Investing notes. Business, technology, and strategy. In search of long-term business compounders.
Here’s what I found interesting recently. 🌎 Our World #1 China’s Chang’e-5 Probe Successfully Lands on the Moon Chang’e-5 is one of the most complicated and challenging missions in Chinese aerospace history, as well as the world’s first moon-sample mission in more than 40 years. Source: Xinhua I changed the usual “Geopolitics” heading to “Our … Continue reading Tidbits #23
Entering the month, the Paper Portfolio maintained a defensive posture given election uncertainties. We began to take this defensive posture starting late in the summer, which allowed us to escape the volatility of August, September, and October largely intact. When we chose to further maintain our defensive positioning during the last update, Capital Flywheels argued … Continue reading Paper Portfolio – December 2020 Update
Here’s what I found most interesting recently. It was a relatively quiet week in the US due to Thanksgiving holiday, but still a little bit of something for everyone. In recognition of the spirit of Thanksgiving, I want to extend a warm and hearty “thank you” to you for your support and readership. Especially since … Continue reading Tidbits #22 – A Lot to Be Thankful For
Recent interest in the “buy now, pay later” (BNPL) space is rising to a fevered pitch. Investors are not only getting giddy over US-based BNPL player Affirm’s IPO filing and its strong growth…but investors have also been captivated by the strong performance of Australia-based BNPL player, Afterpay. Unlike other BNPL players, Afterpay has been public … Continue reading “Buy Now, Pay Later” and What Might Be Coming Next
Here’s a selection of what I found most interesting recently. Unlike prior editions of Tidbits where I had a clear narrative or theme laid out before writing, this time was different. However, after I wrote everything below, the narrative easily fell into place…the world (both physically and digitally) continue to shift along existing fault lines. … Continue reading Tidbits #21 – Land Up for Grabs
Here’s a selection of what I found most interesting recently. I started experimenting with some design changes in recent editions of Tidbits…the design changes don’t come through all that well via WordPress’ default email feature, and I’m not confident I will figure out a better alternative to the default email feature soon. May be better … Continue reading Tidbits #20 – Finish Line in Sight
Despite the size and robustness of the US banking system, banks haven’t really been functioning well for quite a while. The banks have gotten bigger and more profitable, but the banks have largely become disconnected from the vast majority of the population that they once served. Banks have gone from largely local institutions (e.g. your … Continue reading Square, Fintechs, and Our Changing Economy
This is a follow-up to “24/7 Money Printing at the Fed? Misconceptions and Consequences.“ For a longer list of monetary / macro-related notes, please see the most recent related note here. My prior note regarding the nature of “money printing” sparked an interesting debate with a friend, which forms the basis of this current post. … Continue reading An Innocent Question Re: Fed Balance Sheet Expansion and Deflation
Here’s a selection of what I found most interesting recently. I started experimenting with some design changes in the last edition of Tidbits…the design changes don’t come through all that well via WordPress’ default email feature, and I’m not confident I will figure out a better alternative to the default email feature soon. May be … Continue reading Tidbits #19 – What Happens Now?
The Paper Portfolio’s continued defensive positioning during October turned out to be an appropriate move. The Paper Portfolio returned 1.36% vs -2.65% for the S&P500, despite being skewed towards well-owned names. This brings year-to-date returns to 74.38% vs 2.64% for the S&P500. The initial shift into a defensive position at the end of August helped … Continue reading Paper Portfolio – November 2020 Update
This piece is part of a series discussing seemingly major misconceptions around economics and monetary and fiscal policies that are commonly believed by the investing public. Understanding these misconceptions may help improve investing outcomes and make better sense of the world we live in. 1/ “In Dollar We Trust (and Why China Would Prefer Otherwise)” … Continue reading Myth and Misconceptions of American Savings and Overconsumption
Here’s a selection of what I found most interesting recently. I’m experimenting with some design changes…not sure how it looks via email. May be better to read directly in the browser. Of course, the real item of interest is what happens with the elections, whether there will be a constitutional / election crisis, and whether … Continue reading Tidbits #18 – Calm Before the Storm?
đź’° Economy #1 The Number of New Businesses in America is Booming The government regularly releases figures on new-business formation, derived from applications for tax registrations. And “high-propensity” business applications—those displaying characteristics typically associated with firm-creation and the employment of staff—recently reached their highest quarterly level on record (see chart). … All this has surprised … Continue reading Tidbits #17
A few months ago, Capital Flywheels penned two posts arguing why the popular understanding of the USD and monetary easing were problematic and likely incorrect. In “In Dollar We Trust (and Why China Would Prefer Otherwise)“, I argued that the USD position as a global reserve currency is much stronger compared to reserve currencies of the … Continue reading Chinese Capital Sustainability and the Power of Capital Controls
One thought that I can’t seem to shake from my head is that digital advertising is currently in an unstable equilibrium and is ripe for disruption. A lot of the changes happening in the space might already be obvious to you and consumers like you. But what I think is less obvious is the role … Continue reading Trouble in Paradise – Advertising and Payments on Collision Course?
I sensed October was going to get really crazy, but it got crazy, faster than I thought. You know what I’m talking about. Since the whole world already knows what happened yesterday, I’m just going to skip mentioning the elephant in the room because you and I know I have no useful commentary to add … Continue reading Tidbits #16 – Skipping the Elephant in the Room
Much like the general market, the Paper Portfolio had a volatile September. However, the Paper Portfolio proved to be much more resilient than the market overall. The Paper Portfolio was approximately flat during September, returning -0.34%. In contrast, the S&P500 returned -3.74%. This brings year-to-date performance up to 72.04% for the Paper Portfolio and 5.58% … Continue reading Paper Portfolio – October 2020 Update
This is Part 3. Part 1: The Coming Economic (R)Evolution Part 2: Empire(s) of the 21st Century A country’s financial position is not so different from the financial positions for you and I. Countries, like you and I, are dependent on income and earnings. You and I derive income from some combination of labor and … Continue reading A Physical World Under Siege
This post follows up on The Coming Economic (R)Evolution. In that post, I argue how the world evolved from one dominated by labor, to one dominated by the struggle between labor and capital, and now likely entering a new phase where increasingly neither labor nor capital is necessary. As investors, our ultimate preference may be … Continue reading Empire(s) of the 21st Century
Here’s some of the things I found interesting recently. Some of the articles can be a bit dated but still worth considering in the grand scheme of things. 🎮 Games + Virtual Worlds #1 Next Installment of Call of Duty Black Ops About to Launch While this isn’t my type of game, Call of Duty … Continue reading Tidbits #15
Five months ago during the early stages of the unfolding pandemic, Capital Flywheels published Recession of a Different Kind shortly after the market bottomed after falling 35% from all-time-highs. In the face of significant uncertainty, massive unemployment unseen since the Great Depression, and unparalleled economic collapse within recorded history…Capital Flywheels took a leap of faith … Continue reading The Coming Economic (R)Evolution
Similar to July, August was another choppy month. Although the Paper Portfolio did close the month well, it did so with materially more volatility than the index. The underlying reasons for the volatility remain the same as in the prior month. The Paper Portfolio is exposed largely to secular growth stories, many of which benefited … Continue reading Paper Portfolio – September 2020 Update
Below are some of the items that I found most interesting in the last few days. In comparison to prior editions of Tidbits, there isn’t any major cohesive theme that demands our attention. But companies of interest continue to push their agendas forward that will likely lead to industry shifts down the line. Luckily, that … Continue reading Tidbits #14 – The Long and Short of It…May We Find Ourselves in Good Health
In conjunction with the launch of the Paper Portfolio last August, Capital Flywheels published a deep dive on Sea. This felt necessary not only because the Paper Portfolio launched with a (largest) 7% position in Sea but because Capital Flywheels had not seen a company as exciting and mis-priced as Sea since…Shopify in 2016, Apple … Continue reading Sea – Monster in the Making
The digital payments landscape appears to be changing quickly. Most consumers and investors are likely already aware of some of the shifting currents because we can see it and experience it in our every day lives. More and more of our transactions are now digital / card. And more and more of our transactions likely … Continue reading Long Live Merchant Acquirers
In times of chaos, Capital Flywheels’ preference is almost always to invest in change, not to invest in incumbency. Chaos will eventually be followed by a return to normalcy, but the protagonists almost always change. This is because the incentives asymmetrically benefit the disruptors. In chaos, incumbents are incentivized to merely survive, while disruptors are … Continue reading Tidbits #13 – A Summer to Remember…A Summer to Forget?
A few weeks ago, Capital Flywheels explored how societal and technological developments can be potentially simplified down to two core concepts: Energy and computation. For long term investors and thinkers, there is nothing more powerful than recognizing and observing the mega-trends that not only influence our lives over months and years but over decades, centuries, … Continue reading Energy and Computation Part 2 – Nvidia
No…not stocks (maybe depending on the stock!)…but if Amazon, Shopify, and Pinterest’s results last week did not make the point painfully obvious enough, e-commerce IS commerce now. Some data providers estimate that e-commerce share of total commerce increased from 15% last year to 40% in Q2. Normally, e-commerce share only grows about 1% per year … Continue reading Tidbits #12 – Buy, Buy, Buy
Like June, July was a fairly volatile month with investors trying to decide which way to go. The Fed’s continued loose monetary policy supports value reflation trades, but economic growth remains weak with elevated unemployment. Weak economic growth tends to support secular growth stocks (more certainty) and companies with strong balance sheets (more defensive / … Continue reading Paper Portfolio – August 2020 Update
There is nothing that feels more inevitable to me (barring regulatory barriers) than tech giants eventually playing a significant role in the payment space. To a slightly lesser degree, I am also starting to believe that traditional merchant acquirers will cease to exist without business model transformation and that networks like Visa and MasterCard will … Continue reading Part 3 – Payments and Identity