Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating pieces I read this week.
Bitcoin, a type of digital currency, has blown up in popularity. One guy in Norway got lucky. From Business Insider:
Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory.
Bitcoins are stored in encrypted wallets secured with a private key, something Koch had forgotten. After eventually working out what the password could be, Koch got a pleasant surprise:
"It said I had 5,000 bitcoins in there. Measuring that in today's rates it's about NOK5m ($886,000),"
Stress makes people prone to take bad advice, writes Harvard Business Review:
My colleagues and I had another group of participants write about an experience from the past that made them anxious or about their last visit to the grocery store (typically a neutral experience) and then estimate the number of coins in a jar. This time, some participants were given bad advice; others were given good advice (i.e., they received accurate estimates of the number of coins). Those who were in a neutral state were more likely to take advice when it was good rather than bad. But anxious participants tended to make no such distinction. Anxiety reduced their ability to discern between good and bad advice.
Love what you do
Quartz writes a great piece on the founder and CEO of Sriracha hot sauce:
Sriracha sales last year reached some 20 million bottles to the tune of $60 million dollars, percentage sales growth is in the double digits each year, and it does all this without spending a cent on advertising.
Yet [Founder/CEO] Tran shuns publicity, professes not to care about profits, hardly knows where his sauces are sold, and probably leaves millions of dollars on the table every year. His dream, Tran tells Quartz, "was never to become a billionaire." It is "to make enough fresh chili sauce so that everyone who wants Huy Fong can have it. Nothing more."
Shane Parrish talks about Charlie Munger's logic of solving problems by inversion:
Say you want to create more innovation at your organization. Thinking forward, you'd think about all of the things you could do to foster innovation. If you look at the problem backwards, you'd think about all the things you could do to create less innovation. Ideally, you'd avoid those things. Sounds simple right? I bet your organization does some of those "stupid" things today.
Another example, rather than think about what makes a good life, you can think about what prescriptions would ensure misery.
While both thinking forward and thinking backwards result in some action, you can think of them as additive vs. subtractive. And the difference is meaningful. Despite the best intentions, thinking forward increases the odds that you'll cause harm (iatrogenics). Thinking backwards, call it subtractive avoidance, is less likely to cause harm.
Wall Street is the heart of the global financial system. But according to one new study, the best financial analysts in the world live in Asia:
The world's best equity analysts are based in Asia -- these analysts are better at forecasting stock prices than their peers in the US, Europe and the UK. In comparison with the other regions, the performance of buy recommendations made by Asia analysts is superior and consistent over time. The average outperformance of buy recommendations over the medium term is over 4%.
Follow the herd
Another study shows people check their brokerage accounts more often when the market is rising:
Account logins fall by over 11% after market declines. Investors also pay less attention when news media attention to the stock market is low and the VIX volatility index is high. The attention/return correlation and level of attention are strongly related to investor demographics (gender, age) and financial condition (wealth, holdings).
Josh Browns talks about investors in high-flying tech companies:
I'm seeing "Facebook People" squaring off against the "Google People" about which company has the better mobile strategy. The Musk-ites are tilting at the Page-ists, who are sneering at the Bezos-ians who are bristling at the idea that Reed Hastings isn't the most innovative in all the land. If Steve Jobs were still around, his acolytes would surely be engaged in this cult-of-personality jihad up to their elbows.
If you substituted a few of the proper nouns and names from these squabbles with those of professional athletes and sports franchises, they would almost be identical.
Bloomberg shows how famed analyst Gene Munster tracks Apple's (NASDAQ:AAPL) sales numbers on the day of product releases:
Enjoy your weekend.