Juggling Dynamite

Daniel Kahneman’s work in behavioral science has been fundamental in developing my understanding of humans and our vulnerability to repeated mental errors, especially in matters of money. Michael Lewis’ new book (and the discussion below) helps to fill in some context for Kahneman’s life and thought evolution, with partner Amos Tversky.  Their work is also useful in warning of the human tendency to prefer leaders and advisors who offer the most confidence and certainty, even though their over-confidence is actually dishonest and often dangerous.

Bestselling author Michael Lewis discusses his new book, “The Undoing Project,” which tells the story of two Israeli psychologists–Amos Tversky and Daniel Kahneman–and their groundbreaking work uncovering the hidden biases of the human mind. Here is a direct video link.

Twelve percent of millennials identify as vegetarians and meat consumption in the U.S. fell 15% in 2015. Plant-based proteins are expected to make up a third of the protein market by 2054.

In a world of 7.4 billion people with rising diet-based illness, climate pollution and increasingly scarce water, vegan foods are an obvious growth area.  See: Country’s largest meat co just started a VC fund for vegan ‘meats’:

On Monday, America’s largest meat producer announced that it had launched Tyson New Ventures LLC, a $150 million venture capital fund to focus on companies that are developing “breakthrough” technology and business models in plant-based and sustainable protein options.

“We believe we can accelerate the growth of startups through our capabilities in such areas as food and culinary research and development, sourcing, insights, customer relationships and distribution. By doing so, we hope to materially advance the state of the U.S. and global food system.”

Animal spirits indeed:  Professor Shiller says that, near-term, Trump-euphoria is making him question the relevance of historically reliable valuation metrics.  (You mean ‘this time is different?’  Heard that one in 1998-2000 and 2006-08, as well).

Still he acknowledges that at current over-valuations, stocks are priced to under-perform 10-year Treasury bonds for the next decade (even though 10-year yields are less than 2.4% today) .  Translation: stay at the craps table and party for a while if you like, but realize the hangover is likely to cause capital deficits for the next 10 years, at least.  Good trade-off?  Here is a direct video link.

Robert Shiller, Yale University professor of economics, discusses why the current market environment is reminiscent of the stock market crash of 1929.

Here is the picture of relative valuations for US stocks since 1900.  Everyone has to decide how much of their savings they are willing to gamble with and can afford to lose.