2017

I recently spoke with a client who wanted to know what could go wrong with bitcoin.  We talked about bitcoin and the monetary system (not a risk now, but who knows in the future) as well as black market applications (greenbacks work just as well or better here).  The question stuck with me, though.  What could go wrong?  I remembered attending a session at an IMCA (now the Investments & Wealth Institute) conference with Dan Ariely and something clicked.  Ariely’s research suggests that the further we get from money, the higher the likelihood that we will cheat. Check out his TED talk here.  He performed an experiment where subjects were given a limited amount of time to complete a number of math problems and would get paid based on the number of problems they completed.  Subjects who handed in their papers got an average of 4 problems correct. Lots of…

In honor of my favorite vignette from The Office… Question:  What kind of bear is best? ‘Tis the season for market predictions (and forgetting last year’s predictions).  The optimists predict low single digit returns for equities.  The bears predict bear things.  Which means no one expects even decent stock market returns.  Now more than ever it makes sense to hold a portfolio that doesn’t require you to predict the future to be successful. Bears Eat Beets Schwab’s Jeffrey Kleintop points out that while stocks have gone up every month this year, so have earnings. Battlestar Galactica Bitcoin is going bananas yet again.  Charlie Bilello has tracked bitcoin sentiment via Twitter polls at major milestones which is fascinating.  He also occasionally marks bitcoin’s “market cap” (or whatever you want to call it) which has hit $214 billion.  OMG!  That’s more than Home Depot!!! Calm down, Apple’s cash hoard is around $270…

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…

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…

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…