Good Reading -- September 2020

Philip C. Ordway

Original post:

https://philipordway.substack.com/p/good-reading-september-2020

Quoted

"The word ‘unprecedented’ is rarely used properly. This time, it’s being used properly.” — JP Morgan Chase CEO Jamie Dimon, commenting on the $367 billion year-to-date increase in the company’s deposits. That increase in deposits is roughly equal to the total deposits of U.S. Bancorp, the country’s fifth-largest bank, at the beginning of the year. (Thanks to Thom M. for sending this!)

• Related: “Holdings at U.S. commercial banks of Treasury and agency securities…have grown by more than $250 billion since the end of February as [the banks’] total deposits have jumped by more than $2 trillion.” Source: Banks Pile Into Treasury Bonds, Helping to Fund U.S. Borrowing

Facts & Figures

• The market capitalization of Apple recently exceeded (temporarily?) that of the entire Russell 2000. It also exceeded that of the entire FTSE 100.

• “Of the 24,979 companies (including real-estate investment trusts) that issued common stock between December 1925 and July 2020, only 11 have ever ranked number one by market value.” (See Jason Zweig’s exceptional newsletter for more great tidbits, such as the fact that Massachusetts state regulators deemed Apple stock too risky for investors and barred sale of the shares in that state.)

• A basket of companies with current market caps >$1 billion that were also unprofitable in 2019 would be +47% YTD in 2020 (as of Sept. 1, per this trenchant interview with Joel Greenblatt).

Books

• Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World — I’m late to this one, which was published about two years ago. I only read about half of it…I don’t know, there just wasn’t that much in here I found new or interesting given that I read about this situation in the media as it happened. The details are lurid, and the scheme was brazen, but a “a corrupt government enables a conniving fraudster to go on a wild spree” story could have been done just as well in a feature-length article as a 400-page book.

• The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies — This is the other side of the so-called secular stagnation debate (see prior with regards to Bob Gordon’s work). Electricity, mechanical energy, indoor plumbing, penicillin, etc. combined with demographics to produce a boom that is undefeated so far. The first, foundational chart in the book — the “human social development index” from 8,000 BC to today — should make anyone rooted in exponential functions at least somewhat uncomfortable. But there is a deep, philosophical argument too, and as the authors correctly point out, access to information should obviously not be ignored. I’m not fully convinced that “computers and other digital advances are doing for mental power — the ability to use our brains to understand and shape our environments — what the steam engine and its descendants did for muscle power.” I think our hard-wired psychological stumbling blocks may be a big limiting factor, and either way I think many measures of productivity and growth will continue to disappoint the techno-optimist/utopian crowd. (Thanks to Will F. for making me read this!)

• Born a Crime: Stories from a South African Childhood — Trevor Noah’s autobiography is as interesting, thought-provoking, and funny as it was made out to be by the many people who recommended it.

• ‘Losers’ Reviews: The Lessons of Defeat — Roger Lowenstein’s review of this new book, which I haven’t read but sounds really interesting. “[There are] many compelling pieces gathered [here]…over time and a variety of sports, from the 1908 Olympic marathon, covered by Arthur Conan Doyle, to the Brooklyn Dodgers of the 1950s, to the ill-mannered, underachieving and maddeningly blasé Australian tennis star Nick Kyrgios...‘Losers’ considers table tennis and sailing, summer-league basketball and bullfighting. Its subjects all missed in some way—born on the wrong side of the tracks, foiled by personal failings or injuries or bad luck. ‘The locker rooms of winners are crowded…[while losers’ are] desolate and awkward.’ Yet while victory brings a fleeting transcendence, ‘losing reveals something raw about what it means to be human.’”

Articles

• The Billionaire Who Wanted to Die Broke…Is Now Officially Broke — Chuck Feeney, the subject of “The Billionaire Who Wasn’t,” is a fascinating and inspiring subject. After making a fortune in duty-free shops, he initiated the “giving while living” movement. Now, at 89, he’s given away $8 billion in philanthropic gifts over four decades, and his self-imposed deadline has arrived: all the money has been allocated, and he’s closing shop.

• Science and steely nerves saved Houston from a nightmare hurricane evacuation — This is an excellent, thoughtful look at the uncertainty forecasters and public officials face in analyzing hurricane forecasts and making the call to evacuate. As with most things in meteorology, there has been meaningful improvement in the recent years and decades.

• The Dominance of Chaos: Weather prediction will always have a worthy adversary — The application of this framework extends far beyond the weather. “Earth’s atmosphere — incessantly evolving with rising, sinking, and whirling air — is primed for chaos. Chaos thrives there because the atmosphere can’t ever be fully known, to perfection. Why not? On the smallest level, it’s impossible to know exactly where an atom is and how fast it’s traveling, a powerful physical law called the “uncertainty principle.” What’s more, even the slightest, little, undetectable whirl or perturbation in the air can dramatically alter the atmospheric future. All of this means we’ll never have an all-knowing grasp of everything unfolding in the expansive, vacillating sky. There will be gaps and uncertainties. And eventually, they’ll destroy the prediction.”

• How former ref Tim Donaghy conspired to fix NBA games — A case study in the slippery slope of small transgressions.

• Reed Hastings Had Us All Staying Home Before We Had To — This is an illuminating interview. The WSJ ran a similar interview, and both were done as part of a book tour. I highly recommend them both.

• How a Massive Bomb Came Together in Beirut’s Port — An incredible multimedia presentation about an unthinkable tragedy.

• Why Books Don’t Work — There are some worthwhile thoughts here. Ironically this could have been much shorter, and even the author admits there are no new answers here, but it’s still worth reading.