The Diff

Share this post
Longreads + Open Thread
www.thediff.co

Longreads + Open Thread

ESG, Short Selling, Russia, Sanctions, Kazakhstan, Tisch

Byrne Hobart
Mar 5
19
4
Share this post
Longreads + Open Thread
www.thediff.co

Longreads

  • Andrew King and Kenneth Pucker at Institutional Investor look at the many complexities and inconsistencies involved in arguing that ESG investing produces alpha. An ESG-flavored investment can certainly be good for the world, and many of the companies that screen well on these metrics are quite profitable (if you don't need many physical inputs to provide your services, you can be both low-emissions and high-margin). But alpha comes from finding things that a) drive better performance over time, b) aren't recognized by the market, and c) don't get that extra return from taking additional risk.

  • Also in II, Michelle Celarier on short seller Carson Block questioning some negative academic research on short sellers. As a general rule, if you're going to go after shorts in a data-driven way, you need to be absolutely meticulous—you're criticizing people who have chosen a job where they constantly double-check numbers, question assumptions, assume the worst about their interlocutor, and then go out and find evidence that they're correct. Even erroneous short theses are pretty bruising, and in this case Block's case seems quite strong.

  • Kamil Kazani asks: how did Russia get so big? One important element was that the early growth of Muscovy, the predecessor state to Russia, was not primarily military. Vologda, for example, was annexed gradually over a period of more than a century, with Muscovy's influence rising throughout. Russia has ended up being a military power in part because its historical borders have mostly been hard to defend, and any country powerful enough to defend all of those borders can have the ability to attack along one of them. As Czar Alexander III put it, "Russia has only two allies: the Army and the Navy."

  • T. Greer at Scholars Stage notes that the response to Russia's invasion puts us in uncharted territory. This is, in one sense, necessarily true: invading a country in order to annex it used to be more common, so we have more experience with the act than with the consequences of trying to stop it through non-military means.

  • Fin Depencier at Palladium looks back at what happened in Kazakhstan in January. This is timely: since energy and food costs are rising, more countries will have to back down subsidizing those products, and that will precipitate more unrest. But, as the article notes, the elimination of fuel subsidies was a catalyst, but was not the underlying reason.

Books

  • The King of Cash: The Inside Story of Laurence Tisch: Larry Tisch had a phenomenal record as an investor and operator from the 40s through the 80s, but his holding company has disappointed since then ($). This book is partly an illustration of just how many valuation dislocations there used to be in the market—great assets often sold for cheap, and some large companies were seriously mismanaged for long periods until new owners stepped in. (As an aside, this is the third book I've read in the last few months that profiled a media figure and used a monarchial title: Apparently Barry Diller was the King of Media, Sumner Redstone was the King of Content, and now former CBS head Tisch is the King of Cash. Why do these people in particular get tagged with that kind of title?)

Open Thread

  • Drop in any links or thoughts of interest to Diff readers.

  • What I'm thinking about this week: the long-term consequences of Russia's invasion of Ukraine are hard to predict, but the long-term consequences of the response may be easier: that situation is less fluid, since no one wants to be first to start doing business with Russia again after publicly stopping. Aside from the first-order effect that Russia will try to make more of what it needs internally, what are the second-order effects?

Leave a comment

A Word From Our Sponsors

RIP Robo-Advisors

Repeat after me “I’m better than a robo-advisor.”

You don’t read the Diff every week to let a robot manage your money, do you?

But picking stocks is a risky-game: ~30% of all stocks are down 40% or worse from 52 week highs.

Woof.

So how do you invest your money in 2022 to take advantage of market turmoil? You set up rules-based investing to capitalize on volatility.

With Composer, you can set up systematic-trading strategies in a snap with their no-code portfolio visualizer.

You can edit their “Buy the Dips Nasdaq ” template and customize it to only buy the top ten holdings if they were up over 30% last quarter and rebalance every two weeks. Pretty neat, right?

Your traditional Robo would short circuit with those instructions.

With Composer you can drag, drop and quickly backtest strategies from their library or your own - no code, messy spreadsheets or Terminal required. And it's 100% free.

Don't wait, Diff Subscribers get priority access to Composer with this unique signup link.

Investing in securities involves risks, including the risk of loss. Borrowing on margin can add to these risks. Composer Technologies Inc., SEC Registered RIA.

Comment
Share
Share this post
Longreads + Open Thread
www.thediff.co

Create your profile

0 subscriptions will be displayed on your profile (edit)

Skip for now

Only paid subscribers can comment on this post

Already a paid subscriber? Sign in

Check your email

For your security, we need to re-authenticate you.

Click the link we sent to , or click here to sign in.

Sharif Islam
Writes The S.A.D Newsletter ·Mar 5Liked by Byrne Hobart

I have been thinking about how modern conflicts still revolved around fossil fuels (regardless of how much we talk about cyber warfare, cryptocurrencies, globalization). Any thoughts on this? Andreas Malm has some interesting points on this (https://www.theguardian.com/commentisfree/2021/nov/18/moral-case-destroying-fossil-fuel-infrastructure).

Expand full comment
ReplyGive gift
1 reply by Byrne Hobart
Leo Nasskau
Writes Empowered Belonging ·Mar 5

We're trying to figure out whether people would use a news website with built-in prediction markets. There's a short survey here (forms.gle/qFrfvNTTPmNhfRj39) where we would love to see your thoughts.

In a prediction market, you can use real money or play money ('non-cash tokens') to buy or sell a contract that pays off if and only if a specific event occurs. For example, a contract could be worth $1 if Boris Johnson remains the UK Prime Minister on June 1st and $0 otherwise. These contracts are freely traded so that their price reflects the group's view of the probability of an event resolving in one way or the other, thus creating a prediction.

There is some evidence that prediction markets can perform better than individual forecasters, providing a useful source of information about the future. We think there is real potential for prediction markets to give the world reliable predictions about important events that affect millions around the globe. We'd love to know if you think it's a good idea!

https://forms.gle/qFrfvNTTPmNhfRj39

Expand full comment
ReplyGive gift
2 more comments…
TopNewCommunity

No posts

Ready for more?

© 2022 Byrne Hobart
Privacy ∙ Terms ∙ Collection notice
Publish on Substack Get the app
Substack is the home for great writing