This Week I Learned #34

“Go to bed smarter than when you woke up”
— Charlie Munger

2019-01-21

  • Wealthy: Software eating real estate, a presentation by Andressen Horowitz. Annual commissions in US alone for real estate commission is about $100B. US pays about 5-6%, Canada is at about 3% but that is falling, and Sweden is at about 1.5%. Much of what agents do is covered in smoke and mirrors and this leaves it open for companies to really test all these "assumptions" like buying ads in a newspaper, staging a house etc. Hence the opportunity for companies to change the illiquidity of home ownership, the rent vs.own trade-off to combine them with a call option, and creating more ways to generate yield from an asset class leads to an expanded opportunity in another emotionally driven asset base.  https://www.youtube.com/watch?v=IRPH3K1GXj0

2019-01-22

  • Wise: "Alexander the Great and his mule driver both died and the same thing happened to both. They were absorbed alike into the life force of the world, or dissolved alike into atoms." - Marcus Aurelius; in the end, everyone suffers the same fate in this world. You may think you are special, but alas you are not. 

2019-01-23

  • Wise: Learned about Eugene Wei on Patrick O'Shaughnessy's invest like the best podcast. Just a fascinating career journey of how he took on consulting to just pay off his school loans and how he applied to an Amazon role he was under-qualified for but wrote such an impactful 3 page cover letter that the hiring manager had it pinned to her wall and eventually called Eugene to give him his shot. What I also loved was learning that he went to film school before working at Hulu, talk about learning the industry! He also goes into a fascinating discussion on marketing and how North American social media products are merely playing status games (i.e.Instagram is photo status update, Facebook/Twitter are written status updates). China's social platform actually plays a crucial part in people's lives now like WePay. Even in Korea, Kakao, the Whatsapp of Korea, has Kakao taxi (which is Korean Uber) and is getting more into commerce. North american social media company's will have to find a way to continue to become materially valuable in our lives and commerce may be the 'utility' play they need. http://investorfieldguide.com/wei/

2019-01-24

  • Wise: Invest like the best podcast with Michael Duda and Patrick O'Shaughnessy. Fascinating conversation on investing in brands. Fascinating to see the erosion of brands on how quickly they dissipate and what a brand truly means and the image the brand has on a person's lifestyle choices. It eventually turns out it's not about having the best product because that will eventually become a commodity. But it's understanding why people buy what they buy. He also looks at investing in companies based on the qualitative fundamentals of what the customer buys for and who they are. Stuff that excel data just can't tell. Refreshing look at investing with a focus human behaviour. http://investorfieldguide.com/duda/

2019-01-25

  • Wise: To be a dog walker you need a permit if you're walking 4 or more dogs but not anything less. Turns out in the dog-walking world there are celebrity dog walkers that have a cult following on Instagram and their move to different neighbourhoods result in outrage and sorrow by their previous clients. With pets becoming no different from children for many pet owners, it's understandable. If I had a babysitter for my child whom I trusted, I would stick with her for sure. Pet accessory designers are also the rage because apparently, pet owners will stare at their phone for a launch of a new dog accessory design and if they don't get it within a few minutes of the launch the product will be sold out. I never knew about this 'dog accessory/walker' world and it's just one example of the many niches that probably surround the Toronto ecosystem. 

2019-01-26

2019-01-27

  • Wise: Asmath Damodaran on the Cannabis industry. A neat example he showcases is on how cannabis legalization in Colorado (as of 2014) and California (as of early 2018) have not resulted in the "explosive" revenue growth that people had predicted before. It's been strong revenue growth of 10-20% it seems but no 100%+ that some people seem to be predicting with the current valuation of Canadian cannabis companies. Now there are differences with state vs. nationwide legalization. He divides cannabis into two areas: 1) medical and 2) recreational. Medical stream is where the pharmas will get involved as we may see similar industry developments. Recreational is where the alcohol and cigarette companies will probably look to explore. Now, will the industry trend to be a life-style/brand based industry or a low-cost commodity-based industry? I personally think the company with the best branding will excel because I think it's practically a commodity product already (i.e. not mutually exclusive). I agree that the play on the industry now is a "trading" schema and there will still be opportunities for long-term investors to come in as more players... especially sophisticated ones (not the "made millionaire in 1 year expert") enter. https://www.youtube.com/watch?v=nBS7aFF0m0I

 

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