Sep 17, 2021 Sign Up

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"I said no a lot to what seemed like a lot of money... What's good for you in the short run is not always good for you in the long run." — Anthony Bourdain

Good morning and Happy Friday! Massachusetts fined MassMutual $4.75 million for failing to supervise its agent, Keith Gill aka ‘Roaring Kitty’ over the GameStop saga earlier this year #LmaoOK. Fed chair JPow ordered staff to review the central bank’s ethics rules after several Fed presidents disclosed large investments and stock trades (here we go again).

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1. Story of the Day: World's Biggest Wealth Drop

Who's lost more wealth than anyone this year? No, it's not Bill Hwang who famously lost $20 billion in 2 days. It's Colin Huang, the founder of Chinese e-commerce platform Pinduoduo ($PDD). Huang’s fortune has dropped by more than $27 billion after the company’s stock plunged as China cracked down on its internet giants.

It’s the starkest example of how the tide has turned for China’s billionaire class as President Xi Jinping calls for “common prosperity” and reins in the country’s private-sector companies. PDD is among the tech giants that have been pledging current and future corporate profits to invest in philanthropy projects. 

PDD is more vulnerable to the crackdown compared to those peers with mature and profitable models like Alibaba and Tencent. PDD’s American depositary receipts have dropped 44% this year, compared with a 33% decline for Alibaba & 20% decline for Tencent.

Huang, who owns 28% of PDD, founded the company in 2015 and quickly built it into an e-commerce giant by pioneering community buying. The company’s market value reached a peak of $178 billion before falling to about $125 billion.

Short Squeez Takeaway: Colin Huang is probably not losing much sleep over the recent drop in his net worth. He is still worth a cool $35 billion. But with President Xi piling on the pressure on big tech to close the wealth gap, his fortune could shed a few more billion.

Source: Bloomberg

2. Markets Rundown

• US stocks finished an up-and-down day mixed, with the Nasdaq managing to register a slight gain, as August retail sales showed an unexpected rise and a measure of activity in the Federal Reserve’s Philadelphia district came in stronger than expected.

Movers & Shakers

• (+) Avis ($CAR) +10% after Bank of America upgraded Avis Budget to buy from neutral.
• (+) DoorDash ($DASH) +6% after Bank of America upgraded the food delivery company to a buy rating from neutral.
• (–) Freeport-McMoRan ($FCX) -7% as the price of metals, including silver and copper, pulled back.
  

3. Top Reads

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4. Book of the Day: A Thousand Brains: A New Theory of Intelligence

A bestselling author, neuroscientist, and computer engineer unveils a theory of intelligence that will revolutionize our understanding of the brain and the future of AI.

For all of neuroscience's advances, we've made little progress on its biggest question: How do simple cells in the brain create intelligence?

Jeff Hawkins and his team discovered that the brain uses maplike structures to build a model of the world-not just one model, but hundreds of thousands of models of everything we know. This discovery allows Hawkins to answer important questions about how we perceive the world, why we have a sense of self, and the origin of high-level thought.

A Thousand Brains heralds a revolution in the understanding of intelligence. 

5. Daily Visual: How Much Do Countries Spend on Education
Education spending as a share of GDP (2018)

Source: Statista

6.  Daily Acumen: How to Win with Game Theory

When one is confronted with a situation that’s truly zero sum where one party is going to win and the other party is going to lose, a situation is very complicated and sometimes difficult to analyze. Game theory spent much of its early days analyzing zero sum games and trying to figure out what’s the best strategy.

It’s a little complicated because it depends critically on how sophisticated you think the other party is. If they’re very, very smart, the chances that you’re going to outthink them are not very high. In such a situation often times the best strategy is very counterintuitive, because it involves flipping a coin or rolling a dice or doing something random that involves luck.

And in fact, game theory has shown that this is good, solid, mathematically well-founded advice, that often times what you want to do is engage in a kind of random strategy—game theorists call this a mixed strategy—in order to make sure that your opponent can’t get the leg up on you.

The nice thing about these random strategies is that they ensure that your opponent can never outthink you. So even if you think your opponent is a little smarter than you or a little bit more sophisticated than you or has a little bit more information than you do, the fact that you’re being random to a certain extent means that they can’t outthink you.

Source: Big Think

7. Memes of the Day

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