Compound Intelligence #24

  I’ve been a bit slack of late, so this month’s edition of Compound Intelligence is a 2-for-1 bonus issue covering both February and March – and looking back, so much has happened. While every one of these items has been of interest to me and is recommended reading/listening/watching, I’ve bolded my most highly recommended items. Enjoy!   Worth learning “The Next Generation of Trust: A Global Survey on the State of Investor Trust“, CFA Institute, 28 March 2018 “More Instability For Superannuation“, RiceWarner, 27 March 2018 “Quantum Computing 101“, techstuff, 27 March 2018 “Pensioners would retain cash refunds on franked dividends under Labor backdown“, SuperGuide, 27 March 2018 “Famine mortality over the long run“, Our World In Data, 22 March 2018 “The Great Inflation Mystery“, Bloomberg, 22 March 2018 “Over two million superannuation members contribute above the compulsory level“, Roy Morgan, 21 March 2018 “Federal Reserve Raises Interest Rates in Push to End Easy Money“, The Street, 21 March 2018 “‘Long and painful’: Peter Costello’s rate warning for households“, SMH, 20 March 2018 “Why Bill Shorten is wrong — and right — on dividends“, The Motley Fool, 16 March 2018 “Happiness report: Finland is world’s ‘happiest country’ – UN“, BBC, 15 March 2018 “Microsoft CEO Satya Nadella says people waste far too much time doing one thing“, MarketWatch, 13 March 2018 “Hedge Funds That Use AI Just Had Their Worst Month Ever“, Bloomberg, 13 March 2018 “For The First Time In Years, Why People Are Suddenly Talking About Inflation Again“, Odd Lots, 12 March 2018 “How would your superannuation stack up if paid as a monthly salary?“, AMP, 12...

Compound Intelligence #23

  2018 is here! There are plenty of tweets, stories, etc going around wishing ‘good riddance’ to 2017. But I’m not so sure. Before you jump on that bandwagon, a New York Times columnist has written this terrific, fact based, article about “why 2017 was the best year in human history“. It’s well worth a read and discussion. Given it’s January, this issue of Compound Intelligence is a more eclectic mix than usual of fascinating articles, podcasts and videos. Enjoy!   Worth learning “Dreaming of retirement?“, Sydney Morning Herald, 14 January 2018 “Licensing regime for financial advisers needs an overhaul“, Sydney Morning Herald, 14 January 2018 “U.S. 2-Year Yield Tops 2% for First Time Since Financial Crisis“, Bloomberg, 13 January 2018 “CES 2018“, Tech.pinions, 12 January 2018 “The Outlook for International Equities“, Capital Ideas, Capital Group, 12 January 2018 “How to Tell If Someone’s Bluffing: Body Language Lessons from a Poker Pro“, Liv Boeree, Big Think, 11 January 2018 “DACA and Displaying ‘Genius’“, Power House Politics, ABC (US), 10 January 2018 “World’s busiest airline flight routes: Melbourne-Sydney now world’s second busiest“, Traveller, 8 January 2018 “This Is What It Was Actually Like To Live Through The Tech Bubble“, Oddlots, Bloomberg, 8 January 2018 “How to match retirement income with expected spending“, YourLifeChoices, 7 January 2018 “Why 2017 was the best year in human history“, The New York Times, 6 January 2018 “This Is Where You Should Go in 2018“, Conde Nast Traveler, 5 January 2018 “Understanding hybrid securities“, nabtrade, NAB, 2 January 2018 “Africa in Data“, Our World in Data, January 2018 “Concorde: A Supersonic Story“, BBC, 28 December 2017 “The...

Designing products & services for humans

  If you have a spare hour available, you should watch this video. It’s a recording of a talk given by Professor Dan Ariely at Google’s Mountain View, California headquarters around 10 years ago. Dan Ariely is the James B Duke Professor of Psychology and Behavioral Economics at Duke University. He is the founder of The Center for Advanced Hindsight, and co-founder of BEworks. He has authored or co-authored a number of books about behavioural economics; including “Predictably Irrational”, “The Upside of Irrationality”, “The (Honest) Truth about Dishonesty”, “Irrationally Yours”, “Payoff”, and his latest “Dollars and Sense”. So he knows a thing or two about how humans actually make decisions. I’m sure you’d learn something by watching the video – and I really do recommend you watch it for yourself – but let me fast forward you to the end and summarise the key take outs: Humans have irrational tendencies. And it not just other people that are irrational. It’s all of us, including me, and including you. Our intuitions are often wrong, and even if we know they are wrong, that doesn’t necessarily help us make better decisions in the future. This one hurts because we intuit about things all the time. When making decisions about complex products & services that are important to us – say like organ donation, superannuation, retirement lifestyle, healthcare, aged care for a loved one – we are much more inclined to not make a decision if there is an automatic answer available. Here’s a terrific example. In a 2004 study by Eric J. Johnson and Daniel G. Goldstein into organ donation rates by...

Compound Intelligence #22

  As 2017 approaches its close, it’s hard not to reflect on what a fascinating year it’s been from a financial markets perspective (see the table below): Global syncronised economic growth amongst developed countries, and many emerging markets has been high; We’ve continued to experience generally stubbornly low interest rates in developed countries; Inflation has been subdued; Unemployment rates have been improving; and Wage inflation has not taken off – at least not yet! Not to mention the US share market setting so many “all time highs” that it’s hardly newsworthy anymore! All of this seems good in that ultimately, over the very long term, it’s the economy that drives markets. And many aspects of the global economy look good. Of course, there are also numerous risks out there. Most financial assets look at least fairly priced, and many look quite expensive. But which issue might trigger a significant negative market event is highly uncertain, and when that might happen is even more uncertain. It could be in 6 weeks, 6 months, or 6 years – or any time in-between. Compared to economic history, we are already late in this business cycle. As the Sarge always said, “let’s be careful out there.” Donald, Chris & I would like to wish you & your family a wonderful Christmas and a relaxing start to 2018. And while you’re relaxing, enjoy the following selection of great articles, podcasts and videos.     Worth learning “Peak Growth“, PIMCO, 20 December 2017 “3 Ways the Stock Market Could Tank, According to Experts“, TIME, 20 December 2017 “Year in Review: 2017 in 12 Charts“, The World Bank,...

Super is great AND we should strive for it to be better

  I did a quick search on Google News for “superannuation” this evening and here are a selection of the articles that popped up: “New laws to make superannuation safer“, The Australian “Political battle heats up with superannuation reform bills in Parliament“, The New Daily “APRA implores an end to infighting“, Investment Magazine “Porepunkah super loss“, Myrtleford Times “ISA accuses Government of ideological vendetta“, Money Management “Victims of crime could gain access to perpetrators’ super: Kelly O’Dwyer“, The New Daily It would be easy for the average person to read these headlines and be demoralised and/or concerned about the contemporary compulsory retirement savings system – which we call “super” – which was born in Australia in the early 1990s. But hang on just a minute. If you dug around in the Google News cellar a little longer, you might find some other recent articles about a thing called the “Melbourne Mercer Global Pension Index” or “MMGPI” for short (granted this name does not exactly roll off the tongue, but there you are). Here are a couple of these articles: “Aussie pension scorecard slips but still medals“, nestegg.com.au “Australian pensions still highly rated but face headwinds“, Investment Magazine So what is the MMGPI? Well, I’m glad you asked. It’s an annual ranking of the super systems of about 30 countries around the world; big countries, small countries, countries we do a lot of trading with, and countries we care about. And if you read much of the local commentary about the Australian super system, you’d never guess what the MMGPI has to say about the Australian super system. It says that...

Compound Intelligence #21

  Compound Intelligence #21   Well, it’s only been a month since the last edition of Compound Intelligence, but WOW! There is a veritable feast of fascinating material to sink your teeth into here – I hope you find a few “nuggets of gold”. In particular, I’d commend to you the material on the release of the 2017 Melbourne Mercer Global Pensions Index report. This is a rigorous annual study into the pension systems of 30 countries around the world, including Australia’s major trading partners and competitors. Once again, the Australian system ranks well – overall the 3rd best pension system in the world – in terms of Adequacy, Sustainability and Integrity. In among the many & varied issues around the Australian superannuation system (e.g., implementing 2016 Federal Budget changes, the 2017 Federal Budget changes and enhancements to the system before Parliament, the Productivity Commission reviews, the proposed ISWG Code of Practice, the CIPR idea, the highly competitive nature of the different segments of the super system, etc), I think the Government, the media – and indeed the super industry itself – can sometimes lose sight of the bigger picture, which is that Australia has a globally leading pension system. Until next time – never stop learning!   “EY FinTech Australia Census 2017“, EY Sweeney, 3 November 2017 “What is Short Selling?“, Fidelity, 2 November 2017 “How Global Warming Works“, Stuff You Should Know, 2 November 2017 “Make finance studies compulsory in schools“, The Daily Telegraph, 2 November 2017 “Fibre Optics: A look at Australia’s NBN“, The Money, ABC, 2 October 2017 “ETFs in danger of making investment professionals irrelevant“, Australian...
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