Chairman and CEO Nicholas Mitsakos has written three books: “Investment Principles: Strategies for an Irrational World,” “Transformation and Investing: Disruption, Opportunity, and Absurdity,” and “The Ten Year Horizon: Volatile, Intense, and Harmless.”
These books present a broader, more methodical, and more disciplined way to think about investing. Investment success requires understanding many dimensions ranging from global economics, industry, competitive and microlevel analysis, technological innovation, game theory, and human behavior and emotions. This integrated approach develops a more informed and distinctive way to think about the current investment environment, the future, and what choices to make.
Investment success combines predicting the future, the confidence to make bold choices, and the fortitude to stay with those choices. Nicholas asserts that wisdom, defined as combining a broad range of observations into a new set of knowledge to predict the future more effectively, is the essential component of successful investing. The foundation of knowledge, assembling relevant facts from many sources, produces better decisions and superior returns.
There is no simple formula. Thoughtful observation of complex factors, understanding their interrelation, and predicting the outcome of their interaction is challenging. In Daniel Kahneman’s words, it requires “slow thinking” and demanding work. Breathless and urgent recommendations from social media quips are usually misguided. Superficial ideas and quick thinking are even worse.
These books do not contain a series of numerical models and algorithms. Those kinds of tools are a simplified sideshow intended to turn numerous dynamic factors into a simple, typically misleading analysis. One obvious example is the current investment principle that revenue growth is the only factor that matters in determining a company’s future value. Along with other simplistic approaches, this is often nonsense.
The books discuss topics ranging from disruptive innovation and technologies, globalization, leadership, fiscal and monetary policy, and other topics usually relegated to economics or behavioral textbooks. But inferior performance comes from not understanding all the elements, both macro, and micro, that influence investment choice, the policies impacting those decisions, the competitive environment, and the leadership qualities essential to succeed within this context.
General statements are a waste of time, profoundly inefficient and misleading, and designed simply to make the reader feel good without giving him or her any useful way to think more deeply about analysis and more accurate and impactful conclusions.
These are not “how to pick stocks” books. Along with platitudes, there are no simple formulae, heuristics, or any other effortless way to outperform the market. Deep thinking about the factors that matter is complex, challenging, unique to each situation, and escapes simplicity.
The books are not organized as straightforward narratives, but each contains sections addressing different, sometimes unrelated but important topics. The foundation comes from Nicholas’s articles and lectures (posted elsewhere on this website under “Writing and Podcasts” and Arcadia’s “YouTube” channel) and may seem disjointed, but each topic and subtopic is meant to stand on its own. The books can be just as effectively read in discrete sections and not necessarily in any narrative series. These can be reference books, as well as a descriptive analysis.
The third book, “The Ten Year Horizon” explores the next decade’s more frequent and intense economic, geopolitical, fiscal, and market volatility, technological innovation, disruption, and hype.
Long-term opportunity exists, and this book uses a 10-year horizon as a surrogate for a long-term perspective. Some of the world’s most important industries are being disrupted, especially finance via digital assets and Blockchain-based businesses, life sciences via gene editing, DNA sequencing, and CRISPR, and communications via advanced wireless data networks, software technologies including artificial intelligence, and new interactive platforms such as the Metaverse.
Success requires not only understanding how to assess these industries, the potential disruptions, the sustainability of new business models, and other economic forces, but also understanding that human emotions swing market cycles, impact values, and skew competitive dynamics.
This is not a hyperbolic “this time it’s different” sermon, but we are entering an era that will be characterized by persistent uncertainty and rejection of the halcyon days of “growth equals value regardless of profitability.” Vulnerability to economic and social shocks will also be higher and there may be many dark days along the way to the horizon.
The world is becoming a zero-sum chess game. The players, China and the US, hope to either control or influence other pieces – queens to pawns – ranging from Russia and Ukraine to India and Turkey.
This book explores the chills of discontent that ignited these fractures and looks at potential avenues for re-engagement and mutual benefit. The foreseeable future is disjointed and fractured, but, there may be an ultimate realization that long-term benefit from reigniting mutual engagement will be in everyone’s best interest.
Traditional industries that drive the world economy – metals, minerals, plastics, and energy – are essential to any “green revolution.” Technology, innovation, and disruption need minerals, metals, plastics, and energy to build and deploy their products. Technology, and potentially life-saving innovation, are useless without these basic industries – now impacted more than ever by geopolitics and global trade.
Technology and innovation can solve potentially existential threats from climate change to food scarcity to global pandemics But, as I discuss, technology is also an uncontrollable monster that can lead the world into a downward spiral of distraction and meaninglessness – and solve nothing.
I explore whether the future needs the Metaverse, cryptocurrencies, or NFTs (it doesn’t), Blockchain technology and other digital assets (it can), or artificial intelligence and machine learning (it does). The Metaverse and cryptocurrency are mostly a sideshow. Blockchain and digital assets are platforms enabling the digitization and potential disruption of finance. While all these technologies are often lumped together, I discuss the significant distinction between them.
I also explore what can be predicted, what should be ignored, and why basic science and fundamental discovery are our most potent weapons and greatest opportunity to create value and benefit society. I emphasize the need to ignore policy recommendations that attempt to manage outcomes for a shortsighted, politically popular goal.
I close this book with some very personal thoughts from my experiences.