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Hi friends,

Happy Halloween! 

Financial markets got a little spooky this week, but spirits are still high. 

I've been tinkering with the newsletter and got feedback that it's now too truncated. I'll continue my quest for that Goldilocks sweetspot. 

Today's Contents:

  • Weekly Song: American Pie
  • Market Movement and Election Ready
  • Obviously the Future: No Code and Low Code
  • Around the World
  • Sensible Investing Good Reads
  • Escapist Financial Fiction

Weekly Song: American Pie 

The ultimate American classic. And what better week then leading up to an election. It was a contest between this and Thank U, Next by Ariana Grande, but we try to remain non-partisan here. 

For years, listeners struggled to make out the meaning of the song's lyrics. The most likely interpretation of the line 'the day the music died', according to the BBC based on McLean notes, is the 1968 riot at the Democratic National Convention in Chicago, when police brutally cracked down on demonstrators. What was revealed? "The dark underside of one of our most cherished institutions," he argues. Huh, interesting!

That historical event happens to be the centerpiece of The Trial of the Chicago 7 directed by Aaron Sorkin and released recently on Netflix. Do I recommend the film? Yes-ish. As this review suggests, it has all the strengths and weaknesses of any Sorkin film. I found it to be quite stressful to watch, but it does make clear that the social unrest we may be experiencing today is far from unique. 

American Pie by Don Henley

Now the halftime air was sweet perfume
While the sergeants played a marching tune
We all got up to dance
Oh, but we never got the chance
'Cause the players tried to take the field
The marching band refused to yield
Do you recall what was revealed
The day the music died?


We started singin' bye-bye, Miss American Pie
Drove my Chevy to the levee, but the levee was dry
Them good old boys were drinkin' whiskey and rye
And singin' "This'll be the day that I die
This'll be the day that I die"

Is your portfolio "election ready"? Does it matter?


Mind your behavioral finance lessons and manage your investor psychology. Oxford Risk estimates that during periods of high stress, investor losses can rise to about 6-7% a year from emotionally-guided investment decisions. Watch your recency bias and loss aversion. 

What does a Democratic presidency or Republican presidency mean for the S&P 500? On the whole, maybe not much. At least that's the takeaway from the chart below, which maps S&P periods by presidency. 

If you did want to bet on the outcome of the election, what should you buy for each potential outcome? 

Broadly speaking, analysts say Biden’s plan to raise corporate taxes could pressure company earnings. But they expect him to support infrastructure projects and renewable energy.

A second Trump term, meanwhile, may bring more tax cuts and extend de-regulation that could benefit the energy and financial sectors, while risking continued tensions with China.

More specifics here. 

What do betting markets say about the results on Tuesday? Will the election be clear by the end of the evening?



Taxes. How might those changes? Bloomberg put together an analysis of expected changes under each administration.
 

Obviously the Future: No Code and Low Code

I'm going to write on one trend every week that I predict will be unstoppable and will have sweeping implications over the next 10 years. 

What is No Code and Low Code? It's software and tools that one can use to build software products and automation without having to write any original code or write only a minimal amount of code. The implication is that anyone anywhere will be able to use these tools to build a product. The cost of development will go down significantly. 

What are some examples?
Zapier. Allows you to connect all your apps together and to automate actions. For example, every time I heart a Tweet, it creates a record of that Tweet in a Google sheet with the details. You want to try it for yourself? Jeremy at Automatter describes you how you could do for a venture fund flow here.

Webflow. It's a website creation tool that requires limited-to-no coding expertise for most functionality. They have super easy tutorials. Delivery Associates webpage runs on Webflow.

Carrd is an even simpler version. I built Declarative Statements on Carrd.

Airtable. I describe it as a more improved, more functional, better UX/UI version of Excel. That's an old person's description. 

Airkit. Builds low-code customer engagement tools for the enterprise. No-code/low-code took off early on the consumer side. The enterprise and back-end is just getting started and potentially much bigger. 

Why are you convinced?

It's a clear trend to those in the startup and tech communities because it's ubiquitous. It's part of the furniture. It's embedded in the mindset. It's tables stakes. In other communities or ecosystems, people seem completely unaware. 

The big market research firms get it. According to Forrester, in 2018, the no-code/low-code segment had a market size of $4B and was projected to grow to $21.2B by 2022. That's a ~50% CAGR.

MakerPad is at the center of this community. It most notably has a full suite of training programs on all the big no-code tools and has become a hub of growing activity demonstrating the economic opportunity that belies the demand. 

GenZ/Digital Natives lead the way and the on-ramp to this thinking lies in the gaming platforms children use today: Roblox (150M active users), Mindcraft, etc. 

How's it going to play out? 

Three megatrends will coverage. First, the usability of the no-code/low-code software and products will increase. Second, more GenZ and Digital Natives will enter the workplace, and they think naturally in these environments. And, third, market competition will intensify. As the companies and individuals that adapt to the trend and implement it effectively will thrive, those who do not will flounder. The difference between those will be stark.

Shopify allows employees to expense subscriptions to the game Factorio. I can attest personally that it is fun, addictive, and makes the advantages of automation stark. 

The differentiator will be seen in mindsets: Can you figure it out? Can you learn as you go? Can you adapt to new situations and see the potential of what you can build? 

I continue to be impressed by DS member, Janel, who writes a newsletter called Brainpint and ships no-code products including a recent operating system for newsletter management. 

What are the implications?

Those that can effectively use the tools of automation and automated analysis will get smarter and faster and thus drive value on a non-linear basis. For children and young adults, the risk of being on the wrong side of the digital divide or lacking access to the right nudges to sharpen your skills with the best tools is real.

My first job after college was as a business analyst for McKinsey. On one of my studies, I was helping a mid-level executive with modeling. We sat in front of his computer and opened Excel. I watched him pull out a calculator and start making calculations manually and entering the results in cells like it was a paper notepad. I've never feared for my employability since.

However, given the accelerated pace of change, it is not enough for professionals to think they can count on their 'management skills' or 'domain expertise' to stay relevant without continuing to learn and adapt to emerging tools. It seems wise to have a reasonable paranoia of unplanned obsolescence. Fast forward to today, I constantly ask myself "what are the things you are doing that seems like using a notepad on Excel"? 

Further no-code reading:
The Building Blocks of Tech
Makerpad Fund
The No-Code Generation is Arriving

Around The World


End SARS Movement in Nigeria. Well-written primer by Uzoma Bailey Ayogu on the complex and important issues regarding governance and justice in Nigeria. How the situation in Nigeria resolves itself will be an example for the continent and the world. 

Don't be Blind to China's Rise in a Changing World. Ray Dalio warns in an FT op-ed. He lists its strengths: It has achieved some of the world’s lowest Covid-19 case rates. Over the past year, its economy grew at almost 5 per cent, without monetising debt, while all major economies contracted. China produces more than it consumes and runs a balance of payments surplus, unlike the US and many Western nations. This year, nearly half the world’s initial public offerings will be in China, including Ant Financial’s $30bn listing,

The Rise of Tech in Southeast Asia: Reaping the Regional Dividend, a report by Openspace Partners (based in Singapore), making the case for the venture investment opportunity in SE Asia. 

Sensible Investing: Good Reads


The Market Curve by Sequoia. The analysis feels like Consulting 101 but it's worth being clear. Often you see market sizing analysis and it feels like teams just plucked a big number. Their suggestion: the two key things to understand are (a) how many potential customers are there, and (b) how much will each of them be worth to you if everything goes right. That's it. 

Community Corner

I see you, friends. 

Congratulations to Nalin Gupta whose energy company, Wabash Valley Resources, won a large grant from the Department of Energy for the coal plant to transform into the largest site of carbon capture using a carbon-net negative process. This is the forefront of the changes that need to be done on the industrial side to address climate change. 

Good luck to Ryan Fazio, the only member of DS (who I know of) who is on the ballot on Tuesday. Here are his final remarks to the voters of Greenwich, Stamford, and New Canaan, CT. We don't agree on everything (who does?), but I have huge respect for taking action and providing choice and competition in our democracy. Fingers crossed for you. 

Escapist Financial Fiction

Financial fiction is often loosely based on some reality or an amalgamation of half-truth out there in the world. Both books are easy-to-read and reflective of how professional choices impact personal realities. The storytelling is phenomenal and engrossing.

Lake Success is a 'big-hearted portrait of an imperfect family' about a hedge-fund manager in New York who is under investigation by the SEC and flees in search of his college sweetheart. Matt Levine was consulted in the writing.

The Glass Hotel is the latest from Emily St. John Mandel about the relationships and fall-out over a Bernie Madoff-inspired Ponzi scheme. Beautifully written and intertwined with plenty of relationship drama.

Both are good escapist tales if you are looking for a distraction to help clear your mind from immediate matters.

Do you know that in Washington State you can only vote by mail? It all just sort of works. 

Thanks for reading, friends. See you next week. Please always be in touch. 

Best,
Katelyn

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