Posted on

Necessity breeds innovation

Tight constrains and external pressure are fertile grounds for solutions that can perform at even higher order of magnitude than existing ones. 

Population in China and India are each at least 5 times bigger than US. The solution that exist in US might not necessary address the scale needed for these two territories. Already, specific healthcare treatment in India can be provide way better at a fraction of the cost incurred in the US.

While population in Africa might not be as high as India and China, the severe lack of infrastructure and resource of the former acts as a constrain that demands for an even better solution than what is available for waste process

This African factory turns trash into energy, clean water and bricks

Providing electricity to over 3 million people. Read more: https://wef.ch/2IwT37M

Posted by World Economic Forum on Saturday, October 6, 2018

 

Domestic waste is converted to energy and clean water through burning, while ashes are converted into bricks for building houses.  With no legacy infrastructure to deal with,  resource efficient infrastructure can be put in place from day one. Last mover advantage.

Useful references

  • Why the west rules for now: http://garyteh.com/2018/02/book-summary-why-the-west-rules-for-now/
Posted on

Insights from conversations with Ilya

The market is a representation of leveraged corporate earnings around the world.

Leverage occurs in two forms.  Firstly, through corporate debts take on by companies in expectation of increased future corporate returns. Secondly, through borrows taken on by potential shareholders in expectation of appreciation in equity value due to expectation of future corporate returns.

Corporate returns are driven mainly by productivity. Productivity is a function of technology. Technology advancement is a function of innovation. The market will inevitably increase in size in the long run so long as technology advancement and innovation continues to persist.

Cyclical Boomz and Busts are the results of interplays between market participants and central banks (via fiscal policies and regulations) in reaction to prevailing leverage levels in the market.

Market capitalization in 2008 dropped by a total of 50%. Using this as a proxy, we can assume the effect of leverage is approximately 50% of the market capitalization.

Beware that the market can stay irrational longer than you can stay liquid.

Posted on

Book summary – Fault lines

Fault lines

Fault line category 1: Domestic political stresses.

Almost every financial crisis has political roots. Easy credit has been used as a palliative throughout history by governments unable to address deeper anxieties of the middle class directly. Growing income inequality is driving this anxiety in the US.

Fault line category 2: Trade imbalances between countries

This is resultant on prior patterns of growth. Developed countries like US helping developing countries like China grow their GDP and the latter became to reliant on the export economy even after its GDP has grew too large to stay reliant on foreign aid.

  • Governments in the latter group (China, Japan, etc…) start favoring some firms over others in an export focused economy leading to unequal distribution of wealth and reduced domestic consumption. This hampers ability to switch over to domestic focus economy latter on
  • households find it hard to obtain retail credit. Government forced to step in as credit provider

Fault line category 3: The meeting of different financial systems

When different types of financial system come into contact to finance trade imbalance. Example when transparent, contractually based arm’s length financial systems in countries like United States and the UK finance or are financed by less transparent financial systems in much of the rest of the world.

Posted on

Ray Dalio: Beating the stock market by learning history

  • History inevitably repeats itself
  • If a trend is occurring that you don’t have a good idea of how it will pan out, it is more likely because you have not lived in a time where a similar situation had happened before and less likely because a similar situation had happened before
  • Application of FinTech is to make it possible to leverage on assets that we have like the following:
    • Human Capital
    • Social Capital
    • Real Assets
  • An economy built on talent versus an economy built on natural resources and tourism tends to grow faster
    • Singapore versus Jamaica
      • important to educate local population to ensure they do not become second class citizens in their own country to highly qualified expats
    • Three Kingdoms – Cao Cao versus Yuan Shao
  • Algorithms for decision making
    • Be wary of purely deriving algorithms through data mining and regression analysis.
      • The user of this algorithm will not be able to decipher causation versus correlation
      • The training data available might be missing existing significant events
    • The algorithm should instead be a derivation of your own thought processes. Computers/algorithms should be used to complement human decision making instead of replacing it.
  • An environment of radical transparency is helpful towards supporting idea meritocracy
    • helps match individuals strong in one area with other individuals strong in complementary areas.
    • A real world ensemble decision tree model
  • On China
    • Main challenges the country face
      • Debt restructuring
      • Economic restructuring – the need to shift away from export focused economy to domestic focused economy
      • Develop capital markets
      • Balance of payments
    • Developments to date
      • debt being restructured
      • economic restructuring happening dealing with state owned enterprises. Fast development of cutting edge industries. AI advancements comparable to US
      • capital markets like Hong Kong depth of liquidity is impressive
      • balance of payment is being dealt with effectively due to capable leaders and ability to control via levers unique to a strong central government
      • Strong emphasis on kids education
      • Reinforcing Integrity of law through eliminating corruption
Posted on

Forum – Ten years after Lehman brother’s bankruptcy: where are we now and what lies ahead

Moderators

  • Michael Hutchison, UC Santa Cruz
  • Darrell Duffie, Stanford University
  • Barry Eichengreen, UC Berkeley
  • Mark Levonian, Promontory Financial Group

next sources of financial risks

  • highlights
    • China’s corporate debt build up
    • FinTech disintermediating traditional bankers and removing central bank fiscal levers

 

  • cyber disintermediation
    • hackers screwing around with bank account records
    • corporate borrowers went away back in 2008. Banks forced to find riskier customers
    • new technologies are taking away a lot of the lending business
    • new technology
      • new payment systems
      • digital currencies – Singapore, Canada and China
    • cloud provider concentration – Fintech everything on cloud
  • US regulation backsliding risk
    • management of federal government
    • stress test rules
    • reduction of 100-200 billion capital in US
      • capital and liquidity
    • liquidity was the main trigger of the melt down
    • Dodd Frank bill
  • sovereign funds risk: Turkey is 3-4X of Greece economy
  • china corporate debt risk as its financial system becomes more integrated with the rest of the world
    • check for excessive short term borrowing
    • plenty of shadow banking in China growing rampantly
  • institutional funds risk
    • banking system is still concentrated in top 5
    • US absorbed 85% of low cost homes through Fanny Mae mortgages
      • quicken is the largest mortgage generator
  • largest banks in the world are all mainly Chinese versus Japanese back 10 years ago
  • 2008 melt down
    • caused by incompetent regulation rather than wrongful act of financial people.
      • Prosecution is setup to go after cases they would likely win
      • complexity of financial system
      • complexity of corporate structure
      • complexity versus usefulness of market actual needs
  • populist risk: under funded pension fund. Because of really low risk rates
  • financial consumers
    • not a priority versus banks
    • Dodd Frank act
    • consumer financial protection bureau
    • growth rate of structured notes?
  • trade war
    • economic consequences was very limited
    • Brexit effect took 4 quarters to show up

 

  • Volatility: is good if is driven by transparency
  • leading indicators of financial crisis
    • credit spreads
    • credit to GDP
    • rapid growth of housing credit signals impending recession
    • contracts imposed on borrowers – reduced conditions are signs of excessive borrowing
    • credit growth
      • Debt to GDP
      • corporate debt growth in China
    • dump truck index – real estate boom
    • number of cranes visible in urban skyline
  • blockchains (mainly used for security keeping)
    • Bank of America mellow – backup in blockchain
    • securities – T+2 in block chain
Posted on

On similarities between organizations and organisms

An individual in an organization is similar to a cell in an organism.

The earlier the stage in the life cycle, the more generic and diverse the basic unit is. Founders and stem cells.

As maturity occurs, the basic unit becomes more specialized and in some cases loses ability that units in earlier stages had but is more adapted to performing its tasks. Stem cells can become bone cells but bone cells cannot become stem cells.

It is important to keep in mind that every organization and organism has a inherent DNA that will inevitably express itself.

Micheal Porter states an organization should not measure its success by its size but by how fit it’s configuration is in terms of serving its purpose. Charles Darwin’s survival of the fittest posits that the organism most suited for its environment will be the one that flourishes in that environment. In none of these two statements were there mention of size as an advantage.

Regarding cells and individuals, there comes a time in the life cycle of the organism/organization when the cell dies off and the individual departs.

Posted on

Insights from lunch with Jamie

On Apple

Steve Jobs was working at an apple orchard for a period of time and her resolved to just eating apples for two whole weeks

At the end of the two weeks, as a by product of his diet he was able to achieve an extremely heightened level of awareness. He had been pursuing the altering of his biology through food intake ever since,

He would conduct food experiments on himself as well as his staff at Apple by ordering only specific items to be made available in the Apple canteen. Once he ordered only vegetarian food to be made available. There were huge protest and he thus back down by allowing grass fed beef.

His cancer was initially curable but delay through experiments with attempting cure via various diets led him to the eventual terminal stage of cancer before he finally seemed actual treatment.

On being a teacher

Being part of the journey towards a learner’s moment of epiphany bring a tremendous amount of satisfaction.

Unlike US, teachers in Korea is revered

On being of mixed descent in an American society

Struggles with resolving cognitive dissonance associated with identity has consumed the major bulk of attention and energy.

Koreans back in Korea does not consider her one of theirs. White amongsts Americans considered her an outsider. A second class citizen in your own country.

Realized the importance of not having to accept what does not need to be accepted. Instead of accepting what society prescibes, define your own identity based on your own core values.

In times of hardship Mexican and Asian families come together and are able to pull through tough times. This is not the case with African blacks. Generations of slavery has served to dilute family ties amongst this racial group.

 

Posted on

Insights from drinks with Charles Wu

On pivotal

Pivotal was able to grow by setting up a process that allows them to build out simple CRUD app using second tier software developers.

Their pair programming practice allowed them the ability to use relatively cheaper software developers to build out these simple projects while buffering them against the relatively high churn rate.

Their partnership with Code camps like hacker reactor has allowed access to a constantly supply of relatively cheaper labor.

Their standardization of the technology stack to just Rails and Java has further facilitated the interchangeability of developers across projects.

To ensure no wenches gets thrown into the process pipeline, they primarily target companies with legacy systems that need migration away from.

They choose to avoid startups solving technical problems that require deep domain expertise. Supporting Twilio requirements was a real challenge to their process.

On Twitter

Most of the progress by Twitter recently has been stuff that they have talked about before Jack Dorsey’s return as CEO.

The main road block to was management’s inability to make a decision to execute driven mainly about insecurity over potential impact to users.

On Facebook

Was highly stressful. Put on a lot of weight during tenure. Work life balance was a challenge

On having run rate

Reid Hoffman mentioned when you have a long run rate and are able to stay in the game, it’s lije playing baseball without the fear of ever striking out. You just have to wait for the home run.

On shares

Employees have lock in period after a company goes IPI before they can sell off their shares. It’s important to define clearly your exit and not get too greedy

On being Asian in this time and age

Crazy Rich Asian has really help set the trend and this demand for Asian Actors for the next few years. If you are tall, Asian and good looking you have basically cornered the market at this point. Why not give it a shot and go do some casting in the Bay Area?

By the way do something about that domain you own called ThingsToDoSingapore.com

On health and use psychology

Most health issues can be attributed to bad habits like smoking, drinking and fast food. So long as you have a habit of working out and eating healthy it is possible to stave off 90% of health issues.

The trip with Health is to capitalize on the reciprocal bias that humans have. Humans have an inability to differentiate at an emotional level between other humans and things that does favor for them. A robot that pretends to be human that nags them to perform behavior beneficial for their health falls into that category

Hospitals get fined when heart patients return to the hospital within a specific period of time after being released. As such they utilize call centers to help remind recently discharged patients to perform healthy behaviors that will reduce the likelihood of their return.

 

Posted on

Insights from Steven

  • Region trending towards offline single app platforms
  • Trouble shooting due to Null pointer exception is a nightmare
  • syncing of data between front end and backend a problem
  • everything based on socket connections
  • language like ELM which is a string typing language is superior to ReactJS
  • Google functions abstracts DevOps scaling tasks from startups – each function returns an API
  • Singapore government embraces technology
    • GovTech department reports directly to prime minister’s office
    • best practices Agile, Scrum and Standups
    • Agile teams are farmed out to various Government departments
    • Enticing to work for government
    • Start grooming in house engineers as opposed to outsourced solution practices
    • stem bleeding of technology knowledge and know how
  • Education
    • government shifts focus from producing workers to producing entrepreneurs
    • Demand for creativity has increased
    • stronger emphasis on Arts, Music and Physical education by using only qualified teachers
Posted on

Learnings from QiXiang, Vivian and Angelina Wu

  • China has transited from cash to mobile cashless
    • Alibaba – ecommerce
    • TenCent – Small Vendors
  • China development bank has seen decrease in number of transaction and deposits
  • Chinese government want to ensure  control of financial is not usurped by the two big tech
    • Past legislation to ensure every wallet user of Alipay and TenCent has a corresponding Chinese bank account
    • Policy of TenCent pay is more lenient hence easier for new user with no bank account in China to onboard
  • Singapore government is throwing hurdles on Chinese payment to buy time for DBS to catch up
    • matter of national security concern
    • Chinese governments have preference to want to own their own infrastructure
  • Chinese development bank
    • branding considered prestigious in China
    • branding is lost on Singaporeans
    • lost 1000 Chinese speaking Singaporean employees last year
  • Mobile payments in China
    • payment process has became ubiquitous
    • even vendors in remote region of China have adopted
    • crime rate has gone down significantly
    • crime has increasingly became more sophisticated and require specialized knowledge