CA(SA), CFA. Contrarian Economist-ish.
South Africa
Joined May 2010
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In case you're bored this weekend, here's this 25 minute read. I'm calling it my Dan Brown lite contribution - involving the Protestant Reformation and the Templars. With a not-all-that-surprising twist at the end. rollingalpha.com/2018/11/09/…
Hi @Fly_Airlink
I received an email at 04:39 this morning, telling me that flight 4Z106 (scheduled to leave at 14:40 today) will be departing at 04:00.
The sms arrived at 07:20.
Did I miss a 4am flight, or am I leaving at 4am tomorrow, or did your comms team mean 16:00?
Honestly, the poor know how to handle their money far better than the rich. They don’t have a lot of it, so every decision has to count.
Poverty is not “a failure to manage money”.
Wealth is not “the result of good decisions”.
It’s just the hand that you’re dealt.
It’s very hard to get anxious about any AI threats to wipe out humankind when you work in places with unreliable electricity and intermittent internet.
I wish AI all the very best of luck.
An important question for my fellow South Africans.
I didn’t watch the National Budget.
But is there anything more Nationally Boujee than waygu beef dried wors from the Pantry in Joburg?
Give that chef a ministerial portfolio, because they are taking all my money.
As a general question @FNBSA - why are remittances ONLY available through the app and not through online banking?
Jayson Coomer retweeted
The most useful razors and rules I've found:
1. Bragging Razor - If someone brags about their success or happiness, assume it’s half what they claim
If someone downplays their success or happiness, assume it’s double what they claim
2. High Agency Razor - If unsure who to work with, pick the person that has the best chances of breaking you out of a 3rd world prison.
3. The Early-Late Razor - If it's a talking point on Reddit, you might be early. If it's a talking point on LinkedIn, you're definitely late.
4. Luck Razor - If stuck with 2 equal options, pick the one that feels like it will produce the most luck later down the line.
I used this razor to go for drinks with a stranger rather than watch Netflix. In hindsight, it was the highest ROI decision I've ever made.
5. Buffett's Law - "The value of every business is 100% subject to government interest rates" - Warren Buffett
6. The 6-Figure Razor - If someone brags about "6 figures" -- assume it's closer to $100K than $900K.
7. Parent Rule - Break down the investments your parents made in you: Time, Love, Energy, and Money.
If they are still alive, aim to hit a positive ROI (or at least break even.)
8. Instagram Razor - When you see a photo of an influencer looking attractive on Instagram -- assume there are 99 worse variations of that photo you haven't seen.
They just picked the best one.
9. Narcissism Razor - If worried about people's opinions, remember they are too busy worrying about other people's opinions of them. 99% of the time you're an extra in someone else's movie
10. Everyday Razor - If you go from doing a task weekly to daily, you achieve 7 years of output in 1 year. If you apply a 1% compound interest each time, you achieve 54 years of output in 1 year.
11. Bezos Razor - If unsure what action to pick, let your 90-year-old self on death bed choose it.
12. Creativity Razor - If struggling to think creatively about a subject, transform it:
• Turn a thought into a written idea.
• A written idea into a drawing.
• A drawing into an equation.
• An equation into a conversation.
In the process of transforming it, you begin to spot new creative connections.
13. The Roman Empire Rule - Historians now recognize the Roman Empire fell in 476 - but it wasn't acknowledged by Roman society until many generations later.
If you wait for the media to inform you, you'll either be wrong or too late.
14. Physics Razor - If it doesn't deny the law of physics, then assume it's possible. Do not confuse society's current lack of knowledge -- with this knowledge being impossible to attain.
E.g. The smartphone seems impossible to someone from the 1800s -- but it was possible, they just had a lack of knowledge.
15. Skinner's Law - If procrastinating, you have 2 ways to solve it:
• Make the pain of inaction > Pain of action
• Make the pleasure of action > Pleasure of inaction
16. Network Razor - If you have 2 quality people that would benefit from an intro to one another, always do it.
Networks don't divide as you share them, they multiply.
17. Gell-Mann Razor - Assume every media article contains a % of false information.
Sandbox the article from your worldview until you've:
• Seen primary sources
• Spoken to 3 domain experts
18. Taleb's Surgeon - If presented with two equal candidates for a role, pick the one with the least amount of charisma.
The uncharismatic one has got there despite their lack of charisma. The charismatic one has got there with the aid of their charisma.
With a SARB interest rate announcement due this week, I’ve written a post on all the types of inflation that Central Bankers should not be worried about.
Because this interest rate hike would not be inflation-targeting, but exchange-rate-managing.
jaysoncoomer.com/2023/09/19/…
When history looks back and asks:
"To be clear, it was acceptable for people to die under your watch because of... geography?"
Minister in the Presidency Khumbudzo Ntshavheni says it is not the responsibility of the South African government to provide housing for illegal immigrants living in hijacked buildings. timeslive.co.za/politics/202…
Dear @Fly_Airlink - I think you need to relook at the tiering of your loyalty program. You ran your surveys and established that most folks want cash-back rewards. The problem is that most folks are not frequent flyers, so you have it all wrong.
I am a frequent flyer. I have top tier status on multiple airline loyalty programmes. And frequent flyers don't care about cashback rewards to do even more travel - we're travelling because we have to, not because we want to. We just want it to be easier. I am in airports on Sundays and Fridays and Saturdays and Mondays and Thursdays. I am in queues to check in and queues for security and queues for immigration and I'm standing around aimlessly waiting for a bag if you forced me to check it in.
I want frequent flyer status so that I can spend less time in the airport. Priority check-in, priority boarding, priority luggage. I just want to not be travelling for any longer than I need to be.
Stop tiering on sectors flown while ignoring the class of travel - that just forces me to wait longer for the convenience. I'd happily travel business for business just to scale a tier for a year of less inconvenient travel.
You're great as an airline, but your current reward program feels like a punishment for frequent flying. It's catering for the wrong audience. PLEASE fix it.
Jayson Coomer retweeted
No banks do, it’s called fractional reserve banking.
SA banks are however far better capitalised than many global banks and have robust tier one capital ratios.
Don’t worry too much about an SVB type scenario playing out here, our reserve requirements are far better. – at Cape Town, South Africa
𝗧𝗵𝗶𝘀 𝗶𝘀 𝘂𝗻𝗯𝗲𝗹𝗶𝗲𝘃𝗮𝗯𝗹𝗲, 𝗦𝗼𝘂𝘁𝗵 𝗔𝗳𝗿𝗶𝗰𝗮𝗻 𝗯𝗮𝗻𝗸𝘀 𝗱𝗼𝗻’𝘁 𝗵𝗮𝘃𝗲 𝗲𝗻𝗼𝘂𝗴𝗵 𝗰𝗮𝘀𝗵 𝗼𝗻 𝗵𝗮𝗻𝗱 𝘁𝗼 𝗺𝗲𝗲𝘁 𝘄𝗶𝘁𝗵𝗱𝗿𝗮𝘄𝗮𝗹𝘀
( FY22 )
💸FNB = 𝗥𝟮𝟭𝟲 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
💸 Standard Bank = 𝗥𝟮𝟭𝟮 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
💸 ABSA = 𝗥𝟲𝟳 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
💸 Nedbank = 𝗥𝟰𝟱 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
💸 Capitec = 𝗥𝟯𝟳 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
*𝗕𝗮𝗻𝗸 𝗿𝘂𝗻𝘀 𝗵𝗮𝗽𝗽𝗲𝗻 𝘄𝗵𝗲𝗻 𝗱𝗲𝗺𝗮𝗻𝗱 𝗳𝗼𝗿 𝘄𝗶𝘁𝗵𝗱𝗿𝗮𝘄𝗮𝗹𝘀 𝗲𝘅𝗰𝗲𝗲𝗱 𝘁𝗵𝗲 𝗰𝗮𝘀𝗵 𝗼𝗻 𝗵𝗮𝗻𝗱. People rush to get their money out and the bank can’t keep up - causing a financial crisis.
𝗧𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝗿 𝗮𝗻𝗱 𝘄𝗲𝗹𝗹-𝗰𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗲𝗱 𝗯𝗮𝗻𝗸𝘀 𝘀𝘂𝗰𝗵 𝗮𝘀 𝗙𝗡𝗕 𝗮𝗻𝗱 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱 𝗕𝗮𝗻𝗸 would be able to lend money to their regional peers if one of the other banks were short of cash to meet demands.
𝗬𝗲𝘀, 𝗯𝗮𝗻𝗸𝘀 𝗯𝗼𝗿𝗿𝗼𝘄 𝗳𝗿𝗼𝗺 𝗲𝗮𝗰𝗵 𝗼𝘁𝗵𝗲𝗿 𝘁𝗼𝗼.
They can borrow from you or they can borrow from their peers, 𝘁𝗵𝗲 𝗳𝗼𝗿𝗺𝗲𝗿 𝗶𝘀 𝗸𝗻𝗼𝘄𝗻 𝗮𝘀 𝘁𝗵𝗲 𝗱𝗲𝗽𝗼𝘀𝗶𝘁 𝗿𝗮𝘁𝗲 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗹𝗮𝘁𝘁𝗲𝗿 𝗶𝘀 𝘁𝗵𝗲 𝗶𝗻𝘁𝗲𝗿𝗯𝗮𝗻𝗸 𝗹𝗲𝗻𝗱𝗶𝗻𝗴 𝗿𝗮𝘁𝗲.
Deposit Rate = 6.74% (May 23)
Interbank Rate = 8.40% (Aug 23)
𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝗱𝗼 𝘆𝗼𝘂 𝗯𝗼𝗿𝗿𝗼𝘄 𝗮𝘁 𝗮𝗴𝗮𝗶𝗻??
Yes, you heard correctly.
Banks get to create money, charge you interest from the money they create, then also help each other out at better rates when all of you decide you’ve had enough.
That’s todays post, retweet and follow me @talkcentss for more.
It amazes me how folks will just scaremonger blind.
Our economies have developed on credit. Banks are credit institutions. They lend money. They’ll also hold your deposits for you if you want.
If you don’t want to do that, go buy gold or crypto, and then shut up.
JustMy2Cents
𝗦𝗼𝘂𝘁𝗵 𝗔𝗳𝗿𝗶𝗰𝗮𝗻 𝗕𝗮𝗻𝗸𝘀 𝗼𝘄𝗲 𝘁𝗵𝗶𝘀 𝗺𝘂𝗰𝗵 𝗺𝗼𝗻𝗲𝘆 𝘁𝗼 𝗱𝗲𝗽𝗼𝘀𝗶𝘁𝗼𝗿𝘀, 𝗯𝘂𝘁 𝘁𝗵𝗲𝘆 𝗱𝗼𝗻’𝘁 𝗵𝗮𝘃𝗲 𝗶𝘁 𝗮𝗹𝗹 🤯
(FY22)
🏦Standard Bank = 𝗥𝟭.𝟴 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻
🏦FNB = 𝗥𝟭.𝟰𝟲 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻
🏦ABSA = 𝗥𝟭.𝟮𝟰 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻
🏦Nedbank = 𝗥𝟭.𝟬𝟯 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻
🏦Capitec = 𝗥𝟭𝟰𝟰 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
*These deposits are obligations that the bank has to meet, in other words, it’s a liability to them, because they owe you that money.
𝗟𝗲𝘁 𝗺𝗲 𝗘𝘅𝗽𝗹𝗮𝗶𝗻:
Banks are required by the central bank (SARB) to maintain only a certain % of their deposits as reserves.
𝗧𝗵𝗲 𝗿𝗲𝗮𝘀𝗼𝗻:
*If you walk in to the bank requesting your money, they must have those funds available for you (𝗻𝗼𝘁 𝗹𝗼𝗰𝗸𝗲𝗱 𝘂𝗽 𝗶𝗻 𝗶𝗹𝗹𝗶𝗾𝘂𝗶𝗱 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀)
This is known as 𝘁𝗵𝗲 𝗿𝗲𝘀𝗲𝗿𝘃𝗲 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁, and as of June 2023, it stood at 2.5%.
𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻?
It means 𝗯𝗮𝗻𝗸𝘀 𝗼𝗻𝗹𝘆 𝗵𝗮𝘃𝗲 𝘁𝗼 𝗸𝗲𝗲𝗽 𝗮 𝗰𝗲𝗿𝘁𝗮𝗶𝗻 % 𝗼𝗳 𝘁𝗵𝗲𝗶𝗿 𝘁𝗼𝘁𝗮𝗹 𝗱𝗲𝗽𝗼𝘀𝗶𝘁𝘀 𝗹𝗶𝗾𝘂𝗶𝗱 to meet demand for withdrawals. The rest can be lent out and invested.
𝗙𝗼𝗿 𝗲𝘃𝗲𝗿𝘆 𝗥𝟭𝟬𝟬 𝘁𝗵𝗮𝘁 𝗶𝘀 𝗱𝗲𝗽𝗼𝘀𝗶𝘁𝗲𝗱, 𝘁𝗵𝗲 𝗯𝗮𝗻𝗸 𝗼𝗻𝗹𝘆 𝗻𝗲𝗲𝗱𝘀 𝘁𝗼 𝗸𝗲𝗲𝗽 𝗥𝟮.𝟱𝟬 𝗶𝗻 𝗿𝗲𝘀𝗲𝗿𝘃𝗲 (so if enough of you go in all at once, the bank is going to kak) 😂😅
Let’s leave it at that today.
More to come, so retweet, and follow @talkcentss
ALT *𝗜𝗻 𝟮𝟬𝟮𝟮, 𝗦𝗼𝘂𝘁𝗵 𝗔𝗳𝗿𝗶𝗰𝗮’𝘀 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗯𝗮𝗻𝗸𝘀 𝗺𝗮𝗱𝗲 𝗮 𝗰𝗼𝗺𝗯𝗶𝗻𝗲𝗱 𝗽𝗿𝗼𝗳𝗶𝘁 𝗼𝗳 over 𝗥𝟭𝟬𝟬 𝗯𝗶𝗹𝗹𝗶𝗼𝗻
Well, this is just bad advice. I’ve definitely seen pitch decks that have desperately needed a designer.
The reality is: you tell a story in a pitch deck.
If you have a bad story, design won’t help. If you have a good story, design helps you communicate that story effectively.
Pitch-deck advice: I don't think I have ever seen a fundraising deck getting better by using a designer to design it. The same goes for using fancy tools like Figma, Keynote, Pitch.com, or Canva. At @ycombinator we recommend people to use Google Slides and keep it simple.
The two mistakes founders make are believing that the creative capabilities of the tools make a better deck. The second mistake is believing that the design is important.
The most creative people operate under constraints. And the most powerful tools are your words and storytelling. Clear communication and relatable storytelling allow a listener to put themselves in the seat of the person having the problem you are solving. The best way to visualize this is with real photos of real people having these problems.
The best fundraising decks have this structure:
1) Headline that concludes the point you are making
2) 3-4 bullets with evidence towards the point you are making
3) Repeat until you've covered all conclusions
4) Wrap this in a storytelling narrative - tie the slides together with a story
5) Whenever possible, only use real photos and if you use screenshots, zoom in on the thing that tells the story
The exception to the "don't hire a designer rule" is when the founder themselves is a designer. They know what is important about this business - another person will never know this.
Jayson Coomer retweeted
What's tougher?
a) CEO of a 50,000-employee company or
b) CEO of a company from 0 to 10,000 employees?
Both are demanding jobs, but the answer is (b).
The CEO of a company from nothing to 10,000 people is the most complex professional challenge possible.
--
CEOs who take their company from founding to 10,000+ employees are rare.
But that doesn't explain why people like me are in awe of those that do it.
Why?
--
The CEO's job changes radically as the company grows.
The job will be 7 or 8 different jobs over that period.
Many stages require precisely the opposite mindset and skills of the previous step.
--
Let's look at who the CEO manages at each stage of growth:
0 employees: As a founding CEO, you are a player. An individual contributor (IC) usually builds stuff.
10ish employees: As the company grows (10 people), you do more managing. You’re doing IC work and managing people. So, a player-coach.
50ish employees: The company grows again (let’s say to 40-50 people). Your CEO job changes again to manage only middle managers.
150ish employees: To grow again up to 150+, your CEO job changes to team building and culture and strategy. You’re leading VPs who manage middle managers. It's about vision and leadership now.
500ish employees: Again, at 500+, the company reaches a ceiling where suddenly SVPs/GMs get involved. Now there are four layers of reports. You need to elevate again to survive.
As each layer of management gets added, your job shifts upwards and changes again and again.
—
So far, I’ve explained this by discussing who the CEO manages.
But other things impact the CEO's job drastically, too:
• From one product to multiple.
• From managing generalists early on to specialists.
• Investors from founder-led to institutional.
• Culture changes from entrepreneurial to corporate.
• Company goes from a nimble go-kart to a supertanker that takes years to alter course.
And much more.
—
It takes incredible self-awareness, capacity to change, and ability to produce to make those changes.
All while the company grows rapidly.
I know -- I failed as a CEO several times to get to the 50-ish employee level.
--
And that is why people speak in reverence to people who went from tiny to huge as CEO.
It requires a unicorn of a person to pull it off.
I stand in awe.
You've forgotten all the friends, well-wishers and distant relations.
There are a whole bunch of levels that involve new circles of dependents.
For example, Level 2 and a half: where you can pay your parents' medical bills and not worry about compromising their health
Folks who discuss apocalyptic hyperinflation often seem to have this idea that at some point, everyone “wakes up” and realises that money is not worth anything.
It’s a fun idea, but it’s only real in the sense that one day the sun will explode and life will be wiped out.
Money is not worth anything, and that is fine. It is a measurement tool. Realising that money is a measurement tool is something that we all already understand. It’s a salary number, a mortage repayment figure, a price in a supermarket, a stock of deployable value in a bank account to buy assets. To be relative to each other, those values need a common denominator. That’s money.
Panicking that the denominator does not have inherent value is like worrying about gasoline not being a motor car. You get bad gasoline, which can break an engine. But you don’t suddenly wake up and “realise” that your tank of gas doesn’t have an engine and wheels.
Economies are engines and they run on money. Good economies have good money. If the economy breaks down, their money will be useless. But then we’d have a much bigger problem on our hands.
I think you’ll find most folks saying “Some interest rate tightening was needed - but using the interest rate to control the exchange rate is no longer inflation-targeting. It’s a managed exchange rate regime. If there’s a mandate change at the SARB, let’s be frank about it.”
This is COMPLETELY the wrong lesson to learn here.
What about “Clearly the market thinks your decision is foolish, and was hoping that someone with some sense might prevail.”
#seeprevioustweet
Instagram has just suggested that I follow the account of a funeral home in Sydney.
I am not sure what I have done to the algorithm, but I have the sense that it took it personally.
Dear SARB
You announced a significant 50bps interest rate hike to strengthen the ZAR, and… the ZAR instantly and just as dramatically weakened.
If your hypothesis was “By increasing interest rates, the Rand will strengthen to tame food and fuel inflation”, and that action has immediately failed, where to from here?
Here’s my worry. Instead of recognizing that interest rates are not a universal solution to all inflation types (and especially not inflation caused by weakened exchange rates, which you should ignore), you’re going to treat this as “We just need to double-down - the market was pricing in a much larger interest rate hike expectation, so let’s try and meet it.”
Back up, back out, and then back off.
