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The Digest #81
Tax Policy, SPACs, David Swensen, Bruce Flatt on Offices, Masks
"The best index to a person's character is (a) how he treats people who can't do him any good, and (b) how he treats people who can't fight back."
— Abigail Van Buren, Dear Abby column, May 16, 1974 (h/t James Clear’s newsletter)
Keep Your Identity Small by Paul Graham, February 2009. It is difficult to think critically about topics that become part of your identity. This is especially true when it comes to political and religious beliefs, as Paul Graham points out in this old essay. Earlier this week, Elon Musk announced that Tesla will no longer accept Bitcoin, supposedly due to environmental concerns. The reaction of Bitcoin bulls was apoplectic, to say the least. I suspect this is because many people view Bitcoin not only as an investment but as part of who they are. The same is true of many Tesla investors. This can be blinding and hazardous to your wealth. (PaulGraham.com)
Investor Taxes and Stock Prices: Threading the Needle! by Aswath Damodaran, May 11, 2021. How will changes to the individual income tax code impact the prices of financial assets and who will end up paying more? These questions have been causing significant uncertainty over the past few weeks as the Biden administration’s proposals continue to emerge. This article provides an excellent summary and analysis of the situation. (Musings on Markets)
The SPAC King Is Doing Just Fine Even as the Bubble Starts to Burst by Zeke Faux, May 13, 2021. Special purpose acquisition company sponsors structure deals in a manner that guarantees a positive outcome for themselves regardless of how the underlying company performs. So whether he’s right about value investors or not, Chamath Palihapitiya is certain to do very well for himself: “Palihapitiya argues that traditional value investors, who say some stocks are massively overpriced, are morons. Markets, he says, are all but guaranteed to go up as long as the Fed keeps printing money, and individual investors who buy popular stocks are outsmarting Wall Street.” (Bloomberg)
Bill Ackman Talks SPACS, Domino’s Inflation, Crypto, and NYC, May 12, 2021. Hedge fund manager Bill Ackman is interviewed on a number of topics at the Wall Street Journal’s “The Future of Everything Festival”. On crypto: “I think crypto is a fascinating phenomenon. I think it’s a brilliant technology. I kick myself for not understanding it. It’s one of the best speculations ever…But it’s not a place where I would feel comfortable personally putting any meaningful amount of assets. And therefore I wouldn’t invest…our firm’s assets…because there’s no intrinsic value.” (WSJ)
4 Investing Lessons from David Swensen by Nick Maggiulli, May 11, 2021. The intellectual framework of David Swensen’s “Yale model” for investing the assets of endowments and pensions has influenced countless organizations and improved returns that ultimately helped beneficiaries. Mr. Swensen died recently at the age of 67. Nick Maggiulli’s final lesson in this article is particularly poignant: our time horizon can be shorter than we think. The institutions that benefit from the “Yale model” have perennial time horizons but individuals do not. (Of Dollars and Data)
The Pygmalion Effect: Proving Them Right, May 10, 2021. “The Pygmalion effect is best understood as a reminder to be mindful of the potential influence of our expectations. Even if the effect is small, having high expectations in many situations can only inspire others regarding their own capabilities. People’s limitations can be stretched if you change your perception of their limitations.” (Farnam Street)
Good Moods Often Lead to Bad Judgments by Daniel Kahneman, Olivier Sibony and Cass R. Sunstein, May 13, 2021. This essay is an adaptation from Noise: A Flaw in Human Judgment which will be published next week. I’m an eager reader of anything Daniel Kahneman writes and looking forward to this book. (WSJ)
A Reflection on Being Asian by Lawrence Yeo, May 12, 2021. The pandemic has led to cases of hostility toward Asian Americans. This article is a great personal reflection on the author’s pride in his background and his life experiences, both positive and negative. I liked his personal mantra of giving people the benefit of the doubt: “That’s why I aim to live by this simple mantra: As long as you don’t give me reason to conclude that you’re a racist, then you’re not one. That way I don’t see hate where there is none, and I make no assumptions of hostility when a more suitable reason exists.” (More to That)
Bruce Flatt on Office Culture
Bruce Flatt is CEO of Brookfield Asset Management which has significant exposure to commercial real estate, so the comments he made in his first quarter letter to shareholders are not exactly unbiased. However, I broadly agree with his observations regarding offices.
From personal experience, I know how difficult it is to coordinate teams when people are working in remote locations. Remote work can be effective for people who are already familiar with a company’s culture but it is difficult to onboard new hires and communication is always going to be more difficult.
I agree with the following excerpt from Flatt’s letter:
We believe the Culture of a company can only be maintained with a physical presence. Video technology can assist, but it cannot replace physical presence. Companies without a distinct Culture will slowly die over time if they try to get by on video interaction. Of course, some jobs can be done from home, and many specific activities in fact are augmented by video technology, but offices are a very important part of bringing people together in order to build trust for advancing goals and dealing with the inevitable tough times all organizations face on occasions. Furthermore, without the learning that is passed on from more experienced colleagues to younger generations—and the camaraderie created by an office—there is no link between humans. With no links between humans, a Culture does not exist, and with no Culture, eventually there will be no company.
On May 13, the CDC updated its guidance to no longer recommend that fully vaccinated people wear masks in most settings. This is a great milestone and a big step toward resuming a more normal life and accelerating the economic recovery.
I was an early proponent of masks and wore one weeks before it was common to do so. A little over a year ago, I wrote The Psychology of Masks partly due to frustration over how politics had transformed what is simply a tool into a symbol of tribal allegiance.
Social proof is powerful particularly when it comes to something that is as highly visible as a mask. Especially in big cities, being seen indoors or outdoors without a mask became socially unacceptable. At this point, vaccines are widely available to Americans twelve years of age and older and anyone who wants a vaccine should be able to be fully vaccinated by next month.
Some people will continue wearing a mask in the future and there is no way we can know what motivates a stranger who chooses to do so. There should be no stigma involved in doing so. At the same time, being seen maskless in public should not carry a stigma either. It will become a matter of personal choice and individual liberty in a free society and hopefully people will be tolerant of the choices of others.
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