Capital Allocators Monthly – September 2018

 

Investing is simple, but it’s not easy.

Although I don’t trade much, last year I bought Bitcoin in September at prices ranging from $3,500 – $15,000 thinking I would hold it for the long-term. I sold it all in December at $17,500 when I couldn’t stomach the volatility (even though it was all upside vol).  Earlier this year, I bought cannibis stock Green Thumb Industries, again for the long-term, and sold it this month with another huge gain for the same reason.  These might be the two best trades I’ve ever had.  That windfall profit I took home?  How about a combined 0.80% of my portfolio!

Like I said, investing is simple, but it’s not easy.

Reading
1. The Death of Passive Investing
My latest piece in Institutional Investor is a simple concept.  With the proliferation of index ETFs, it’s no longer a passive exercise to invest with a low cost approach.

2. Annie Duke’s weekly Blog
My conversation with Annie is the most downloaded episode on Capital Allocators.  Her book Thinking In Bets is a tour de force of applied behavioral finance.  Behavioral tendencies are hard wired in us – awareness helps a little bit, but we still wake up every day conditioned to make the same mistakes again.  Annie writes a weekly blog that provides current examples of behavioral mistakes and every day reminders of System 2 thinking.  It doesn’t take that long to shift back to System 1, but her regular reminder in my inbox helps my conditioning (a little).

3. Michael Schwimer, applied Moneyball
I heard about Schwimer’s Big League Advance Fund a number of months ago and was riveted.  Michael applies baseball analytics to acquire stakes in minor league players, and creates a significant win-win in the process. Sports Illustrated told his story, and I had a fun conversation with him earlier this week that will release shortly.

4. Harvard Management Company’s farmland investments
Harvard’s struggles with a farmland investment, chronicled in Bloomberg, is a warning sign for allocators looking to make direct investment.  The concept sounds good, but when an investment goes bad it can become all consuming.

5. James Aitken’s book list
I mentioned James’ extensive reading during our conversation, and have since been deluged with requests to share his reading list.

Listen
Capital Allocators
1.  Raff Arndt, CIO of Australia’s AUZ$140 Sovereign Wealth Fund, manages a pool with the size and transparency of CalPERS and the sophistication of Yale.

2.  Steve McKeon, Professor at University of Oregon, talks corporate finance, security issuance, and crypto security tokens.

3.  Michael Mervosh, Founder of the Hero’s Journey Foundation, discusses how to live a fulfilling life.

4.  Sarah Williamson, CEO of FCLTGlobal, talks about Focusing Capital on the Long-Term for corporate executives, money managers, and allocators.

Best of the Rest
1. Leigh Drogen on The Meb Faber Show.  Leigh understands the integration of data analysis and human implementation in hedge funds on a deeper level than the rest of us.  He wrote a chapter in Meb’s The Best Investment Writing, Volume Two and reads the chapter on this episode.  I listened twice – it’s so, so good.

2. The Hidden Side of Sports on Freakonomics.  Starting with Episode 349, Steve Dubner uncovers the hidden side of sports. Unfortunately, Episode 350 has since been dubbed ‘the Freakonomics jink’, as it covers the San Francisco 49ers and their big bet on (since) injured quarterback Jimmy Garoppolo.

Prior monthly emails are available at capitalallocatorspodcast.com/blog.

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Have a good one,
Ted