What I read last week

Financial Markets

The year 2020 was an extraordinary one, especially for financial markets. If you walked away from the stock market and just looked at the year-end returns, you would think it was just an ordinary year. Under the surface, there was plenty of fascinating stuff going on.

The year 2020 in returns

The importance of network effects in business and finance can’t be overstated. I’m increasingly drawn to this concept of interaction and its influence on market participants.

Just how important are network effects in finance?

I read a lot of research throughout the week and I’m constantly looking for new resources. There are plenty of good websites that keep track of worthwhile investment whitepapers.

 A collection of whitepapers published in December 2020

The market environment which unfolded over the past decades is basically uncharted territory for asset allocators. Textbook theories do not necessarily apply here and the implications for portfolio construction are not straightforward. Due to historically low bond yields, institutions tilted their portfolios heavily in favor of equity investments and influenced overall market dynamics.

Uncharted market territory

Implications for asset allocation (Podcast)

Business & Strategy

Much has been written about the impact behavioral design can have on people. The importance of default settings, be it regarding savings decisions or user data transparency is well described in the following article by Ben Thompson.

Maybe we should rethink our own “default” behavior?

Should we aim for new defaults?

Over the last decades, the cost of solar energy production has decreased significantly. As a result, companies are now building an increasing number of solar power plants, where the low cost of solar panels allows significant oversizing.

In the future, the surplus energy could be used for the production of hydrogen or stored in batteries.

Optimizing grid capacity

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