Ben Thompson, via his website Stratechery ('Strategy' and 'Tech'), has made a name for himself over the past decade popularising the concept of 'aggregation theory'. I invite readers to check out his material directly for a fuller explanation, but in short, his argument is that tech platforms have become so powerful (and profitable or potentially profitable) because in the internet era, the game has changed, and it has become far more important for companies to aggregate (and control) demand than to control supply (the latter of which Ben argues was the case in the past). Organisations that now control demand are the ones destined to prosper, and those companies are the large tech platforms.
Monday 20 May 2019
Saturday 18 May 2019
We have currently reached the point in the cycle where investors are once again questioning whether traditional value investing is dead. The last time this occurred was in 1999, and much like in 1999, it has also resulted in many self-described value investors caving in to the pressure of years of disconfirmatory market outcomes (high growth, high quality businesses sharply outperforming - particularly hyper-growth tech names); abandoning traditional value discipline; and rationalising a move towards more growth-oriented investing, which feels much more comfortable (being with the crowd, and doing something that has worked very well in recent history).
Monday 13 May 2019
Uber's much-anticipated IPO occurred on Friday, and to the surprise of almost no one (sensible), the stock ended the session down 7% (despite the offer having already been priced at a discount to initial ambitions, after Lyft's weak post-IPO showing). In my view, the stock likely has much further to fall, and in many respects the Uber story is the perfect exemplar of this cycle's excesses.
Thursday 9 May 2019
In recent weeks/months, Turkey has again been making headlines for all the wrong reasons. This time the focus has been on the acrimonious outcome of local elections; the further recent weakening of the Lira from about 5 to more than 6 vs. the USD (after having recovered from over 7 in August last year, touched on the day I first blogged about Turkey); controversy about the sufficiency of the Turkish central bank's foreign currency reserves; a March spike in overnight Lira swap rates; and the debate on the willingness or otherwise of the CBT to tighten sufficiently to ward off seemingly intractably high inflation (19.5% YoY at present - down from a peak of 25.5% in October 2018, but still elevated).