In the rearview mirror, 2020 seems like a 12-month-long roller coaster ride through market highs, dramatic lows and back again, social unrest, contested elections, and more.
If nothing else, 2020 helped remind us all of how unpredictable things can be. One of my strongly held convictions, and one of Foster Group’s core investment and planning principles, is to embrace uncertainty, especially in the near term. At the same time, it’s helpful to remember that history provides ample reasons for long-term optimism.
Many of my favorite content pieces from 2020 reflect on the themes of uncertainty, risk, change, and remaining optimistic in the face of unsettling circumstances.
Favorite Blog Posts
- “Save Like A Pessimist, Invest Like An Optimist,” Morgan Housel, Collaborative Fund, September 2, 2020
It is hard to pick just one post from Morgan Housel whose writing appears on the Collaborative Fund blog. Housel’s broad understanding of history and psychology, as well as his ability to draw investment and financial lessons from them, is consistently thought provoking. It doesn’t hurt that he is also an excellent writer.
In this particular post, he uses Bill Gates and statistics about 100-year events to illustrate how it is possible and beneficial to act like a pessimist and an optimist at the same time. Hopefully, reading this post will lead you to look at others of his from the year. (Check out “Wealth Is What You Don’t Spend” and “Risk Is What You Don’t See.”)
Housel’s book, The Psychology of Money, released in 2020, is also very high on my list of favorite financial books of all time. If you like his blog posts, you’ll love his book.
- “Nobody Told Me,” Jonathan Clements, Humble Dollar, February 8, 2020
Clements wrote the column, “Getting Started,” for the Wall Street Journal in the 1990’s and now writes regularly for the website, Humble Dollar. His common sense and plain language approach to investment and finance have always been appealing to me. In this post, he offers ten pieces of advice he wished someone had told him in his 20’s.
- “Financial Markets Are No More Uncertain Today Than They Were Last Year,” Joe Wiggins, Behavioural Investment, June 30, 2020
Blogger, Joe Wiggins, reminds investors and everyone else that financial markets, like many other things, remain as uncertain now, heading into 2021, as they were heading into 2020. This is true whether or not we understood it then or recognize it now. Wiggins challenges our perceptions that circumstances after the identification of the coronavirus became more uncertain than they were before. “It seems paradoxical to suggest that things were more certain before something we hadn’t expected happened and upended our prior beliefs.” You may need to read that sentence a couple of times and then check out his writing on behavioral finance at the site, www.behaviouralinvestment.com.
- “How Oil Prices Went Subzero: Explaining the COVID-19 Oil Crash,” Jeff Desjardin, Visual Capitalist, April 21, 2020
One of the many exceptional financial events of 2020 occurred April 20th when the price of oil went negative. In effect, oil producers were in the unimaginable position of being forced to pay people to take crude oil off their hands. How could this happen and were oil markets permanently broken as a result?
The website, Visual Capitalist, was a new find for me this year. Its authors and designers come up with very creative ways to visualize data and concepts. Good narrative writing is there, as well, but the infographics tell far more than one thousand words could about some timely and complex events.
- “The media exaggerates negative news. This distortion has consequences,” Steven Pinker, The Guardian, February 17, 2018
Though not technically a blog post and not originally written in 2020, I first came across this article during this particularly contentious year of electoral politics and social unrest. The author, academic psychologist Steven Pinker, has written a number of interesting and provocative books and articles concerning how humans think and use of language.
Published online by The Guardian, Pinker describes the media’s descent into an increasingly negative voice based on the “belief—near universal in American journalism—that ‘serious news’ can essentially be defined as ‘what’s going wrong...’” He argues that this drumbeat of negativity portrays an incomplete picture of how things really are and creates, not surprisingly, negative mental and emotional consequences in consumers of news media. Reading this article helped me to step back and ask just how much I was letting highly critical and one-sided editorial writers and television “news” commentators influence my mood and my thinking.
Favorite Podcast Episodes
- Conversations with Tyler, “Annie Duke on Poker, Probabilities, and How We Make Decisions” (Episode 99)
Tyler Cowen is an economist at George Mason University, an author and an excellent, though unconventional, interviewer of interesting people. In this conversation, he interviews Annie Duke. Duke has a PhD in psychology, has won multiple professional poker tournaments, and has written two books about decision making, combining her education and experience. She has been a popular guest on other podcasts, as well, due to her conversational style. (Annie Duke was also interviewed on the podcast, Capital Allocators with Ted Seides. See next podcast below.) And who doesn’t want to hear from a PhD in psychology who went on to master poker at the highest level?
Other great Conversations with Tyler in 2020 included episode 86 with Ezra Klein, episode 93 with Philip Tetlock, and episode 91 with Ross Douthat.
- Capital Allocators with Ted Seides, “Randall Stutman; Admired Leadership” (Episode 150)
This podcast usually focuses on interviews with institutional money managers from around the globe. The host, Ted Seides, is a former hedge fund manager and is acquainted with many of the leaders, money managers, and consultants directing capital investment for the largest endowments.
However in this episode, Ted interviews Randall Stutman, who has a lifetime of experience in coaching and studying high-level leaders. Stutman and his team have recently created an online course, Admired Leadership, describing the 100 behaviors repeated by the most talented leaders with whom he has worked. Over the course of the conversation, Stutman discusses decision making, time, information management, inspiring others, giving feedback, and how to be a fan of those you lead. Stutman’s approach is different than the usual principle or conceptual model of many leadership writers. He focuses on concrete behaviors and how to implement them.
Shane Parrish, host of The Knowledge Project podcast, also interviewed Stutman in 2020. Ted also interviewed financial blogger, Morgan Housel. (See first blog post above.)
- Freakonomics Radio, “Should America (and FIFA) Pay Reparations and The Pros and Cons of Reparations” (Episodes 426 and 427)
In the summer of 2020, the social unrest kindled by the killing of George Floyd in Minneapolis, along with the rise of Black Lives Matter as a movement, created a flood of content and conversation around racial injustice in the United States, currently and historically. One of the words that appeared frequently, though often with confusingly different meanings, was reparations.
Steven Dubner, the host of Freakonomics Radio and co-author with Steven Levitt of the bestselling book Freakonomics, has a unique way of bringing the research of academic economics to a variety of current affairs. This two-part series looks at the racial wealth gap in America and interviews academics offering very diverse opinions of what could and should be done, including discussions of reparations.
If you’re interested in more Freakonomics Radio, Dubner’s interview with Whole Foods founder, John Mackey, “How to Succeed by Being Authentic (Hint: Carefully),” Episode 438 is also a very good 2020 listen.
- Malcolm Gladwell’s Revisionist History, “Dragon Psychology 101,” Season 5, Episode 1
Malcom Gladwell is a popular author (The Tipping Point, Blink, Talking to Strangers) and creative podcast host. Revisionist History is organized into 5 seasons. This first episode of 2020’s season 5 explores the little known world of art museums and how they acquire and manage their collections. The episode, “Dragon Psychology 101,” is named in reference to J.R.R. Tolkien’s hoarding dragon, Smaug, from The Hobbit. After an unusual story appeared about the Metropolitan Museum’s inventory, Gladwell wondered if all art museums have a hidden treasure hoard like a dragon?
Gladwell’s interest here is not in finance or economics directly though accountants do appear prominently in this episode. I recommend Gladwell because he tells a good story, with humor, whether you agree with his conclusions or not.
I’ve enjoyed revisiting each of these blog posts and podcast episodes. I hope you find some things that interest you and help provide some wisdom and understanding in preparation for whatever comes your way in 2021!