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June 04, 2021
UFOs, the Unexplainable, and Solving Mysteries with Data

For generations, U.F.O.s have been in the purview of late-night call-in radio shows and supermarket tabloids, not the Department of Defense. Now the government is publicly acknowledging that mysterious sightings can no longer be dismissed, and a major report is due in June. 
~ “Are U.F.O.s a National-Security Threat?” April 30, 2021. David Remnick. The New Yorker Radio Hour.

In December 1998, on a dark snowy road in southern Sweden, I glanced above the trees and saw a small glowing oval object moving in parallel to our car. The road was straight, the sky was cloudy and black.

I pointed it out to my girlfriend, who was driving. We stared at it silently for about 10 seconds. The object moved in front of the car, hovering over the road a few hundred meters ahead. It maneuvered in perfectly straight lines – vertical then horizontal, far then near, side to side. I looked around for an explanation – was it a reflected dashboard light, a helicopter?

After a minute of silence I reluctantly asked, “Are you seeing this? What is it?”
She nodded but stayed silent.
I offered, “Is that what they call ... um ... a UFO?”
She peered at it thoughtfully, shrugged, “Mmmm, yeah, I guess so ...”

After another minute of hovering and a few perfectly straight sideways and vertical movements, and it darted away. I filed it under "Head Scratchers."

March 12, 2021
Being Greedy, Doing Good - The New Economics

As a young investor in the late 1990's the conventional wisdom was that "sin stocks" (gambling, alcohol, and weapons stocks) outperformed others. Investors could choose to either be greedy and profit or be principled and underperform. The narrative fit the transactional "greed is good" nature of the times. But it turns out the story isn't so simple.

Inflation spotting, meme stocks (see our Jan newsletter), cryptocurrencies, and the green transformation – lots happening in markets. Today we focus on the latter.

With a our new ESG dataset, we see that the performance of ESG investments is more often the opposite of the conventional wisdom - invesors can both do good AND outperform.


January 30, 2021
The Revolution Will Be Game-ified

This week's GameStop battle was the latest in a smoldering revolution - a revolution embodied in a cute Shiba Inu (and a few rainbow ponies).

Dogecoin. wow

Dogecoin is a cryptocurrency started as a joke, and it is worth $6.7 billion (as of Jan 29, 2021).

Dogecoin is a meme that resonates widely perhaps because it has no “fundamental” value. It’s human - or canine - whatever. The point is, it isn’t useful. It has no tangible value, yet it has grown to a market cap of $6.7 billion.

October 21, 2020
Election Psychology & Markets

“Prepare for the unknown by studying how others in the past have coped with the unforeseeable and the unpredictable.”
~ George S. Patton

The chart above displays the S&P 500 average versus the level of media uncertainty around past (and present) U.S. presidential elections. The yellow line is the average news and social media uncertainty level. The uncertainty average includes all presidential elections back to 2000. The white dashed line is the average S&P 500 return around all presidential elections since 1928. In the longer lower plot, the red line shows our 2020 level of U.S. uncertainty coming into the Trump-Biden match-up.

In 2020, uncertainty is higher than any other election. The “uncertainty collapse” (decline in the yellow line) starting 2-3 weeks before the elections (1) correlates with a rally in the S&P 500 and (2) happens when the media (and others) believe they know the likely outcome.

June 05, 2020
Elites and Inequality


“Inclusive economic and political institutions do not emerge by themselves. They are often the outcome of significant conflict between elites resisting economic growth and political change and those wishing to limit the economic and political power of existing elites.”

― Daron Acemoğlu, Why Nations Fail: The Origins of Power, Prosperity, and Poverty

After the global financial crisis, many people lost trust in the financial system. The Fed came to the rescue, and market prices recovered. Yet the sense of economic unfairness remained. Rising asset prices helped those with assets, while wages stagnated.

June 05, 2020
Unraveling Social Trust & the Path Forward

“And with economic and cultural indexes down, with the world turned darker and more predatory, we will go through more. We thought we’d be telling our grandchildren about the spring of 2020. Actually we’ll be telling them about the coming 10 years, and how we tried to turn everything around.”
~ Peggy Noonan, "On Some Things, Americans Can Agree". June 4, 2020. Wall Street Journal.

Last week my 11-year old daughter cried as she told our family how young neighborhood boys her age - strangers - had attacked her. They pelted her with batteries and tried to drive her off the bike path as she pedaled away from school, ramming her bike with their own. 

Her mother and I explained that maybe the boys’ home lives aren’t positive. Maybe they are being raised in abusive households. But that didn’t satisfy her sense of injustice.

Her school is in an immigrant neighborhood of Amsterdam, near public housing. Here in the Netherlands there is a higher proportion of Surinamese immigrants in public housing. These are largely descendants of African slaves from Dutch Suriname. Racial issues were in the back of our minds.