This week's interesting finds

Adam Young and Sydney Campbell – Partners since 2019 and 2020 (Yonge-Dundas Square – Toronto, ON) 

Our holiday gift guide – 2022 edition 

For those fearing winter (and those looking forward to it), we have a new list of gift recommendations tested by EdgePointers. As always, they’re as varied as the partners who recommended them. From digital to analog, there are things for the home and even something in outer space. We hope they help inspire your presents for those closest to you these holidays. Just like last year, we’re also featuring some items made by some of our Portfolio companies (although this isn’t a recommendation to by a company’s securities). 

EdgePointer of the Month 

The latest EdgePointer of the Month is Nataliya Goreva, head of Trading Operations. 

Read more about our multilingual, world traveler Nataliya.  

This week in charts 

Returns by asset class since 2011 

Home owners with variable-rate mortgages face difficult squeeze as interest rates rise, house prices drop, Bank of Canada warns. 

About 670,000 variable-rate mortgages have been issued since the start of the pandemic, according to the Bank of Canada. Variable-rate mortgages accounted for around 50 per cent of all mortgages issued since mid-2021, compared to an average of 20 per cent in the years before the pandemic. 
Borrowers have sought the variable-rate products because borrowing costs have typically been cheaper 
Financial markets expect the bank’s benchmark interest rate to reach 4.25 per cent by early 2023, up from 3.75 per cent today. 

“This is not a large share of households, but it is larger than it would have been based on historical trends,” [Bank of Canada Senior Deputy Governor Carolyn] Rogers said. 

than fixed-rate mortgages. Part of the motivation was that federal banking rules require borrowers to prove they can make their monthly mortgage payments at an interest rate at least two percentage points higher than their actual mortgage contract. 

Problems in the mortgage market can infect the broader financial system if borrowers default on payments. Ms. Rogers said Canada’s banking system is in a good position to handle potential shocks, thanks to reforms following the 2008-09 financial crisis that increased capital and liquidity requirements for lenders and bolstered mortgage stress tests. 

Moreover, the central bank is “not expecting a severe economic downturn with the kind of large job losses typical of past recessions,” she said. 

But tens of thousands of homeowners will be pinched as interest rates continue to rise. The Bank of Canada is widely expected to raise interest rates again on Dec. 7, either by a quarter-point or half-point. 

What Really Matters? (Howard Marks memo)

“What really matters is the performance of your holdings over the next five or ten years (or more) and how the value at the end of the period compares to the amount you invested and to your needs. Some people say the long run is a series of short runs, and if you get those right, you’ll enjoy success in the long run. They might think the route to success consists of trading often in order to capitalize on relative value assessments, predictions regarding swings in popularity, and forecasts of macro events. I obviously do not. 

“I think most people would be more successful if they focused less on the short run or macro trends and instead worked hard to gain superior insight concerning the outlook for fundamentals over multi-year periods in the future. They should:

• “study companies and securities, assessing things such as their earnings potential; 
• “buy the ones that can be purchased at attractive prices relative to their potential; 
• “hold onto them as long as the company’s earnings outlook and the attractiveness of the price remain intact; and 
• “make changes only when those things can’t be reconfirmed, or when something better comes along. 

This week’s fun finds 

Walk this number of steps each day to cut your risk of dementia 

People between the ages of 40 and 79 who took 9,826 steps per day were 50% less likely to develop dementia within seven years, the study found. Furthermore, people who walked with “purpose” – at a pace over 40 steps a minute – were able to cut their risk of dementia by 57% with just 6,315 steps a day.

“It is a brisk walking activity, like a power walk,” said study coauthor Borja del Pozo Cruz, an adjunct associate professor at the University of Southern Denmark in Odense, Denmark, and senior researcher in health sciences for the University of Cadiz in Spain. 
Even people who walked approximately 3,800 steps a day at any speed cut their risk of dementia by 25%, the study found. 

The largest reduction in dementia risk – 62% – was achieved by people who walked at a very brisk pace of 112 steps per minute for 30 minutes a day, the study found. Prior research has labeled 100 steps a minute (2.7 miles per hour) as a “brisk” or moderate level of intensity. 

The editorial argued that individuals looking to reduce their risk of dementia focus on their walking pace over their walked distance. 

Coffee vs. tea smackdown 

Do you start your mornings with a potent dose of caffeine from a freshly brewed cup of Joe? Or do you prefer a slightly less caffeinated nudge from a warm and gentle cup of tea? 

Whatever your preference, scientists have found that regularly drinking coffee or tea can provide a variety of health benefits. But how do coffee and tea compare in a head-to-head matchup? We took a look at the research, and here’s what we found. 

How a Halifax oyster mascot lit up the internet 

Meet Pearl, a local Halifax mascot who has garnered worldwide attention online. 

Pearl is the mascot of the Halifax Oyster Festival — a giant oyster with over a dozen eyes, luscious lips and long legs. 

The Coast, a digital-first news outlet in Halifax, puts on the Halifax Oyster Festival every year. They created Pearl six years ago to represent the festival. 

Note: OysterFest is this weekend, November 25 and 26.

This week's interesting finds

Juan Gomez – Partner since 2016 (Peace Love Austin Mural – Austin, TX)

This week in charts 

Food and Agricultural Organization of the United Nations food price index first YoY drop in two years

Bear markets usually mean new market darlings

Japan Weighs Raising Taxes On EVs With "Higher Output Motors"

The country's internal affairs ministry is reportedly weighing whether or not to raise taxes on electric vehicles in order to make up for a shortfall in income from taxes on traditional gas powered cars, Bloomberg reported Thursday morning.

Currently, electric vehicle owners pay a flat fee of 25,000 yen per year to local governments, but the ministry is interested in potentially altering this framework for vehicles that have "higher output motors", the report says.

The ministry will reportedly ask the ruling coalition to "consider the change" for inclusion in the 2023 tax code, Bloomberg reports. Even then, the change could take several years to come into effect.

Recall, we wrote back on November 5 that UK chancellor Jeremy Hunt is expected to put an electric vehicle excise tax in place by 2025-2026.

This month's Autumn Statement will include the measures, according to FT, who said people familiar with the road tax is part of a larger plan to address a fall in motoring tax revenues caused by the shift to EVs, which leave out fuel-related taxes. Fuel duty raises about £35bn, but the Treasury has warned that a growing number of EVs on the road could cause this number to plunge by £2.1bn by 2026-27. Ergo, a new excise duty on EVs could take place by 2025-2026.

This week’s fun finds

Mapping The Most Used Words On Every Country and U.S. State's Wikipedia Page

Can You Get a Full-Body Workout in 20 Minutes?

Maillard Howell, head of fitness at Reebok and co-owner of Dean CrossFit in Brooklyn, said the key to getting an effective workout in a short amount of time is focusing on compound exercises.

A compound exercise is one that uses multiple muscle groups at the same time to perform a movement — like squats, push-ups or deadlifts. Isolation exercises, like bicep curls or calf raises, won’t raise your heart rate as quickly as compound exercises and primarily work one muscle group at a time.

If you’re short on time, “you want big movements that use big muscles,” Mr. Howell said.

[Cardiovascular physiologist Dr. Stephen J. Carter] recommended a three- to five-minute warm-up with the goal of increasing your circulation. “I keep it dynamic. I just want to start moving, and I’m a big fan of raising your body temperature before a workout,” Mr. Howell said.

Once you’ve completed the workout — and caught your breath — Mr. Howell suggested a three- to four-minute cool down. He recommended static floor stretches, like the pigeon pose — with one leg stretched out straight behind you, and the other leg bent in front with the side of your calf resting on the ground. You can rest your calf up on a bench to make it easier, or just go through any stretches that feel good.

Life in the Slow Lane

I was being a snob. Slow cookers are useful for all sorts of people, but particularly for a specific kind of cook: the person who wants to do things from scratch, but lacks the time, culinary knowledge, or confidence to do so on the hob or in the oven. It is a sympathetic tool, unlikely either to burn your food or leave your meat undercooked. Your timings can be out by hours with little impact on the end result. It’s economical, too — first in its ability to make the most of cheap cuts of meat and tough vegetables, second in its small energy footprint (it costs about the same to run as an energy-saving lightbulb).

The common thread within the slow cooker community is convenience. The slow cooker is inherently domestic: Chefs have no interest in leaving their pots unattended, and the prospect of having to keep a lid clamped on them and leave them untasted and unadjusted is anathema. It’s not a terribly glamorous piece of kit. “They’re not sexy!” Megan Allen, another slow cooker fan tells me, laughing. It’s not aspirational. It might be prosaic, but the slow cooker is a purely functional device: it gets the job done.

This week's interesting finds

Sarah Ford – EdgePoint Partner since 2008 (Duckworth St. – St. John’s, NL) 

Photo by one of our advisor partners: Jim Mason 

Wondering why you’re seeing this? Click here to find out more about our beliefs at EdgePoint and why our internal partners are proud to stand behind (or in this case beneath) them.   

This week in charts 

Institute of Supply Management (ISM)’s Services Purchasing Managers Index (PMI) Prices Paid Index vs. CPI 

Note: The Services PMI report are the opinions of purchasing managers in non-manufacturing industries about business conditions, with 50 as the midpoint. The higher the number, the better they think things are.

Venture capital has been patient   

An inverse relationship   

This week’s fun finds 

No such thing as too many cooks in the kitchen for the Operations team 

As a team building exercise, Operations had an after-work social where they made then ate their dinner. The department was split into teams of two and challenged to make one dish (a soup, appetizer, main or dessert). I think everyone won this one. 

Compliments to the chefs!   

EdgePoint hot sauce review crew 

Because there are so many saucy individuals at EdgePoint, we’ve offered up our services to review hot sauces on behalf of our external partners. 

First up, Ass Kicking Whoop Ass Ghost Pepper Sauce. 

Heat: 7.2 (out of 10) 

Flavour: 6 (out of 10) 

• Just enough flavor that I wasn’t regretting the pain from the heat. An ideal match for someone who prefers hot sauce with pizza instead of garlic dip. 

• Got a bit of that vinegar and spice. But a little goes a long way to be able to actually enjoy the flavour. The heat gets progressively hotter, which is why I am giving it a high rating. 

• This hot sauce has a nice heat but light in flavour. Good for those who are looking to just add heat but not one for those looking to add heat and enhance a dish. 

A face only a mother could love: Terrifying photo shows what an ant looks like close up 

It's an award-winning close-up photo of ... an ant. 

The eye-popping photo is one of 57 Images of Distinction in Nikon's Small World Photomicrography Competition.  The terrifying portrait was captured by Eugenijus Kavaliauskas, a Lithuanian photographer.

This week's interesting finds

Jinhyung Kwon – EdgePoint Partner Since 2020 (Toronto, ON – Financial District)

Science or tobacco (Go West) - Geoff MacDonald talks about how fossil fuels have become the "new tobacco" in the media.

Note – Due to technical issues, we’re giving our readers another chance to read Geoff’s commentary.

This week in charts

Inflation was supposed to be done by now…

Maybe two years from now? 

Where Canadian workers went

Nuclear Shutdowns Have Already Harmed the Planet

In total, since 2012, the carbon costs of nuclear phaseout policies in developed countries add up to about 800 million tons of CO2. To place that number into context, that’s enough CO2 emissions to melt 2400 km2 of Arctic summer sea ice, plus or minus another 240 km2. It equates to a full two years of nationwide fossil CO2 emissions from a medium-sized country like Turkey, Australia, or the United Kingdom, or more than 0.1 parts per million of the 416 parts per million of carbon dioxide in the planet’s atmosphere.

These totally unnecessary carbon emissions will continue to grow over the coming decades, with one academic paper estimating that added global emissions from Germany’s nuclear phaseout alone will total 1100 Mt of CO2 by 2035. With each additional year, the consequences of reactor shutdown decisions made years ago continue to accumulate around the world.

Why do shutdowns of nuclear power plants increase a country's fossil carbon emissions? This effect occurs because to date, low-carbon electricity formerly generated by decommissioned nuclear power plants in the wealthy world has largely been replaced by fossil fuels, causing added carbon emissions as a direct result of nuclear phaseout policies.

But even to the small degree that falling nuclear electricity generation has been replaced by renewable power, this represents “treadmill decarbonization” where low-carbon energy is simply replacing other low-carbon energy sources instead of reducing overall fossil fuel consumption. At a time when governments should be seeking to maximize the pace of clean energy deployment and taking fossil fuel power off the grid, treadmill decarbonization counterproductively expends resources swapping out clean nuclear energy for renewables while letting fossil fuel plants continue to run. 

UBS Global Real Estate Bubble Index 2022

Real house price levels in Vancouver and Toronto have more than tripled in the last 25 years. An urban housing shortage amid strong population growth and falling mortgage rates are typically seen as the two main culprits of the long-term property bonanza in both Canadian cities. High investment demand has also added significantly to the price increases. The index has been flashing warning signals in the last couple of years.

The housing boom has become more of a countrywide phenomenon and is therefore hardly driven by a shortage of construction. In such overheated markets, with already very stretched housing affordability, the recent rate hikes by the Bank of Canada could be the last straw that broke the camel’s back. New buyers and owners during mortgage renegotiations not only need to pay higher interest rates but are also required to provide more income to qualify for a mortgage. Price correction is already in the making.

This week’s fun finds

Halloween – EdgePoint’s favourite holiday

Not just because it’s associated with orange, but because our fun-sized partners (and a few full-sized ones) get to dress up. A few even came into the Toronto office to trick-or-treat.

Edge-ucation camp

For “Take Our Kids to Work” day, we were able to bring back Edge-ucation camp, our financial literacy camp for teenagers. We talked about compounding, inflation and other basics.

Larry Bird remembers when players that later went bankrupt made fun of him for saving his money - "They'd just laugh and make jokes about me stashing my money away"

"Some of the guys who made far less than me bought the $700,000 homes, and the Rolex watches, and the big luxury cars. I used to tell them, "You're crazy, you should be saving your money." They'd just laugh and make jokes about me stashing my money away. But I could see what they were doing. They were throwing away their future. So many of them were living for today and not even stopping for a minute to think about ten years down the road when their playing careers were over and the money stopped pouring in. And by the time they realized what I was telling them was true, it was too late.I can't tell you how many ex-teammates have asked me for money. It's heartbreaking for me to say no, but I do because I warned them. I told them to save."

This week's interesting finds

Daniela Orla – EdgePoint Partner since 2015 (Toronto, ON – Queen & Spadina) 

Science or tobacco (Go West) - Geoff MacDonald talks about how fossil fuels have become the "new tobacco" in the media.

This week in charts 

Back to brick and mortar 

CPI contributor change – August vs. September 2022 

Where Canadian immigrants are coming from   

Immigrants make up the largest share of the population in over 150 years and continue to shape who we are as Canadians 

More immigrants are now working in Canada than before the pandemic, and, from 2016 to 2021, immigration contributed to 79.9% of the growth in Canada's labour force. 

According to 2021 Census data, almost 1.9 million children younger than 15 years had at least one parent born abroad, accounting for almost one-third (31.5%) of all children in Canada. This proportion was up from 26.7% in 2011 and 29.2% in 2016. 

BASF to downsize ‘permanently’ in Europe 

BASF, which produces products from basic petrochemicals to fertilisers and glues, spent €2.2bn more on natural gas at its European sites in the first nine months of 2022, compared with the same period last year. 

[CEO Martin] Brudermüller said the European gas crisis, coupled with stricter industry regulations in the EU, was forcing the company to cut costs in the region “as quickly as possible and also permanently”. 

The company announced two weeks ago that it would reduce costs by €1bn over the next two years, targeting mainly “non-production areas” such as IT, communications as well as research and development. 

Brudermüller, who has previously warned that an embargo on Russian gas would plunge Germany into its biggest crisis since the second world war, said on Wednesday the cost cuts were necessary to “safeguard our medium and long-term competitiveness in Germany and Europe”. 

German exporters rethink €100bn ‘love affair’ with China 

Since the turn of the millennium, China has gone from accounting for just over 1 per cent of German exports to commanding a 7.5 per cent share of sales abroad, making it second only to the US. In 2021, more than €100bn worth of German goods were sold there. 

Source: Financial Times 

Thorsten Benner, director of the Global Public Policy Institute in Berlin, described the ties as the main factor in the “golden age of the German economic model”, seen during the latter stages of Angela Merkel’s 16-year reign as chancellor, which ended last year. 

Alicia García-Herrero, a senior economist at think-tank Bruegel, said the buoyancy of the links between the two export powerhouses had been replaced by a sinking feeling in Berlin as exports slide. “Germany is losing its trade surplus and part of its competitiveness, partially because China has moved so rapidly up the value ladder.” 

It comes at a sensitive moment for the broader relationship between the two countries. Russia’s invasion of Ukraine has given fuel to German critics of Beijing, who argue the country’s economic ties are trumping foreign policy goals and leading to collaboration with prospective geopolitical rivals. Olaf Scholz, who will fly to Beijing next week for his first meeting with Chinese leaders as German chancellor, is set to unveil his new China strategy next year. He is under pressure from his coalition partners, the Greens and the Free Democrats, to loosen ties and courted controversy when he asked ministries to back an investment from Cosco, a state-owned Chinese shipping conglomerate, in a container terminal at the Port of Hamburg. The deal was approved earlier this week, though Cosco took a smaller-than-planned stake, which will limit its capacity to influence decision-making. 

“The China strategy will include clear messages on the need to reduce dependencies, and diversify supply chains and trading partners,” said Benner. 

Misreading Xi and the rise of Li 

The professional China commentariat and its echo chamber in the Western media were blindsided by the appointment of Shanghai party head Li Qiang as the country’s premier, the number two position to Xi Jinping. 

Li is a tech-savvy supporter of high-tech entrepreneurship who believes that China’s future lies in the digital economy. Xi, the Western press insisted with near unanimity, had reverted to Maoism. 

In fact, Li’s appointment as premier-designate was foreseeable as well as foreseen. Asia Times wrote as much on October 21, forecasting that Xi would opt for retiring four out of the seven Politburo Standing Committee members, including not only Premier Li Keqiang, but also the widely touted premiership candidate Wang Yang, and would not miss the opportunity to install a new, younger and different cast of leaders. 

Li is the Shanghai party chief. Few if any previous Shanghai leaders have failed to advance to the Standing Committee, Xi included. That his advance to the number two position nonetheless came as a surprise to most Western analysts merely proves how much so many have misread Xi in particular and Chinese governance in general.   

This week’s fun finds 

Discovery Unlocks Potential of 'Special' Muscle 

And Marc Hamilton, professor of Health and Human Performance at the University of Houston, has discovered such an approach for optimal activation – he’s pioneering the “soleus pushup” (SPU) which effectively elevates muscle metabolism for hours, even while sitting. The soleus, one of 600 muscles in the human body, is a posterior leg muscle that runs from just below the knee to the heel. 

Building on years of research, Hamilton and his colleagues developed the soleus pushup, which activates the soleus muscle differently than when standing or walking. The SPU targets the soleus to increase oxygen consumption – more than what’s possible with these other types of soleus activities, while also being resistant to fatigue. 

So, how do you perform a soleus pushup? 

In brief, while seated with feet flat on the floor and muscles relaxed, the heel rises while the front of the foot stays put. When the heel gets to the top of its range of motion, the foot is passively released to come back down. The aim is to simultaneously shorten the calf muscle while the soleus is naturally activated by its motor neurons. 

While the SPU movement might look like walking (though it is performed while seated) it is the exact opposite, according to the researchers. When walking, the body is designed to minimize the amount of energy used, because of how the soleus moves. Hamilton’s method flips that upside down and makes the soleus use as much energy as possible for a long duration.   

Save Like A Pessimist, Invest Like An Optimist 

But there was another side of Bill Gates. It was almost paranoia, virtually the opposite of his unshakable confidence. 

From the day he started Microsoft he insisted on always having enough cash in the bank to keep the company alive for 12 months with no revenue coming in. In 1995 he was asked by Charlie Rose why he kept so much cash on hand. Things change so fast in technology that next year’s business wasn’t guaranteed, he said, “Including Microsoft’s.” In 2007 he reflected: 

"I was always worried because people who worked for me were older than me and had kids, and I always thought, ‘What if we don’t get paid, will I be able to meet the payroll?’” 

Optimism and pessimism can coexist. If you look hard enough you’ll see them next to each other in virtually every successful company and successful career. They seem like opposites, but they work together to keep everything in balance. 

What Gates seems to get is that you can only be an optimist in the long run if you’re pessimistic enough to survive the short run. 

The best way for most people to apply that is: Save like a pessimist, invest like an optimist. 

1 in 3 Gen Z Adults Have Seen a Horror Movie in Theaters in the Past Month 

It's spooky how fast Spirit Halloween stores pop up. Here's how the retailer does it 

Beneath the songs and the memes, the story of Spirit Halloween is really one of urban development patterns. 

Perhaps above all, Spirit's business model hinges on space. Lots of it. Spirit looks for anywhere between 5,000 and 50,000 square feet of space, but in the company's own words, "no store is too large (or too small)" — and the company has no problem finding the space it needs. 

Drop any ZIP code or address into the company's store locator, and a flurry of orange arrows is almost sure to pop up. 

The company finds this space largely in abandoned buildings — malls that have shut down, retailers that have filed for bankruptcy and so on. 

"Spirit is pretty much a bottom-feeder business that works only at the expense of other stores; if there weren't vacant storefronts, this business wouldn't exist," writes Rachel Quednau, program director for Strong Towns, an urban planning advocacy group that emphasizes incremental city planning. 

From January to August, the company spends its time scouring the country and scoping out properties for temporary leases, and a big part of what makes this a reliable process for Spirit Halloween is that these abandoned spaces are otherwise unusable within local economies.

This week's interesting finds

EdgePoint Q3 2022 commentaries are now live on the website. This quarter: 

• Think different (equity) – Jeff Hyrich talks about why we “think different” from the investment industry. 

• Let’s get ready to rumble (fixed income) – Frank Mullen discusses two behavioural biases that lead to sub-optimal returns and how we believe EdgePoint is structured to avoid them.

Geoff Goss – EdgePoint Partner since 2008 (Halifax, NS – Armdale Rotary)   

This week in charts 

Canadian mortgages   

These Global Cities Show the Highest Real Estate Bubble Risk  

Bears before bulls?

The Covid-19 Baby Bump: The Unexpected Increase in U.S. Fertility Rates in Response to the Pandemic 

Figure 1A shows that the decline in childbearing in the U.S. accelerated between March 2020 and January 2021, with Table 1 showing the number of births falling by 76,000 more than anticipated by the pre-pandemic trend (column 3). The qualitative pattern for the total fertility rate is remarkably similar: TFR fell from around 1.75 in January 2020 to 1.6 in January 2021, over 3 times the rate of decline from 2007 to 2020. Notably, the accelerated decline in childbearing began around March 2020, about nine months too soon for domestic pandemic lockdowns or the April 2020 pandemic surge in unemployment to affect conceptions. In order for the shortfall in births beginning in early 2020 to reflect falling conceptions, behavioral changes would have had to start in June 2019, well before COVID-19 had even been identified. In short, declines in fertility rates during 2020 happened too quickly to reflect changes in childbearing desires in response to the economic uncertainty and job losses caused by COVID-19.

Private equity circles fallen stars of pandemic IPO boom 

Of more than 400 listings where companies raised at least $100mn between 2019 and 2021, 76 per cent are below the price at their initial public offering, a Financial Times analysis of Dealogic data shows. The group’s median return since their respective IPO dates is negative 44 per cent. 

The laggards include such-hyped stocks as Robinhood Markets, Lyft and DoorDash, all of which went public during a market boom that ended in late 2021. The Nasdaq Composite index that contains many growth companies has fallen 32 per cent this year. 

With share prices plunging, private equity groups are aggressively circling newly public companies as potential buyout targets, several Wall Street executives said. And some corporate boards have been receptive. 

“When you think about the amount of private capital that has been raised that hasn’t been deployed, then look at how public equity valuations have re-rated, it feels like it’s going to be a natural pairing up,” said David Bauer, who runs equity capital markets at KKR, the investment group known for its private equity business.  

This week’s fun finds 

Ask an AI Art Generator for Any Image. The Results Are Amazing—and Terrifying. 

No humans were involved—no sketch artists, no photographers, no photo editors. Just me, my laptop and OpenAI’s Dall-E 2. (The name is a play on Pixar’s animated robot WALL-E and surrealist artist Salvador Dalí.) I typed those phrases into a text box and out popped the images within seconds. 

You might look at that image of a “Monkey recording a podcast” and think: “Oh, the system is just mashing together images of monkeys and microphones!” Nope. 

The AI systems interpret your words and create fully original images. You could insert the same prompt and never get this same image. 

So how did the AI know what a podcasting monkey would look like? By studying the AI equivalent of flashcards. Programmers train AI using hundreds of millions of captioned photos, which it deconstructs in a mathematically complicated process. By now, the Dall-E 2 AI has deconstructed many images of monkeys and many scenes of podcasting. Then, through another complex process called diffusion, it turns a meaningless cloud of pixels into an image with a reasonably high probability of resembling what you requested. In this case, that pensive little guy in headphones, talking into a studio mic.

This week's interesting finds

Tim Ng – EdgePoint Partner since 2012 (Vancouver, BC – Coal Harbour)

Photo by one of our external advisor partners.

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This week in charts 

There’s always uncertainty in the world

The customer isn’t always right

Toronto traffic 

There Will Be Drawdowns

By now, the litany of reasons for the market rout are known to just about everyone: war, inflation, tightening monetary policy, and a global economic slowdown. All news seems to be bad news and as one might expect, forecasts of impending doom are running rampant.

During such times, it’s hard to imagine stocks ever going up again. Which is undoubtedly leading many investors to either panic and sell or hold off on investing new money until the “dust settles.” In theory, their reasoning is sound: by waiting for the market “to bottom,” they’ll avoid further downside and be able to buy back in at lower prices.

But in practice, this strategy almost always fails. For if they’re scared to invest today, what are the odds that they will be buyers if prices go down more and the news only gets worse? Not very good. Based on the evidence of investor returns trailing fund returns across all categories, they’re much more likely to do the opposite. The 1.73% annualized “behavior gap” over the last 10 years is a direct result of investors buying high and selling low, again and again.

This week’s fun finds

Too Many Songs, Not Enough Hits: Pop Music Is Struggling to Create New Stars

Insiders have plenty of theories about why the market for new artists has become more difficult. Chief among them: a deluge of new music. It has become so easy for aspiring artists to release tracks that songs are hitting streaming services by the hard drive-full, making it harder for any single tune to stand out amid the glut. “Due to the sheer number of things coming out, songs that were shoo-ins for being hits five to 10 years ago now have to fight to see daylight,” says veteran producer Warren “Oak” Felder (Usher, Demi Lovato). Even the biggest record companies are taking notice — “If there are 80,000 tracks a day being uploaded on major [digital service providers], then [major-label] market share is going to be diluted by default,” Sony Music Group chairman Rob Stringer told investors this summer.

In addition, the reach and influence of once-powerful mediums like radio and late-night TV have also declined. (“A No. 1 radio song doesn’t mean fuck anymore,” laments one longtime A&R executive.) Managers say that even marquee streaming playlists don’t have the commercial oomph they had just a few years ago. (“Now, just because you’re in a top 10 slot on a big Spotify playlist, it doesn’t mean your audience is growing,” one manager says.)

The rise of TikTok has complicated matters, too. The platform has become a hit-maker — helping Em Beihold’s “Numb Little Bug” and Nicky Youre’s “Sunroof” climb the charts, for example — but it’s an unpredictable marketing tool, less susceptible to manipulation and less responsive to star power than other platforms. Engineering a viral moment is akin to walking into a corner store and emerging with a winning lottery ticket. “There doesn’t seem to be any rhyme or reason to what breaks there,” says Justin Lehmann, who manages Aminé and Khai Dreams, among others. “And without breaking there, it’s difficult to say what else can cause a big moment to happen for anybody.”

Taken together, all these factors mean that seizing — and then holding — the attention of the music-loving masses is that much more challenging. “It used to be that you released an album, got Rolling Stone to review it, got on tour, got on late-night TV, and that was how you broke,” says one senior executive at a major label. Even if luck was a factor, the path was clear. “It was four or five things. Now you need four or five things a week, or at least a month, or else your streams don’t go up.”

The Art of Manliness podcast (45 min)

Our lives are populated by rituals. Baptisms. Funerals. Graduations. Singing happy birthday, chanting cheers at a sports event, saying grace before dinner. When we perform rituals, there’s no causal link between the behavior and the hoped for effect; for example, there’s no causal connection between exchanging rings at an altar and becoming wedded to another human being.

But my guest would say that doesn’t mean that rituals are useless and irrational; in fact, doing two decades of research on rituals caused him to do a one-eighty on his perception of their value. His name is Dimitris Xygalatas and he’s an anthropologist and the author of Ritual: How Seemingly Senseless Acts Make Life Worth Living. Today on the show, Dimitris explains what defines a ritual and how a ritual is different from a mere habit. He shares how a greater understanding of ritual is upending our theories of human civilization, and the idea that “first came the temple, and then the city.” Dimitris describes how rituals can be seen to have their own kind of logic and purpose, as they build trust and togetherness, serve as an effective way to deal with stress, signal someone’s commitment to a group, and ultimately contribute to people’s overall well-being.