Newsletter #1

Morgan Housel on Risk, Apple's latest acquisition which went under the radar, Hertz's bankruptcy filing, Varta's stupendous rise as a battery powerhouse and Epic Games' analysis by Mathew Ball

1. The Three Sides of Risk

   If you’re going to read just one article from this - make it this.
   
   "There are three distinct sides of risk:

   1. The odds you will get hit.
   2. The average consequences of getting hit.
   3. The tail-end consequences of getting hit.
   
   The first two are easy to grasp. It’s the third that’s hardest to learn, and can often only be learned through experience. But once you go through something like that, you realize that the tail-end consequences – the low-probability, high-impact events – are all that matter. In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on. We spent the last decade debating whether economic risk meant the Federal Reserve set interest rates at 0.25% or 0.5%. Then 36 million people lost their jobs in two months because of a virus. It’s absurd."

2. Apple acquires NextVR

   The technology startup has been a pioneer in broadcasting sports and entertainment events through virtual reality and only recently got acquired by Apple in a deal reportedly worth $100 million.

3. The tiny battery powering Airpods built a $1.9 bn fortune

   Thirteen years ago, no one wanted to buy a money-losing hearing-aid battery maker. No one but Michael Tojner. Against all odds, Austria's 'Mr 300 percent' turned that $40 million investment into a $1.9 billion fortune (thank you, Apple!). Now he has to fend off the copycats.

4. Petition’s brilliant analysis of Hertz

   The combination of an extremely levered balance sheet + a deteriorating business environment led to Hertz, an American car rental company, filing for bankruptcy. Last year, all US rental car companies bought nearly 2 million automobiles - or about 10% of the US auto industry production.

5. The Epic Games Primer: Parts I-VI Directory

   Mathew Ball’s incredibly detailed analysis of Epic Games, a video game and software developer, using the Flywheel approach is a throwback to Walt Disney’s flywheel of Disney.

   

   That’s it for this one - till next time!