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Story stocks
We have highlighted the impact of retail investors on the market in past issues. One could perhaps make the argument that the Tesla chart above is spurious correlation, but given the current valuation we suspect this is another retail driven “story stock” (which doesn’t mean they don’t have a good product).
Electric vehicle stocks are easy for individuals to attach themselves to – it is a no brainer that the electrification trend will continue right? Unfortunately, for investors in the electric truck company Nikola, which has seen shares fall from over $90 to ~$20 at the time of writing, the rubber does have to hit the road at some point (excuse the pun).
A great piece highlighting the distinction between luck and work in achieving success. It highlights the story of Tu Youyou, a pioneer in antimalarial medication. Her success borders on miraculous, as she had no postgraduate degree, no research experience abroad, and no membership in any of the Chinese national academies. It wasn’t a miracle of course – her success was achieved through extremely hard work.
There are a thousand examples that could be given for the successful person who was just in the right place at the right time. However, when you exclude the extremes, success relative to your true peers is more often achieved because you worked harder.
As a general rule, the wilder the success, the more extreme and unlikely the circumstances that caused it.
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A thorough update on the current state of “return to work”. This piece covers off everything from the companies that are moving to permanent work from home arrangements, to zoom fatigue, to the professional and mental health impact it is having on younger employees.
The issue of what a full return to work looks like is more nuanced than simply setting a date.
Dr. Neeley likened the situation to waiting at an airport terminal for a flight that is continually delayed. With the new dates announced, she said, people can finally start adjusting from a temporary “grinning and bear it” approach to a permanent shift.
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A quick read discussing whether COVID-19 is more like a shock (i.e. the default of Long-Term Capital Management) or a crisis (i.e. the Great Financial Crisis). The market reaction so far looks much more like a shock given the rapid recovery. The challenge could come if the “shock” drags on and starts to resemble a more traditional financial crisis.
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This was one of Howard Marks' more widely shared pieces, so apologies if you have already seen it! As always, Howard provides incredibly clear and thoughtful analysis of the current state of the world. He reiterates some of the views shared in “Shock or Crisis”:
The economic recovery everyone’s counting on is not an independent event, unaffected by developments. Rather, it is highly dependent on progress against the disease…and also on the continuation of fiscal expenditures in the interim.
Thus, today, it seems to me that most assets are offering expected returns that are fair relative to their expected risk, relative to everything else. But the prospective returns on everything are about the lowest they have ever been.>
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