This is the last edition of The 2-Minute Thought. It’s time – and taking a break from the same format week in and week out often is a good idea. But first, a few random thoughts before going:
Anders Hall, the head of Vanderbilt University’s investment office, said in a recent interview with SumZero that the best advice he had for someone thinking of starting a hedge fund is to remember that “the world does not need another asset management firm.” Many people may understand this, he said, but they still go ahead because “many believe themselves to be unique or different.” That’s fine, of course. But, “They should not assume investors will soon join them in the effort.”
That strikes me as sound advice – and not just for hedge funds, because there are plenty of things the world does not need more of. There are far more restaurants than there are customers to keep them all afloat. There are far more books written than can be widely read. And daily, weekly, or monthly commentary? The world simply does not need more content, as anyone who pushes out content should know.
That’s one way to look at things. Another is to watch the people that still go on to open funds, start restaurants, and write books, and then learn from how they find their own way.
This makes me think of food blogger J. Kenji Lopez-Alt, who when asked for his best advice on opening a restaurant, said, Just don’t, just don’t do it. But then he went ahead and opened his own restaurant, and he actually seems to still be enjoying it, kind of.
As a content pusher myself, I’ll say that I’ve genuinely enjoyed writing this little column. It started in February 2016, so it’s been almost three years of writing on investing ideas – and random things like Japanese laundromats, the multilingual brain, Denmark, North Korea, and In-n-Out Burger.
The beginning of 2016 was a pessimistic time for markets, if you can remember that before things soared and then fell again. Market earnings multiples now are very close to where we were in early 2016. We started at 16, reached a peak of 21, and now are pretty much back to 16 or 17.
Value investing still struggles, and active investment management still faces existential crisis. But actually, passive investing doesn’t look quite like the be-all, end-all it once was. People are souring on the big platform tech giants. And the economy may well be in a different phase.
While I wrote very little about it here, what stands out to me most from recent years is populism and how divisive the world has become. The haves versus the have-nots. The you against me. A different kind of politics took root from 2016. The vote for Brexit happened in 2017 – though they’re still working out exactly how to shoot themselves in the foot over there. And in this week’s Barron’s, Schwab strategist Liz Ann Sonders said we have “an every man or every country for himself mentality” that is affecting the way the world works in many different ways.
That’s a depressing thought. And yet, there is kindness out there if you look for it.
I just read Gallup’s 2018 World’s Most Generous Countries Report, which looks at how 146 countries give time and money to help others. It’s worth remembering that in 2017, Americans donated more money than the GDPs of all but 40 countries around the world. That is something. But Americans scored less well when asked if they had helped a stranger or someone they didn’t know in the past month.
The top country in terms of helping out a stranger was Libya, where 83% of responders said they had done so recently. And the most striking thing for me: All top 10 countries in this respect were in North Africa, sub-Saharan Africa, or the Middle East. That is something worth thinking about.
Thank you for reading -- and Happy Holidays.