Google vs. Amazon. World stock markets 1899 vs 2019. Solar Panels.

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Google vs. Amazon (Link)
Steve Yegge spent years at both Amazon and Google. His famous posting from 2011 gives an insiders look what Amazon was able to figure out early on and what hindered Google. Google did nearly everything better than Amazon, yet Amazon continued to be more successful. The difference came down to products vs. platforms and Amazon’s CEO Bezos was fierce about building platforms and Google didn't understand this. Products are always built on top of platforms. Platforms are all about long-term thinking. The power of a platform comes from the variety and sophistication of the products it enables. Bezos realized long before the vast majority of Amazonians that Amazon needs to be a platform.

Relative sizes of world stock markets 1899 vs 2019 (Link)
At the start of the 20th century, the UK equity market was the largest in the world, accounting for a quarter of world capitalization, dominating even the US market (15%). Germany (13%). Of the US firms listed in 1900, over 80% of their value was in industries that are today small or extinct. Today the US equity market us the largest in the world, accounting for 50% of world capitalization with the UK now under 6%.

What Happened When I Bought a House With Solar Panels (Link)
I’d soon learn that the system was tied to the title of the house. It appeared that if we bought Jug’s place, we’d have to assume his lease arrangement with Sunrun. On consumer review sites and in local news reports, rueful customers warn others to stay away from TPO solar offered by Sunrun and other companies. State attorneys general and politicians have fielded complaints from people who say they were sold expensive systems they can’t afford after signing contracts they didn’t understand; or are paying more now on their electricity bills, not less as promised; or are having trouble selling their homes because potential buyers are turned off, just as I was. (Customers of Sunrun and other companies must sign binding arbitration clauses, barring them from suing or joining in class actions.) Salespeople would cherry-pick data, skim over crucial details, and prioritize speed above all, he told me. A trainer from California who listened in on hundreds of sales calls for quality control estimated that 60 % of customers knew no more than half of what they were signing up for and 10 % had no clue.

Weekend catch up

Your weekend edge - catch up with this week's readings:

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Life lessons from Blackstone's Byron Wien (Link)
- If you want to be successful and live a long, stimulating life, keep yourself at risk intellectually all the time.
- The hard way is always the right way.
- Don’t try to be better than your competitors, try to be different.
- If it pays the most, you’re lucky. If it doesn’t, take it anyway, I took a severe pay cut to take each of the two best jobs I’ve ever had, and they both turned out to be exceptionally rewarding financially.

Don’t ask for his macro forecast - Howard Marks (Link)
“I don’t think anybody can consistently know the economy, interest rates, currencies, and the direction of the markets better than anybody else. So I swear off forecasting, and one of the elements in Oaktree’s investment philosophy is that we do not base our investments on macro forecasts. That doesn’t mean we’re indifferent to the macro, and our approach is, rather than depend on forecasts of the future, we depend on reading the present. I believe one of the greatest predictors of what the market’s going to do, or influences on what the market’s going to do, is where it stands in the various cycles, and if we can have an idea when the market is at an extreme position, I believe that can help us increase or decrease our aggressiveness or defensiveness in a timely fashion.”

The greatest investor you’ve never heard (Link)
Herb Wertheim may be the greatest individual investor the world has never heard. This once optometrist is a testament to the power of compounding as well as to the resilience of American innovation. Like Warren Buffett, Wertheim believes firmly in doubling down when his high-conviction picks go against him. Instead of concentrating on the metrics in financial statements, Wertheim is devoted to reading patents and spends two six-hour blocks each week poring over technical tomes. “What’s more important to me is, what is your intellectual capital to be able to grow?” Thanks to his engineering background, the technical nature of optometry and his experience as an inventor, the patent library is Wertheim’s comfort zone. Stocks he invested in based on their impressive patent portfolios include IBM, 3M and Intel.“If you like something at $13 a share, you should like it at $12, $11 or $10 a share, and if a stock continues to go down, and you believe in it and did your research, then you buy more”.

Jim Collins — A rare interview with a reclusive polymath (Link)
You likely know Jim Collins from one of his eight books, including Good to Great. Jim seldom gives interviews, so this is a rare window into an especially curious mind. At the end of every single day, Jim opens a spreadsheet with 3 columns and logs the following:1. What he did that day. 2. The number of creative work hours for that particular day (For the past 30 years, he’s clocked more than 1,000 creative work hours for the whole year). 3. A number: either +2, +1, 0, -1, or -2. indicating his overall emotional state for the day (+2 is the highest – aka a really good day).

What else matters more than future growth? (Link)
A simple question when thinking about future growth. What else matters more than this? Here’s what happened to a bunch of big economies over the last 30 years:

And here’s what happens over the next 30 years. 

America is leaps ahead of others. But if, aging-wise, China and Europe become the equivalent of Japan, and Japan becomes the equivalent of Del Boca Vista, everyone will feel it.

China ranks 86th in UN World Happiness Report (Link)
China ranked 86th - below 70th ranked Libya and 59th ranked Russia! The report noted Chinese rural households were much happier than urban households despite lower incomes. With the economy still growing at high levels you wonder why happiness is decreasing? Not too far behind China, is Venezuela, which is now ranked 102nd in the world down from 20th only 5 years ago.

Relative returns of companies exposed to the US-China trade wars

Gold reserves at major producers over the last 6 years

The problem of declining gold reserves has not been exclusive to Barrick. Many of the world’s largest gold companies including Newmont, Goldcorp Inc., and Kinross Gold Corp. have also seen their reserves fall. In the recent environment, there is a need to increase gold reserves to take advantage of the rising gold prices. This is providing increased incentive for consolidation among gold producers.

Howard Marks. US-China trade war. Friday Humor

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.
_________________

Don’t ask for his macro forecast - Howard Marks. (Link)
“I don’t think anybody can consistently know the economy, interest rates, currencies, and the direction of the markets better than anybody else. So I swear off forecasting, and one of the elements in Oaktree’s investment philosophy is that we do not base our investments on macro forecasts. That doesn’t mean we’re indifferent to the macro, and our approach is, rather than depend on forecasts of the future, we depend on reading the present. I believe one of the greatest predictors of what the market’s going to do, or influences on what the market’s going to do, is where it stands in the various cycles, and if we can have an idea when the market is at an extreme position, I believe that can help us increase or decrease our aggressiveness or defensiveness in a timely fashion.”

Relative returns of companies exposed to the US-China trade wars

Friday laughs

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.
_________________

What else matters more than future growth? (Link)
A simple question when thinking about future growth. What else matters more than this? Here’s what happened to a bunch of big economies over the last 30 years:

And here’s what happens over the next 30 years. 

America is leaps ahead of others. But if, aging-wise, China and Europe become the equivalent of Japan, and Japan becomes the equivalent of Del Boca Vista, everyone will feel it.

Life lessons from Blackstone's Byron Wien: (Link)

• If you want to be successful and live a long, stimulating life, keep yourself at risk intellectually all the time.
• The hard way is always the right way. 
• Don’t try to be better than your competitors, try to be different.
• If it pays the most, you’re lucky. If it doesn’t, take it anyway, I took a severe pay cut to take each of the two best jobs I’ve ever had, and they both turned out to be exceptionally rewarding financially.

Gold reserves at major producers over the last 6 years 

The problem of declining gold reserves has not been exclusive to Barrick. Many of the world’s largest gold companies including Newmont, Goldcorp Inc., and Kinross Gold Corp. have also seen their reserves fall. In the recent environment, there is a need to increase gold reserves to take advantage of the rising gold prices. This is providing increased incentive for consolidation among gold producers.

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.
_________________

China ranks 86th in UN World Happiness Report (Link)
China ranked 86th - below 70th ranked Libya and 59th ranked Russia! The report noted Chinese rural households were much happier than urban households despite lower incomes. With the economy still growing at high levels you wonder why happiness is decreasing? Not too far behind China, is Venezuela, which is now ranked 102nd in the world down from 20th only 5 years ago.

The greatest investor you’ve never heard (Link)
Herb Wertheim may be the greatest individual investor the world has never heard. This once optometrist is a testament to the power of compounding as well as to the resilience of American innovation. Like Warren Buffett, Wertheim believes firmly in doubling down when his high-conviction picks go against him. Instead of concentrating on the metrics in financial statements, Wertheim is devoted to reading patents and spends two six-hour blocks each week poring over technical tomes. “What’s more important to me is, what is your intellectual capital to be able to grow?” Thanks to his engineering background, the technical nature of optometry and his experience as an inventor, the patent library is Wertheim’s comfort zone. Stocks he invested in based on their impressive patent portfolios include IBM, 3M and Intel.“If you like something at $13 a share, you should like it at $12, $11 or $10 a share, and if a stock continues to go down, and you believe in it and did your research, then you buy more”.

Jim Collins — A rare interview with a reclusive polymath (Link)
You likely know Jim Collins from one of his eight books, including Good to Great. Jim seldom gives interviews, so this is a rare window into an especially curious mind. At the end of every single day, Jim opens a spreadsheet with 3 columns and logs the following:1. What he did that day. 2. The number of creative work hours for that particular day (For the past 30 years, he’s clocked more than 1,000 creative work hours for the whole year). 3. A number: either +2, +1, 0, -1, or -2. indicating his overall emotional state for the day (+2 is the highest – aka a really good day).

Your weekend edge - catch up with this week's readings:

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.
_________________

Putting downturns in perspective(Link)

Buying is easy, selling is hard $(Link)
The researchers looked at more than 4 million trades among 783 portfolios from 2000 to 2016 and found that stock pickers actually showed skill when buying. However, the sales by these institutional investors cost them as much as 100 basis points, or a full percentage point, of yearly returns compared with a no-skill strategy of simply selling holdings at random. Translation: Investors spend way more time analyzing what to buy than what to sell.

Global inequality - it ain't what it used to be (Link)
On the planet as a whole, inequality has fallen dramatically. Not only has it fallen in terms of income, but it’s fallen in other dimensions of human well-being such as life expectancy and schooling. This is a poorly known fact in need of greater coverage. The poorest of the world have since experienced large increases in incomes. In fact, their living standards increased more rapidly than those of the richest in the world. Thus, there has been a fall in inequality. Depending on the methodology, the indicators of global income suggest falls between 9% and 33% since the 1970s.

A record number of Americans are 90 days behind on their car payments (Link)

More than 7 million Americans are at least 90 days behind on their auto loans, according to the New York Fed. That's higher than the peak in 2010 as the country was still reeling from the devastating financial crisis.

What happens when Canada ignores incentives and competitiveness (Link)
Between 2013 and 2017, Canadians increased investment outside the country by 74.0 per cent while foreigners investing in Canada declined by 55.1 per cent. Encana, one of the country’s premier energy companies now invests more outside of Canada than in it. And the company’s CEO recently moved to Denver and indicated that headquarter activity would become less-concentrated in Calgary. One of the country’s largest gold companies, Goldcorp, has just been purchased by an American company and much of its headquarter activity will now shift to the United States. TransCanada Pipelines recently announced it would change its name to TC Energy in part to try to attract more investors leery about investing in a perceived Canadian-only focused company.

Fossil fuels
Only 24% of Canada's total electricity generation comes from fossil fuels, ranking it sixth best out of 42 countries measured.

Emissions
Replacing coal with the large increases  in domestic natural gas production and replacing dirty imported oil with a domestically supported oil industry is apparently the biggest factor towards the U.S. leading the world in emission change. No misguided global initiative required for the US to lead the world.  Maybe it requires a new government, supportive of investment and local industry,  for us to be environmental leaders?  

Source: BP Statistical Review of World Energy 2018

Household saving rate
German household saving rate is on the rise. Most of real wage gains are being saved, not spent.

What is GDP in China? (Link) 
"And yet, when you speak to Chinese businesses, economists, or analysts, it is hard to find any economic sector enjoying decent growth. Almost everyone is complaining bitterly about terribly difficult conditions, rising bankruptcies, a collapsing stock market, and dashed expectations. In my eighteen years in China, I have never seen this level of financial worry and unhappiness." - Michael Pettis

A building binge leaves cities with 65 million empty apartments (Link)

Celebrating with Liz, Sarah, and Theo on their 2nd anniversary! 

Get the Edge - Click here to view an archive of investment education, daily musings, book recommendations and more.
_________________

Buying is easy, selling is hard $(Link)
The researchers looked at more than 4 million trades among 783 portfolios from 2000 to 2016 and found that stock pickers actually showed skill when buying. However, the sales by these institutional investors cost them as much as 100 basis points, or a full percentage point, of yearly returns compared with a no-skill strategy of simply selling holdings at random. Translation: Investors spend way more time analyzing what to buy than what to sell.

Global inequality - it ain't what it used to be (Link)
On the planet as a whole, inequality has fallen dramatically. Not only has it fallen in terms of income, but it’s fallen in other dimensions of human well-being such as life expectancy and schooling. This is a poorly known fact in need of greater coverage. The poorest of the world have since experienced large increases in incomes. In fact, their living standards increased more rapidly than those of the richest in the world. Thus, there has been a fall in inequality. Depending on the methodology, the indicators of global income suggest falls between 9% and 33% since the 1970s.

Household saving rate
German household saving rate is on the rise. Most of real wage gains are being saved, not spent.