Quest for the Sane & Ambitious
Or how I learned to appreciate relentlessly boring things
Thesis
Following extensive networking conversations with former and prospective colleagues, I developed criteria for evaluating organizational culture.
Qualifying company culture can be challenging, but for me, a crucial aspect was whether colleagues believed their leadership possessed enough self-awareness to avoid being either complacent or unhinged. In other words, I sought seek a culture that is both sane and ambitious.
To test my approach, I experimented with the latest internet toy. I wondered whether the markets rewarded prudent ambition in specific target industries. Unfortunately, the results were mediocre. ChatGPT provided approximately two dozen examples of companies recognized for what it called “financial success and innovation.”
Curious to learn more, I compared the performance of this basket of securities to the S&P 500 over the past decade of cheap capital. I used ChatGPT to calculate total returns (price appreciation plus dividends) from January 1, 2010, to March 7, 2023, and compare it to the total return of the S&P 500 index during the same period. Although the ChatGPT training data set only extended to sometime in 2021, I found the results informative.
Of the twenty companies analyzed, only three outperformed the index. Two were "dumb pipe" paymasters with entrenched digital infrastructure (Visa/MC) while the other brand boasted a uniquely strong ethos, stubbornly owning and rerouting traffic from "relentless.com."
The spoils of prudent and driven organizations were not equitably shared.
Relative to a relentlessly boring index fund purchased over a decade ago, the investment value delivered was average.
Research & Development
As a side note, the level of stress for stock-incentivized executives of the 17 ambitious and prudent companies is mind-boggling.
It takes ruthless drive (and significant luck!) to meet strike-price goals, not to mention the entire secondary derivative options trading market around quarterly earnings announcements.
The juice has to be worth the squeeze.
Imagine expending all that effort and still not outperforming the market. Perhaps the relentlessly insane are onto something.
It's worth noting that ChatGPT is trained on low-quality open internet text. Robust, market-specific language learning models will soon expose their product to savvy professional-consumer users for a fee (as a percentage of assets under management).
An intuitive interface for investors to ask questions and separate signal from noise makes it easier to find more nuanced and actionable insights without painstaking research and tedious calculations. Then that text output can integrate with a data visualization tool.
Like Visual Capitalist meets DALL-E.