Complexity Investing & Semiconductors (with NZS Capital)

126 snips

Nov 3, 2021

Guest

Jon Bathgate

Guest

Brinton Johns

Brinton Johns and Jon Bathgate, public equities investors at NZS Capital, dive into the intriguing world of complexity investing and its intersection with the semiconductor market. They discuss how complexity theory shapes their investment philosophy and why adaptability is crucial in uncertain markets. The conversation then shifts to the critical role semiconductors play in the information age, touches on innovations like silicon carbide, and highlights the landscape of key industry players. Their insights reveal the intricate dynamics that drive both technology and investment decisions.

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ANECDOTE

Ants and Resilience

Ants optimize for resilience and longevity, not productivity, by having half the colony inactive.
This contrasts with companies focused on short-term productivity and quarterly earnings.

INSIGHT

Buffett and Munger's Laziness

Warren Buffett and Charlie Munger's investment approach embodies the ant's resilience strategy.
Their focus is on long-term steady returns, not maximizing short-term productivity.

ADVICE

Sustainable Growth

Prioritize durable, long-term compounding growth over hypergrowth.
Companies prioritizing long-term thinking, often founder-led, offer more sustainable value.

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Complexity

The Emerging Science at the Edge of Order and Chaos

M. Mitchell Waldrop

M. Mitchell Waldrop's book delves into the world of complexity science, exploring how individual elements spontaneously form intricate systems like ecosystems and economies. It highlights the work of luminaries at the Santa Fe Institute, including Nobel laureates Murray Gell-Mann and Kenneth Arrow, and their revolutionary discoveries that could transform multiple scientific disciplines. The book offers a compelling narrative about the scientists behind this emerging field and their quest to understand complex systems.

The Origin of Wealth

The Radical Remaking of Economics and What It Means for Business and Society

Eric Beinhocker

In this book, Eric D. Beinhocker argues that modern science provides a radical perspective on how wealth is created within the global economy. He posits that the economy is a 'complex adaptive system' where physical technologies, social technologies, and business designs interact to create novel products, new ideas, and increasing wealth. Beinhocker explores how 'complexity economics' offers insights into issues such as creating adaptive organizations, the evolutionary workings of stock markets, and new perspectives on government policies. The book takes readers on an entertaining journey through economic history, from the Stone Age to the modern economy, highlighting the three-step evolutionary formula of differentiate, select, and amplify as the key to wealth creation.

The Idea Factory

Bell Labs and the Great Age of American Innovation

Jon Gertner

The Idea Factory traces the origins of some of the twentieth century's most important inventions, such as the transistor, laser, digital communications, and cellular telephony. The book focuses on the lives and work of brilliant and eccentric scientists like Mervin Kelly, Bill Shockley, Claude Shannon, John Pierce, and Bill Baker, who spent their careers at Bell Labs. It delves into the organizational structure and strategies that enabled Bell Labs to sustain a golden age of innovation, including the physical layout designed for serendipitous interactions and the creation of courses to diffuse knowledge. The book also distinguishes between 'invention' and 'innovation,' highlighting Bell Labs' involvement in the full vertical stack from theory to marketable products.