18: Plum Capital on Elevate Credit ($ELVT), Technology Save the World, Reality Has an Incredible Amount of Details, How Asia Works, Southern Rock
Nous n'avons rien à nous que le temps, dont jouissent ceux-mêmes qui n'ont point de demeure - Baltasar Gracián
Investing & Business
Plum Capital on Elevate Credit
Reading time: ~10 minutes
I recently discovered Plum Capital, and really liked his write-up in the consumer finance space! I’ve subscribed and you should too to receive more quality posts :-)
Elevate is a subprime consumer lender. The business model is straightforward, the Company conducts balance-sheet lending to individual consumers who have poor credit scores (typically below 650 FICO) or are “credit-invisible” (i.e. young adults or recent immigrants). To offset the high charge-off rates that one might expect from such a customer base, ELVT typically charges APRs in the 90% - 150% context. While such rates seem egregious prima facie, it is important to note that ELVT’s APRs are quite competitive versus the traditional payday lenders and mom & pop operators, where the sky is truly the limit (APRs of 300 – 500% are relatively commonplace).
[…]
I believe that ELVT represents one of the most compelling risk/reward profiles in the micro-cap space today, and would not be surprised to see the stock double over the next couple of quarters as the Company returns to growth and continues to buy back shares at attractive prices.
Thought-provoking stuff…
“Technology Save the World” by Marc Andreessen
Reading time: ~10 minutes
Great essay by M. Andreessen (from A16Z) on the long-term implications of the covid-19 crisis and the different innovations it forced into our lives.
An interesting passage:
It turns out people really can live in a smaller city or a small town or in rural nowhere and still be just as productive as if they lived in a tiny one-room walk-up in a big city. It turns out companies really are capable of organizing and sustaining remote work even — perhaps especially — in the most sophisticated and complex fields.
This is, I believe, a permanent civilizational shift. It is perhaps the most important thing that’s happened in my lifetime, a consequence of the internet that’s maybe even more important than the internet. Permanently divorcing physical location from economic opportunity gives us a real shot at radically expanding the number of good jobs in the world while also dramatically improving quality of life for millions, or billions, of people.
Reality Has an Incredible Amount of Detail
Reading time: ~10 minutes
Reality has a surprising amount of detail. This turns out to explain why its so easy for people to end up intellectually stuck. Even when they’re literally the best in the world in their field.
On the details behind the simple act of bringing water to a boil:
If you’d used a glass pot instead of a metal one, the water would boil at a higher temperature. If you cleaned the glass vessel with sulfuric acid, to remove any residue, you’d find that you can heat water substantially more before it boils and when it does boil it boils in little explosions of boiling and the temperature fluctuates unstably.
Worse still, if you trap a drop of water between two other liquids and heat it, you can raise the temperature to at least 300 °C with nothing happening. That kind of makes a mockery of the statement ‘water boils at 100 °C’.
It turns out that ‘boiling’ is a lot more complicated than you thought.
This surprising amount of detail is is not limited to “human” or “complicated” domains, it is a near universal property of everything from space travel to sewing, to your internal experience of your own mind.
Arts & History
How Asia Works
Reading time: ~10 minutes
I am still going through the list of reviews done by the ACX community, it has so many gems!
This week, I wanted to share with you the review of How Asia Works, an essay on emerging economies and economic policies:
What was the best thing that ever happened? From a very zoomed-out, by-the-numbers perspective, it has to be China's sudden lurch from Third World basketcase to dynamic modern economy. A billion people went from starving peasants to the middle class. In the 1960s, sixty million people died of famine in the Chinese countryside; by the 2010s, that same countryside was criss-crossed with the world's most advanced high-speed rail network, and dotted with high-tech factories. […]
These countries started with nothing. In 1950, South Korea and Taiwan were poorer than Honduras or the Congo. But they managed to break into the ranks of the First World even while dozens of similar countries stayed poor. […] You don't have to bring in culture, genetics, or anything complicated like that. Japan, South Korea, Taiwan, etc, just practiced good economic policy. Any country that tries the same economic policy will get equally rich, as China and Vietnam are discovering. […]
How Asia Works is Studwell's guide to good economic policy. He gives a three-part plan for national development. First, land reform. Second, industrial subsidies plus export discipline. Third, financial policy in service of the first two goals.
Note: the review contest has now ended! The winning review is the one on Progress and Poverty by Henry George (who inspire Georgism), and Orwell's Down and Out in Paris and London review coming second!
Treat for the Ears
Other Interesting Links
Until next week!
Antoine