What I’m Reading: Achieving Happiness

1. Some interesting new research on achieving happiness: “Over the past decade, an abundance of psychology research has shown that experiences bring people more happiness than do possessions.”


2. David Thomson’s insights on the film Whiplash: “Genius is actually beyond teaching or example. It doesn’t bother with or heed advice to practice 25 hours a day or suggestions to give up on sex, golf, and other addictions.”


3. Norway’s climate change trade with Liberia echoes the Coase theorem on negotiation: “In 1960, the economist Ronald Coase argued that bargaining between parties could, under certain conditions, produce a mutually beneficial and efficient solution to problems like pollution.”


4. A bug in video poker made two allies rich; personal enmity and tax problems followed: “Every jackpot, he realized, was being reported to the IRS, and he’d already won enough from the bug to propel him into a higher tax bracket.”


5. Fail-Safe‘s insights about Cold War nuclear strategy: “But the crisis’s real cause is the logic of the nuclear system at every level—its institutions, structures, procedures, and rationales. This isn’t a movie about why we should fear machines or the people who control them. It’s about how managerial systems can bring about just the things they’re designed to avert.”


6. How to live an anti-fragile way of life: “The general underlying principle here is to play the long game, keep your options open and avoid total failure while trying lots of different things and maintaining an open mind.”

A New Rentier Class

Portfolio manager Conor Sen suggest active management will survive due to several factors: Gen-X / Millennial investors; crowded trades in passive investing strategies; “opportunistic CEO’s”; and developments in algorithmic trading. Sen also notes that hedge fund and institutional money managers still have an aura: this is a cultural myth sustained by endowment and pension fund flows.


In the long-term, I see a new rentier class emerging to service the 1% elite. Today’s asset classes will be modelled as alpha generation, trading, and execution algorithms. New types of arbitrage will be developed. The existing cultural myths will continue as a smokescreen. The truth may filter out in other sources: investigative journalism exposes of offshore tax havens; or Russian download sites on foreign exchange trading in Eurodollar markets.


Sen’s active managers of the future may be closer to Charles Stross or William Gibson than the 1980s era of the Big Swinging Dick trader (Michael Lewis) or Masters of the Universe (Tom Wolfe).