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LABOUR LOOSENING
A common goal of this missive is to offer some data around anecdotes we hear regularly. Lately, there has been a lot of talk regarding layoffs, hiring freezes, and a general unwind of some of the over-hiring of the pandemic era. The data doesn’t support that the labour market is loose at the moment, but we suspect that the lagging indicator will continue to trend down, and that current figures are a bit overstated with older postings.
All in, this a good sign in a world where inflation remains a key concern.
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How to Live an Asymmetric Life | Graham Weaver
Do hard things, do your thing, do it for decades, and write your own story. Simple, right?
When faced with choices about what we want to do, most of us miss one important piece of the equation. We factor in all the risks and tradeoffs, but we completely discount how differently we will show up when we’re truly energized about something.
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A history lesson on how valuations have evolved over time. This piece loosely explains our view that future returns in equities are likely to be lower than in the most recent decade given the amount of multiple expansion that has taken place. That said, timing is always uncertain, and we acknowledge that today’s tech-focused market likely warrants a higher valuation than many previous periods.
Obviously, multiples can't go to infinity, and equally obviously, paying a higher price for a given set of cash flows means lower expected returns. So it makes sense to assume that multiples mean-revert. And over long periods, they do: stocks traded at high single-digit multiples in the late 40s and early 50s, high teens multiples in the 60s and early 70s, back to high single digits in the early 80s, straight up to a record of 40+ during the great large cap growth bull market of the late 90s, then down to the mid-teens during the early-2010s recovery.
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A helpful summary of the pre- and post-COVID policies which have led to one of the major shocks of the last year. Instead of a boom following the end of zero COVID, growth has continued to struggle. One major missing piece in this article is the impact of demographics and the aging population, which is a material strain, but it does provide some great context for the current dynamics.
The more Beijing tries to stave off outflows of useful factors of economic production—for instance, by maintaining strict capital controls and limiting listings of companies in the United States—the more it will deepen the sense of insecurity driving those outflows in the first place.
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An important caveat here is that Graham’s commentary assumes great professional ambition, which we all know is not the only way to live a great life. That said, this is a highly thoughtful piece on the nature of work and how to excel at it.
It may not be possible to prove that you have to work hard to do great things, but the empirical evidence is on the scale of the evidence for mortality. That's why it's essential to work on something you're deeply interested in.
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