Among those "in the know," the letters and writings of former Marathon Asset Management's former fund manager Nicholas Sleep are worth their weight in gold. Imagine them as a less discovered "Margin of Safety." Sleep's musings, from as long as 16 years ago, are back in the spotlight, in no small part because his work has proven to be so prescient. This Financial Times (another here) article highlights some of his thinking and features a link to a thesis he wrote on Costco in 2004. The FT puts this spin on the piece: "Sleep's pitch was just as much about the fact the market hadn't priced in Costco's 'perpetual growth' as much as it was about its customer-orientated business mode." Customer-orientated business strategies are fascinating and Sleep's focus on customer centricity reminds me of Benchmark General Partner Sarah Tavel's idea that customer happiness can be a moat source. Tools such as the Net Promoter Score can be helpful to a certain extent in gauging a company's customer focus (or at least perception), but I'm curious if anyone has any frameworks they use to better understand how well a company serves its customers. It tends to be a tough question to answer.

Lindsell Train's occasional thought pieces are insightful (recent example here) and I recently stumbled upon this video conference interview with the cofounder of the London-based asset manager, Nicholas Train, on long-term investing. Train believes that COVID has accelerated trends that were previously under way: "It's evident we're having this, to me rather extraordinary filmed discussion over this device right now. Probably inconceivable five years ago, this extraordinary acceleration in the adoption of digital products and services, that definitely is a result of the virus." The pull-forward of digital adoption, broadly speaking, is an investment theme that a number of managers have addressed, but does the trend continue when we eventually return to normal? How many of these new digital habits will stay? Train also has a suggestion for investors: do yoga. "That's become an increasingly valuable part of my life over the last 10 or 15 years," he says. "Yoga practice makes you a better person at virtually every level. I would say I'm definitely a better investor because of the yoga practice."

Morgan Housel, a recurring author featured on Beach Reads, wrote a book to be published next month called "The Psychology of Money." This WSJ review by famed financial author Jason Zweig praises Housel's writing, and this point resonated with me. "How, asks Mr. Housel, did a janitor 'with no college degree, no training, no background, no formal experience and no connections massively outperform' many professional investors? Investing isn't an IQ test; it's a test of character... Mr. Read [the janitor] could defer gratification and had no need to spend big so other people wouldn't think he was small. From such old-fashioned virtues great fortunes can be built." The anecdote illustrates perhaps the key takeaway of the book: "Many rich people aren't wealthy, Mr. Housel argues, because they feel the need to spend a lot of money to show others how rich they are. He defines the optimal savings level as 'the gap between your ego and your income.' Wealth consists in caring less about what others think about you and more about using your money to control how you spend your time."

Given the expertise and capital at the direction of Bill Gates, his interview on COVID with Wired Magazine is well worth a read. While he isn't happy with how things have gone thus far, especially in the US, he remains optimistic: "There's been trillions of dollars of economic damage done and a lot of debts, but the innovation pipeline on scaling up diagnostics, on new therapeutics, on vaccines is actually quite impressive. And that makes me feel like, for the rich world, we should largely be able to end this thing by the end of 2021, and for the world at large by the end of 2022. That is only because of the scale of the innovation that's taking place." While those dates still sound like the distant future, having some sort of timeline is soothing, as is the fact that treatments are improving. "We've had about a factor-of-two improvement in hospital outcomes already, and that's with just remdesivir and dexamethasone," Gates says. "These other things will be additive to that." We're far from through with COVID, but some green shoots appear to be emerging.

Whether for good or ill, the internet gives power to individual voices so that people and groups that previously had no way to have their message heard can build audiences and share information for practically zero cost (more here). However, according to this article, much of the free information online is misinformation or at least influenced by the interests of private groups: "It's concerning that the Hoover Institute will freely give you Richard Epstein's infamous article downplaying the threat of coronavirus, but Isaac Chotiner's interview demolishing Epstein requires a monthly subscription, meaning that the lie is more accessible than its refutation." This poses real problems that can have ugly real world consequences. The author poses a number of solutions for "free" information, but ultimately this is a tricky issue (I don't agree with all of the author's suggestions). What I think is most important here is that in many cases, information creation (e.g. work published in academic journals) is largely funded by the public, but then sold back to the public. The author provides the following quote from a University of Johannesburg professor that explains this issue: "The costs of the research production are borne by the universities, and as a result, by public monies, in most cases. Then, private companies publish the research, and charge the universities and public institutions for the very research outputs that they paid for. This is effectively the subsidy of the private sector by public money. There is a myth that this is an example of entrepreneurialism. In my view, all it does is facilitate enrichment at public cost with huge consequences for those most disadvantaged." Fixing arbitrage opportunities such as the one outlined here is a good first step in making quality information more widely available. PS: Is anyone bothered by the fact that some articles featured in Beach Reads are paywalled? I don't have a great solution to this issue but I'm open to suggestions.

Moving on from issues with free versus paywalled journalism, this piece from Wired Magazine examines the impact that using cookies - or not - may have on advertising revenue. The result is far from expected. When Dutch public broadcaster NPO - the "BBC of the Netherlands" - abandoned using cookies to track users on its website in January, ad revenue increased. "In January and February this year, NPO says, its digital ad revenue was up 62 percent and 79 percent, respectively, compared to last year." This is borderline unbelievable - the ad tech industry is massive (and horribly complex) and can consume 30% of advertising economics, according to this article. The author posits that one benefit of more profitable advertising may be more comprehensive journalism, in part by reducing the need to place content behind paywalls: "The future of digital publishing could be one in which a lot of money shifts back to the organizations producing the articles people want to read and the videos they want to watch. If advertisers start paying to appear in a certain context rather than to target a certain user, it will advantage publishers whose content is actually good—and put out of business the long tail of low-quality or outright fraudulent sites that currently soak up much of the money spent on automated programmatic advertising."

Disclaimer: To the extent that Beach Reads discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. The companies and or securities referenced and discussed do not constitute an offer nor recommendation to buy, sell or hold such security, and the information may not be current. The companies identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the companies identified was or will be profitable. Beach Reads does not constitute a recommendation or a statement of opinion, or a report of either of those things and does not, and is not intended, to take into account the particular investment objectives, financial conditions, or needs of individual clients.