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That Doesn’t Work Anymore: Retooling Investment Economics in the Age of Disruption
Decades old economic measures and concepts such as GDP, inflation, business cycles and supply chains are quickly becoming—or already are—obsolete, thanks to new and coming technology. New technology, whether it be physical or just an idea, affects not only asset values, but also interest rates, stock valuations, barriers to entry, regression and correlation analysis, and more. In his book That Doesn’t Work Anymore , Robert S. Kricheff discusses how one can adapt traditional data to these changes, outlining ways to use newer and better tools to help you make good investment and business decisions. Each chapter of the book is short, pragmatic, and grouped by topic with research and real-life anecdotes, which delve into how technological and societal developments have changed the meaning and value of traditional economic data-points, predictive tools, and business concepts. With years of experience within the world of marketing and economics, Kricheff provides specifics on new and more valuable data sources as well as better methods for applying the information to investing, business, and even your career.
268 pages, Paperback
Published December 17, 2018
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November 10, 2019
Kricheff is the senior VP of Shenkman Capital, a $30 billion fund. This book is the distillate of his experience. So what is different for investing in the Age of Disruption? Some examples:
1. GDP and unemployment figures are lagging indicators so it is not useful for investors. Current indicators such as the Chicago Fed National Activity Index (CFNAI) is much more useful.
2. Fundamentals are still the most important. Company reports sometimes meet and other times beat expectations; it is not important for the Long term but it does impact short term prices.
3. Many people predict recessions all the time. However historically stock prices and the economy (of America anyway) has always gone up so one should not try to time the market and take a cash position too often. I find this optimism a total change from the pessimism 11 years ago when everyone expected the financial world to end. If not for the bravery of Bernanke and the rest of Big Government officials, a lot of leveraged investors and banks would have gone bankrupt.
4. The valuation of new companies hardly depend on earnings (there may be none or loss) or hard assets (there may be little). Market share and expectation of some sort of earning suffice; ultimately whether a disruptive company can survive depends on availability of capital to burn. However, even seasoned investors like Masayoshi Son can lose money; indeed part of the problem was the huge amount of capital that he provides!
5. Risk is often defined as volatility; however to him real risk is losing money. A volatile stock that goes up over time is better than a non-volatile stock that goes down.
6. Index stocks are good in theory but they contribute to the herd effect: when an index stock goes up, its weightage increases and so index funds are forced to buy more of it.
7. When an economy consists mostly of services, economic indicators may become less accurate.
An excellent book for investing. Having said that, the whole industry that espouses the free market actually can only exist because of government support. Such is the irony of modern finance.
1. GDP and unemployment figures are lagging indicators so it is not useful for investors. Current indicators such as the Chicago Fed National Activity Index (CFNAI) is much more useful.
2. Fundamentals are still the most important. Company reports sometimes meet and other times beat expectations; it is not important for the Long term but it does impact short term prices.
3. Many people predict recessions all the time. However historically stock prices and the economy (of America anyway) has always gone up so one should not try to time the market and take a cash position too often. I find this optimism a total change from the pessimism 11 years ago when everyone expected the financial world to end. If not for the bravery of Bernanke and the rest of Big Government officials, a lot of leveraged investors and banks would have gone bankrupt.
4. The valuation of new companies hardly depend on earnings (there may be none or loss) or hard assets (there may be little). Market share and expectation of some sort of earning suffice; ultimately whether a disruptive company can survive depends on availability of capital to burn. However, even seasoned investors like Masayoshi Son can lose money; indeed part of the problem was the huge amount of capital that he provides!
5. Risk is often defined as volatility; however to him real risk is losing money. A volatile stock that goes up over time is better than a non-volatile stock that goes down.
6. Index stocks are good in theory but they contribute to the herd effect: when an index stock goes up, its weightage increases and so index funds are forced to buy more of it.
7. When an economy consists mostly of services, economic indicators may become less accurate.
An excellent book for investing. Having said that, the whole industry that espouses the free market actually can only exist because of government support. Such is the irony of modern finance.
Displaying 1 of 1 review