Food: Braised goose and spicy clams
This is probably my family’s favorite Chiu-Chow restaurant. Our usual is the braised goose, pan-fried noodle, and the winter-melon soup. This week, we also had the spicy clams and deep-fried shrimp balls. The pan-fried noodle is supposed to be a dessert dish, but we ate it as a staple anyway.
Love: Roots and wings
During breakfast on-route to my daughter’s piano lesson, I shared with her what I thought was a very insightful thought by Goethe, “There are two things children should get from their parents: roots and wings.” This was cited in Chapter 5 of How to Raise an Adult by Julie Lythcott-Haims, which I mentioned last week.
I explained to her what was meant by roots and wings. I wasn’t sure if that totally sunk in, and think I’ll need to repeat the message and explanation many more times verbally, and more importantly through actions.
Growth: Fitter father
Two things made my week this week: (1) as I prepared to go out for my usual Saturday run, my daughter commented I look like one of those Titans in the reality show hosted by Dwayne Johnson; (2) I finally regained the Excellent status on Fitbit’s assessment of Cardio Fitness. I had slipped to Very Good for more months than I cared to count, due to sickness, traveling and whatnot. After the gym closure earlier this year as a result of the pandemic, I took to running and doing bodyweight exercises around my neighborhood park instead. I guess the regular schedule helps. Still, making it to the Titan level is a totally different level, much as I appreciated my daughter’s compliment.
Investment: Ain’t No Mountain High Enough
A professional investor friend (Disclosure: I invest in one of his funds) recently shared that he had started dabbling into stocks which he “doesn’t know how to value”. He has been a long-time Graham-and-Dodd value-investment believer, so this sounded to me like a major departure. This reminded me of an article by John Auther (now with Bloomberg, previously with Financial Times) I had read recently. In the article, Authers compared the difference in return between Growth stocks and Value stocks. For the past decade or more, the gap between the returns to the two had widened in favour of Growth stocks. I reproduced the trajectories using as proxies the Vanguard Russell 1000 Value ETF (VONV) and Vanguard Russell 1000 Growth ETF (VONG). This is what I got. Notice the increasing gap for the past decade.
The lesson to me is that Matthew’s Effect reigns in the post QE world. During the world-wide easing of monetary policy via a variety of QEs, funds flows to the moneyed, who are encouraged to take on more risks. If this pattern holds, the current bout of QEs will further perpetuate such gaps, where there “ain’t no mountain high enough, ain’t no valley low enough.”
The same friend had also recently invested in an experimental biotech company. I looked into biotech ETFs and found two: SPDR S&P Biotech ETF (XBI) and iShares Nasdaq Biotechnology ETF (IBB). I compared these with VONG and VONV, and get the following:
Biotech stocks (XBI – Blue line and IBB – Red line)
If we had started in 2019 Jan instead, here’s what we would get. In the space of 16 months, XBI and IBB had already returned more than 25% compared with VONV, while VONG was ahead by 28%.
So what next? To the extent one can stomach the heightened volatility of the biotech sector, one might trust the Mathew Effect to do its job to continue to deliver returns in excess of those to value stocks.
Awe: The star that paints a daisy
Who would have thought the orbit traced by a star around a black hole would result in a daisy-petal pattern? Well, other than Einstein that is.