2021:10 wrap-up
2021 is almost in the books.
It was a good year on multiple fronts (count your blessings I would say).
First of all we had a little family addition beginning of August. Not surprisingly, one of the main reasons the writing slowed down (or let’s say stopped) before the summer. Hello early (fun) mornings.
Return wise - we had quite a good year (at work). Not going to talk about it here - but whereas we were struggling a bit during the summer of 2020 after a couple of good years, we are back on track in 2021. The crash course on semis, keeping our overall cool (e.g. looking out over a bit longer time horizon) and revisiting some names proved to be worthwhile.
Pandemic of course kept on going - as everywhere in the world. So not much to add there. In Belgium sport facilities, restaurants and shops remained open most of the time so actually nothing too spectacular in terms of lockdowns.
Below some brief general end-of-year thoughts that popped-up.
Let’s start fresh in 2022.
Happy end of year everybody!
2022 goals? Let’s go for tiny habits instead
Mm yes - but becoming more a fan of building habits. Or growth without goals as Patrick O’Shaughnessy puts it (with the words of Jiddu Krishnamurti):
Man lives by time. Inventing the future has been his favorite game of escape. We think that changes in ourselves can come about in time, that order in ourselves can be built up little by little, added to day by day. But time doesn’t bring order or peace, so we must stop thinking in terms of gradualness. This means that there is no tomorrow for us to be peaceful in. We have to be orderly on the instant.
First copied the Scott Adams part here but feel the opening sentence is a bit too harsh (i.e. goals are for losers). You can have a healthy combo of habits and goals (semantics) - but do feel exploring and creating habits is a powerful way to move forward over time. It applies to living in general, exercising, cooking, sleeping, living and also investing.
By coincidence stumbled upon this podcast of the Art of manliness (don’t ask). Where they talk about the book Tiny habits: the small changes that change everything.
Yeah, I think the biggest takeaway from my work is simplicity. Simplicity is the thing that I saw early on that made technologies that engaged people. Everything that people were choosing for themselves and using, the overriding pattern was simplicity.
It’s a compensatory relationship. They can compensate for each other, like teammates. If motivation is low or weak, then ability has to be high. It has to be really, really easy.
What doesn’t work is trying to motivate yourself toward an abstraction, like lose weight. That is an abstract thing because you can’t in this moment lose weight.
Yeah. It comes down to three criteria. If you’re looking for a habit or behavior change to help you reach whatever aspiration, the best matches, the golden behaviors have these three characteristics. Number one, it’s a behavior that you want to do. Number two, make sure it’s a behavior you can do. Then the third criterion, this is important, it needs to be a behavior that will have impact.
Investment process
No big changes here. Although when you look back over the years - one notices some changes. Or let’s say a slightly different (higher/lower) appreciation of certain elements. I was already on the path of assessing:
the quality of the businessmodel (moat)
intelligent capital allocation
Quality is a very broad term - but guess most involved have some idea what it means for them. In terms of capital allocation I often use the term intelligent given it depends on the situation what could be the best decision. Can still turn out bad of course but at least you need a management that thinks intelligently about what to do with the operationally generated cash. Yes, this can also mean acquisitions (talking serial acquirers here - big transformative M&A is probably more of a question mark).
Reinvestment and the moat trend is something I’m thinking about more and more. ROIIC is of course nothing new but important the more I think about it. Dorsey also talks about this.
Similarly - and of course somewhat related - the trend of the moat is an important concept. The people of WCM (Defying the fade) talk about it for example.
No coincidence both (some WCM people and Dorsey) are ex Morningstar equity research - which is heavily and consistently focused on the moat. Lately imo also on the moat trend - as well as the capital allocation part of the business.
A whole other topic - I feel portfolio management is similarly something underrated. Especially how you size positions.
What did I read?
Less macro.
More business model (company specific) research. I tried a few new substacks. Still feel there is room for some more European oriented writings. Also curious how the paying arena will evolve (versus other kinds of research).
More podcasts than ever.
Not too many books.
Happy with the overall trend here.
I have a few books on the shelf I would like to finish beginning next year. Do suffer from Tsundoku however.
What else?
Our local gym hosts Les Mills Grit classes. Discovered them a few years ago. If you have couple of friends returning weekly, a good coach and you like HIIT classes - it becomes addictive! We kept going in 2021.
Also: padel lives up to the hype. Big advantage is that you immediately can start playing a game (or at least it feels that way).
VR escape games are cool.
Travel wasn’t really easy last year (corona and baby) - but will make it up in 2022 ;)
Not a lot of cooking - but did enjoy some good sandwiches for lunch!
See you in 2022!