Health Levers

Levers are few things that we have control over that affect a particular outcome. Here I'm thinking about health and I mentioned the following levers an earlier post.   

-Eat

-Sleep

-Stress

-Community

-Exercise

I believe these are the most important levers that have an effect on quality of life as measured by:

-Mental wellbeing (management of stress, anxiety but also excitement and positive mood)

-Lifespan (length of life)

-Healthspan (the area under of the curve of how we feel x how long we live)

-Mobility (lack of back/neck pain, ease of moving around in old age)

From here, there are a whole list of tactics to try an improve on all of these areas. 

-Not leaving sweets and beer around the house is a better strategy than "willpower."

-Fasting reduces caloric consumption (rules of no eating before noon and after 8pm)

-Eye mask/blackout curtains and ear plugs for sleep

-Leaving your phone outside of the bedroom (don't let it be the last/first thing you see between sleep)

-Easing into exercise (2min the first day and building up verrrrrry slowly over time helps habit formation)

-Meditation (one I do not do yet at the moment)

-Deadhang, up dog and down dog, camel and lunge/warrior are some of the best poses for mobility (spine, chest, hips are just big parts of your body)

-DL, Squat, Bench/push ress, Row are the best lifts for strength (body can squat, lunge, press, pull, walk and twist - and these work out 4 out of 6)

There's also a wholistic nature to health. Stress manifests itself in various ways such as overeating, abusing alcohol, stiffness in lower back or lack of sleep.

Investment Mental Models

 I supposed this whole blog is largely a series of mental models that I've built up over time. But here I'll list a bunch of them that relate to investing without describing them too much. 

1. Under earning or passes off savings to the customers (COST, DPZ)

    b. Monopolies that have not yet flexed their pricing powers

2. Spawning with an existing strategy and have a large runway - or what Charlie might say riding a wave (MCO/SPGI in corp debt, AMZN in ecom and cloud)

3a. Spawning different businesses (a lot of the big tech companies, IAC)

    b. A distributor that can add new lines of business 

4. Low cost producer (HIFS, PGR/Geico, Saudi Aramco)

5. Provides such a good experience that it grows TAM (UBER, DASH, ABNB, VMEO, potentially ANGI, online gambling)

6. Rollup - need to be careful that you aren't buying lemons/ better to buy from incentivized sellers (CSU.TO, RICK)

7. Ecosystem control (TCEHY, BABA, AMZN)

8. Marketplace since it reduces competition (ETSY, CPRT, FB)  

 

Health is Wealth

 As I get older, I am appreciating the effects of developing healthy habits. After doing cursory reading, it seems to me like a person who eats well, sleeps well, has a good community around them and controls stress can outlive someone by quite margin. I would throw out a guess that someone with 1 sigma of better of habits in all 4 departments than avg (in the US) can outlive someone who is 1 sigma worse by 10-20 years. 

Another way I see it is that today is the youngest I will ever be. And therefore my body and health function will necessarily decrease over time, and more noticeably in my 40's and 50's, and the 2nd derivative will also increase over time. And as this happens, my health will be of greater and greater importance to me. People with declining health would nearly given anything for better functionality and have very little use for wealth.

Hopefully, I can take away a few things from this which is 1. to spend a little more time with my parents, and 2. to pay more attention to healthier habits. I've usually done fine in the eating department though I could sleep better and give more attention to stress management and the community around me. In terms of stress and work, if I can decrease stress and add a couple of years of both lifespan and healthspan, the couple years of compounding will also add to wealth, so there there's not even a whole lot of sacrifice.       

Tencent

I own shares of Tencent and think it looks attractive at $80. At the moment, Tencent is one of the best companies in the world. An average user of Wechat spends more time on the app than an avg. user of Facebook, Snapchat, Twitter, Spotify, etc. combined. The Company monetizes through Value Added Services which in large part includes games and ads. It has very high returns on capital and essentially controls distribution of apps and games in China. Most of excess capital goes towards investments, which have performed incredibly well over the past 5 yrs ~20% pa. Gaming, social media and cloud all have long runways for growth and China's GDP is still much lower than US GDP. China also has some tailwind of users becoming more digital (though less than the US) though does have some demographic headwinds with an aging population. 

In terms of competition, Tencent somewhat competes with BABA in cloud and ecommerce, Bytedance in advertising, and has other real competition in games. But really, Tencent has stronghold in the Chinese ecosystem and it seems incredibly tough for another app or company to displace it. Really, we would need to imagine FB's AR investments would have to take off and the metaverse to come to fruition. And even if that's the case, it'd be hard to imagine Tencent didn't have a place in that world. In gaming, Tencent owns a significant portion of game studios, and has several investments in "competitors" like Sea Limited, Epic Games, Riot Games, etc. 

Tencent trades at $770B market cap and generated 20B of net income last year and has been growing 30% pa. It also has ~$200B of investments. With the tailwinds of China GDP, less stigma over spending on games, growth of ecommerce and digital payments, the movement towards cloud, Tencent clearly has a bright future. At 22x 21E ex investments, Tencent seems like incredible value and I can easily see it being worth 4x in a decade. 

One of the risks is China's declining population which should eventually drag on China's GDP. But China is still starting from a lower base and I have to think China's GDP outpaces US GDP given China should have 2-3x the population of the US in 20 yrs. 

As for CCP risk, I would think China wants its technology companies to thrive.