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At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Business (Capital allocation guide for CEOs; Inside Saudi Arabia’s $360 billion investment fund), Productivity (3 time management secrets you need to know), Technology (Even experts can’t agree on whether technology is dangerous for kids), and Decision-making (Benchmarking isn’t always good).3) The growing fatigue with work from home [Source: Livemint]
The current pandemic has made everyone work from home. If not everyone, at least most of them. So, will this trend of working from home continue even after the pandemic is over? Recently, real estate advisory Knight Frank (India) Pvt. Ltd. surveyed 1,600 technology professionals in India and found that 30% of them reported deterioration in productivity and work performance while working from home. A PwC study in the United States suggested that productivity during the pandemic was shored up by super achievers that masked a fall among the rest who struggled with a combination of physical and emotional issues while working from home.
The recent Mint-Bain India CEO survey, in which 105 CEOs were polled on the economy and business scenarios, underlined the temporary nature of remote working. Less than one-third of the CEOs saw over 25% their workforce continue to work from home, post Covid-19. In short, remote work is the present, not the future. The long-term outlook is work from office or a blended model where a minority works out of home. Infosys Ltd., India’s second-largest IT exporter, has over 95% of its workers working remotely at the moment. Depending on when the Covid-19 caseloads ebb, the company plans to get employees back to offices in a phased manner.
A number of companies appear to have tilted towards a hybrid working model, already. RPG Enterprises is allowing all sales employees to work from home permanently. Flipkart, the Essar Group, and the Indian Hotels Company Limited (IHCL) among other corporates are all contemplating the hybrid approach. If this model is to work, trust is the key. And micro management wouldn’t work either and leadership styles need adjustments.
4) How benchmarking impacts your decisions [Source: A wealth of common sense]
Benchmarking is something that everyone, knowingly or unknowingly, uses to perform better. Will Danoff of the Fidelity Contrafund has one of the best long-term track records in the entire fund business, handily trouncing the S&P 500 over the past 30 years. In an interview, Barry Ritholtz asked Mr. Danoff why he wasn’t benchmarked to more of a growth-focused index such as the Nasdaq 100. Mr. Danoff said, “Yes. There’s a lot of truth to that. I am much more of a growth investor. I am, in my opinion, a capital appreciation fund with a growth bias. So, I do have a go anywhere — a large grow-anywhere component and it’s just the technology. It’s been such a powerful tidal wave that I’ve probably stayed in technology longer and bigger than I would have expected.”
How you choose to benchmark yourself in other areas of life can impact your decisions as well: a) How other people invest: People who brag about their investment success are often far more willing to share their successes than failures. Benchmarking yourself strictly against other people’s winning investment ideas will make you feel like a failure at all times. No one bats one thousand in this game. b) How other people live: When you see other people buying new cars, boats or other toys it can lead to a sense of entitlement. There’s a huge difference between buying stuff and being wealthy. Unfortunately, when you see those around you buying stuff it’s hard to avoid the temptation because we benchmark ourselves against the stuff we see and wealth isn’t something you can see parked in someone’s driveway.
c) Someone else’s career: We’ve all spent some time day-dreaming what it would be like rich and famous, just like stars or business tycoons, but there is a downside to being one of the most recognizable people on the planet. It’s a cliche at this point to say that money doesn’t buy happiness because money sure can solve a lot of problems. But it sure doesn’t buy contentment or make it any easier to stay out of your own head sometimes. Benchmarking yourself against people who are more successful than you could provide the motivation to get better but it could also blind you to the fact that no one’s life is perfect.
9) So many young adults living with parents will have ‘serious consequences’ for financial markets: Deutsche Bank [Source: Yahoo Finance]
Mostly as a result of being priced out of the housing market, the majority of young adults under 30 are living with their parents. While this trend was evident prior to the coronavirus shutdown, the pandemic has exacerbated that trend by packing the one-two punch of making it harder for young college graduates to land a job in a recession while simultaneously triggering layoffs that disproportionately impact them. According to a new report by Deutsche Bank, a worsening generational wealth divide risks ushering in a new “Age of Disorder.” “The widening generational divide should be a key source of alarm for investors, financial markets and society as a whole,” wrote Deutsche Bank analyst Henry Allen, adding that there could be “serious consequences for asset markets” if the gap between older and younger Americans’ wealth isn’t addressed.
The past decade has been brutal for young adults. The 2008 financial crisis led to a nearly 20% unemployment rate for Americans aged 16-24. While their employment prospects gradually improved, the coronavirus pandemic has wiped away such progress. “The pandemic sent youth unemployment to its highest levels in over 70 years of recorded data,” Allen wrote. The unemployment rate for young Americans was 26.9% in April at the height of the government coronavirus shutdown related layoffs, compared to 14.7% for the general population. While the youth unemployment rate has since dropped to 18.5% in July, it continues to surpass the 10.2% rate for the overall workforce during that same time period.
Making matters worse, historical evidence has shown that the effects of recessions are long lasting for young adults as their wages “suffer for years afterwards” and they become far less picky when it comes to accepting job offers,” wrote Allen. Deutsche Bank warns of dire consequences for investors and financial markets if this trend continues. “Investors can expect an abrupt, and significant upheaval in housing and asset markets, tax systems, climate policy, and many other areas,” Allen wrote. “This scenario becomes more likely towards the end of this decade as Millennial and younger voters start to exceed those in older generations.”