Food: Buffet is back!
Our first buffet since the lockdown and reopening. Diners still need to wear their masks when getting food from the buffet counters. Otherwise, it’s almost back to normal.
Love: The start of an end of term routine
My daughter’s school term came to an end after a short 3-week resumption of lessons at school. She had accumulated a large pile of worksheets from the long months of learn-from-home. This week, I tasked her with identifying the books and worksheets she would like to keep and recycle or shred those that she wouldn’t.
I instructed her to divide her stuff into three piles: shred, recycle, retain. Worksheets with her name and handwriting go into the shred pile. Instructional materials from the school and books she had outgrown go to the recycle pile. For each subject, a couple of her favorite works go into the retain pile, as would reference materials she still finds useful. In the beginning, she asked me which pile each should go to every few minutes. It took a while for her to get the idea that she needs to make the initial sort, while I would only review after she had completed the first sort.
She also ended up feeding the shred pile into the shredder. It was tedious work sitting in front of the machine feeding papers into it. But she had seen my wife and I did that with our papers. So it wasn’t that difficult persuading her that she needs to own this. Further, she also identified a pile of unused school-labelled exercise books and writing paper that can be used in the next school year. All in all, it was a good end-of-term routine to start.
Growth: Home inventory apps
My wife was never a keen organizer of stuff. She would leave mail piling up for months before processing them. When I first read about Marie Kondo a few years ago, I bought two of Kondo’s books – The Life-Changing Magic of Tidying Up, and Spark Joy – to try to inspire her to tidy up.
This week, at last, she got excited about taking stock. She found an app on the iOS platform that helps her track her stock of pasta, canned food, tissue paper, bottled water, etc. Over the weekend, she essentially did a stocktake of kitchen consumables. Whether or not the actions were borne out of the Kondo-seed I planted years ago, it is a desirable outcome for me. Hopefully, this is just a start for her to get more organized.
This, in turn, prompted me to look at tools to further quantify our home inventory. Other than using GoodReads to record the books I have, I have not had a record of the hardware we own. A quick check on the internet turned out a few suggestions, mostly paid apps for commercial use. The good thing about these apps is that as their bread and butter is online service for a wide range of commercial companies, there is less chance of my database becoming dormant due to the apps ceasing to function. I’ll write an entry after further evaluation.
Investment: Private Equity and the Billionaire Factory
Amongst my circle of Aussie friends, Macquarie Bank is widely known as the “millionaire factory”. The surefire way for a graduate to become a millionaire five years out of college is to join the bank, progress up the corporate ladder, and watch the bonus rolling into his (yes, still predominantly male) bank account. No one bothered what the stock returns are for its shareholders.
This week, Ludovic Phalippou likened the private equity industry to a billionaire factory. The Oxford professor estimated that for PE funds that raised capital from 2006 – 2015, the total commitment raised was US$1.7 trillion, the total paid-in capital was US$1.2 trillion, and the total value net of fees was US$2.1 trillion. This gives a net profit of US$922 billion after fees. In particular, assuming a carried interest of 20% per industry standard, the carry would be US$230 billion. Most of this carry “goes to the largest PE firms and within the largest PE firms most of the money goes to a few partners, often the founders.”
The author counted only 3 leveraged buy-out billionaires in 2005: Henry Kravis and George Roberts, ranked 93, followed by Alec Gores ranked 181. In 2020, the count was 22, including the following:
“Steve Schwarzman (Blackstone) is 29th, Leon Black (Apollo) 63rd, Henry Kravis, George Roberts, and Ale Gores are about 110th, Robert Smith (Vista) is 131st, Josh Harris (Apollo) is 154th.”
Ludovic Phalippou – An Inconvenient Fact: Private Equity Returns & The Billionaire Factory
In a previous post, I looked at Leland Fund, which offers a mutual fund that tracks the Thomson Reuters Private Equity Buyout Index. I concluded back then that the economics of the fund, with its heavy sales charge of up to 5.75%, and an annual fee of 1.8%~2.8%, does not make sense to the average retail investors.
From this week’s paper, the good news for retail investors is this: the performance of PE and the following 2 mutual funds do not differ much. The passive mutual fund, Dimensional Fund Advisors’ US Micro Cap Portfolio (I) (net assets ~ US$5 billion) has a net expense ratio of about 51 bps while generating a return of 10% p.a. for the period 2006-2019. The active mutual fund, T Rowe Price’s Small Cap Stock Fund (net assets ~US$8.8 billion) has a net expense ratio of about 89 bps while generating a return of 12% p.a. over the same period.
Awe: A Photon’s million years preparation
To estimate the time a photon takes to reach the earth from the surface of the Sun is pretty straightforward: distance from Sun to Earth is 150 million km, the photon travels at the speed of light ~ 300,000 km per second, so the time taken = 150 x 10^6 / 300,000 = 500 seconds = 8 min 20 sec.
However, the real work the photon had to go through is actually in the core of the sun. In this week’s Wired UK podcast, Matt Reynolds presented as a fact that it takes 170,00 years for a photon to reach the surface of the sun. Based on NASA’s website, the process can take about a million years. If earthlings are an audience which eyes photons intend to hit, they literally took a million years preparing for it.
