This Week I Learned #31
Wise: Netflix's Drug Cartel episode in the Dirty Money documentary showed a case of a "Too big to jail" scenario with the HSBC scandal in 2010. HSBC bought Bital, a bank with huge presence in Sinaloa (area for massive drug production in Mexico) and practically became the owners of a lot of the drug cartel bank accounts via merger. Of course, they should've rated the bank as being high risk but despite public email logs saying there were no anti-money laundering processes in place they rated Bital as being standard (the lowest rating). Solving problems by just hiring a bunch of unqualified compliance folks to just clear a backlog of alerts for breakages in their process. You also learn how easy it is for sanctioned off criminals to actually continue to wire money by bypassing simple filtering protocols. As expected, the US government made a deal with the bank instead of indicting the bank and decided to accept 5 weeks worth of profits for HSBC as a penalty. Even after having publicly admitted to all their crimes the bank was never indicted.
Wise: Watched Magnus, a documentary on Magnus Carlsen. Fascinating to learn about a young chess prodigy and his path to the world championship. What I loved seeing, and maybe this was the director's intention, was the power of intuition that rose out of Magnus and the creative process he seemed to embody. The fluidness to which he would play his moves when he did not feel the pressure and/or was mentally relaxed. It was also quite the story of how creative ingenuity of a human mind could beat a mind that was trained on mechanical preparation techniques of a computer. Sure, a pure AI can beat a human but this documentary showed me how in the world of humans, creative ingenuity will prevail any mind that relies entirely on data memorization.
Wise: Interview with the management team of Death Wish Coffee Company at Google. The story of how an accountant started the most purchased coffee on Amazon and Google, and also how they created the world's strongest coffee. Didn't know that Robusta beans had 2-3x more caffeine than Arabica beans. https://www.youtube.com/watch?v=SiWrSGN0WXI&index=7&list=PLGGpadyh0wS55NuIm4Y3JfuFJVyxD8wGx&t=0s
Wise: Podcast interview with Anil Dash on MIB. Learned that Apple and Google had colluded on their immigrant employees (those with H1B1 visas) to pay them lower than US counterparts and agree to not poach each other's engineers. With the risk of deportation if they were to get fired the employees had no leverage and many continued to live content with what they had and were given. https://ritholtz.com/2018/01/masters-business-anil-dash-making-tech-world-humane-ethical/
Wise: Jim Chanos' interview with Barry Ritholtz. Chanos goes into what he is bearish on and the similarities he sees with the debt situation in between Japan in 1990s and China in the 2010s. The former went through a 20 year bear market after over-levering its corporations and using debt to fuel growth/demand. Chanos refers to the 2000-2003 period as the golden age for hedge funds and how may forgot to hedge and were since blown up from 2008. PE has continued to reap in their golden age and I wonder if the continued levered + high fee model will prosper and/or what triggers could bring a closure to its golden age. Everything runs in cycles after all. https://www.bloomberg.com/news/audio/2018-05-11/james-chanos-discusses-investment-driven-models
Wise: Ryan Holiday's story on Gawker was fascinating, I had no idea that Peter Thiel practically bankrupted a company and its founder. Just seeing the darkside of media through this interview with Ryan Holiday and Barry Ritholtz. https://ritholtz.com/2018/03/transcript-ryan-holiday/
Wise: Alex Banayan's interview with Tom Bilyeu. What I found fascinating were the stories he shared of Steven Spielberg's break into film and the story of Microsoft's Chi Lu. Both were insightful stories on the idea of creating systems to find your own opportunity, Alex's "third door". "Luck is like a bus that comes around every time. Your preparation is the fare and without the fare you can't get on the bus" - Chi Lu, https://www.youtube.com/watch?v=nXoU5ItqlkM&t=1590s
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