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A compelling case for optimism (and long-term thinking)
“In the long run, optimists shape the future.” This line came from a remarkably thought-provoking essay last week by Kevin Kelly, founder of Wired Magazine. The essay is a quasi-philosophical meditation on a number of wide-ranging subjects—the exponential nature of innovation, the sustainable energy revolution, future ingenuity and adaptable resilience—but at its core, his essay offers a few profoundly simple observations that serve as a refreshing rejoinder to the 24/7 negativity promoted by modern media. (“If newspapers and websites were only updated every 50 years, they might report: literacy is up, longevity increased, violence is down,” he writes.) Kelly makes the case, rather convincingly I think, that optimism isn’t some pollyanna attitude endemic among the naive, but rather a “skill that bestows resilience and adaptability” in an increasingly connected world.
By avoiding short-term risk, do institutional allocators actually increase long-term tail risk?
One somewhat idiosyncratic fascination of mine is the business of institutional asset allocation. I suppose it’s the perfect cross-section of my interests: something that’s needlessly opaque and enormously consequential. Every year, thousands of investment professionals at endowments, pensions, and foundations—representing trillions of dollars of capital—allocate billions of dollars to investment managers based on… what criteria exactly? With that preamble, I found this week’s piece by John-Austin Saviano, Managing Partner of Cyan Capital Partners (and former CIO at UC Berkeley), to be wonderful clarion call to allocators to embrace new out-of-the-box thinking. “The fiduciary mindset is often one of defense. Protection,” Saviano writes. “Investment committees often gravitate toward a ‘do no harm’ posture which, while understandable, can work against the practice of investment management that actually requires the taking of well-reasoned risks.” He continues:
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The “uncoachable” traits of an exceptional investor (podcast)
This week, our pal Tilman Versch of the Good Investing Talks podcast published a stellar interview with Dennis Hong, founder/CIO of ShawSpring Partners, an investment firm based out of Boston. The entire 90-minute episode is worth a listen, but I particularly enjoyed the 27-minute mark when Hong describes 4 “uncoachable” traits of an exceptional investor—that part resonated with me. In reality, pedigree has very little correlation to long-term success—but curiosity and passion (bordering on obsession) with business models, technology, and investing theory itself are better determinants for positive long-term outcomes.
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A few more links I enjoyed:
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