Across multiple literature, its been stated privacy versus health will be one of the primary dichotomy societies around the world will need to juggle with as technological advances are made in the fields of artificial intelligence, communications (surveillance) and medical science (genetic research).
What is surprising was the rate at which the Corona pandemic catalyzed this change. In light of this, it is fascinating to observe how different societies position along the spectrum. Some societies has opted for surveillance to the maximum extend possible with current technology while others opted for its polar opposite going to the extend of staging mass protests against it use.
The AI Economy, Roger Bootler
To Be a Machine, Mark O’Connell
Irrational Exuberance, Shiller, Robert J.
Life 3.0: Being Human in the Age of Artificial Intelligence, Max Tegmark
no matter how much research you done regarding a stock you don’t have a contract what the future price should be
with high yield bond there is a contract for a certain price in a future, if you are correct about the calculation, you will be correct about your yield
bargain price: liquidation price 75cents on the dollar buy at 20 cents
when you are not a big established investment firm like Lehmen brothers, you have no franchise to protect. You are free to go the unconventional route for potential outsized returns
great ideas are born bad. Its easy to make your way to a great idea from crazy outrageous ones than cautious and sensible ones. Investment bankers by default filter out the crazy outrageous ones.
Contrarian thinkers need to train themselves to see things via unconventional routes
ways to structure a bond
give money back sooner
give higher interest rates
give more stock
give stocks cheap
It is easier for corporation to pay interest which is tax deductible than dividends which are not
Bonds offer process
first tier high rollers offer liquidity get to buy at cheaper price and exit earlier
second tier payers, with franchise to protect, who want to avoid stigma of being junk bond buyers will come in later at more expensive price and exit later.
Successful leverage buyout scenario: after buy out use cashflow from business to pay off the junk bonds thus deleverage the business
Mutual fund arbitrage: compare value of underlying portfolio and stock price
If you are right about a company being undervalued and it is willing to put itself up for sale, there will be buyers
Poison pill: defense mechanism against corporate take overs. When would be acquirers crosses threshold of ownership, existing shareholders are given extravagant rights rights making it less desirable as take over target
perception versus reality, see what the world could not.
Vision is Strength.
capital is abundant, vision is scarce.
excess capital is not strength but opportunity for weakness
capital put in the hands of someone with vision will result in drastically different results.
return of the owner manager as opposed to the corporate manager
by-pass the China wall principle where companies try to isolate the deal making and arbitrage departments
herd instincts: investors are constrained by appearance. A manager of a respectable financial institution will shun “fallen angels” so as to avoid appearing imprudent to his colleagues
forces wishing to keep a large company afloat are far greater than those that wish to see it perish
credit rating systems are flawed. It focuses on the past instead of the future. Ignore large fortune 500 companies in favor of ones with no credit standings to find a good deal.
The market which may be quick to digest earnings data was grossly inefficient in valuing everything.
Lessons from Solomon brother traders
I don’t pat myself in the back, because the next sensation is a sharp kick lower down
those who say don’t know, those who know don’t say
Despite the valuable lessons history can offer us, its shown that man does not learn any of these valuable lessons.
Benjamin Graham: The more elaborate the mathematics, the more uncertain and speculative the outcome. Avoid substituting experience with theory.
Key historic events:
1933 Glass Steagall act: separation of investment banking and retail banking
July 1944 Bretton wood systems: World currencies agree to a fix exchange rate against the USD, USD agree to fix exchange rate with Gold.
1971 Collapse of the Bretton Wood systems: US, faced with increasing pressure to maintain the USD gold exchange rates as its foreign reserves were depleted by a extended Vietnam war, went off the gold standard to prevent a run.
6th October 1979 The Volcker Act : money supply will be fixed, interest rates would float
12th Nov 1999: repeal of the Glass Steagall act: banks can now take use consumer deposits for investment purposes.
Good news reporting should seeks to inform rather than sensationalize with attention grabbing headlines. Its easy to appear data driven but still be misleading if you do not use the proper frame for understanding the numbers
On investment bank predictions
When on the receiving end of predictions made by external parties it is important to understand the underlying agenda they are trying to achieve. When examined thoroughly, predictions made by investment banks are so bad and contradictory, they should just stop making public declarations.
However if taking into account their objective is not to inform but to incite a trading decision by their clients so as to make a commission or offload losing positions on their trading books, it makes perfect sense.
Liar’s poker: Rising through the wreckage on Wall Street, Micheal Lewis