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Over the last two weeks, I have used my Wednesday notes to explore the lack of productivity growth in recent decades. Last week, we saw how the amount of research produced in technology, engineering or medicine has grown enormously, but research productivity (in the sense of creating new ideas) has seen a steady decline. As I will show today, this seems to be a major driving force that holds back job creation and productivity growth in the real economy as well.

ESG scandals are (luckily) a rare thing. If we rely on the RepRisk Relative Risk Indicator, risk ratings in excess of 25 points happen only in one in 200 companies. And as I have reported here, RRI readings of 35 or above become existential threats to their CEOs. But once a company experiences an ESG scandal, it has significant and lasting consequences, not only for the company but also its peers.

Charlie Ellis pointed out in his famous book “Winning the Loser's Game” that one of the best ways to outperform the market in the ‘investment game’ is not to pick winners but to avoid the losers, i.e. assets that drop sharply in price.

It’s February and at many companies where I have worked that means it is time for promotions. It is the time when valued employees are given new and expanded responsibilities in managing teams. And it is peak time for the Peter Principle, i.e. the principle that people are promoted to their individual level of incompetence.​

A while ago, I wrote a note that claimed that changes in bond yields and inflation are much more important than changes in earnings for equity market returns – at least over shorter timeframes like 12 months.