  Getting buy-in from people who have seen several leaders come and go will not be easy.  Narvekar does have an advantage in…

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