The Solow Model of Economic Growth.

The Solow Model of Economic Growth. a simple model but from which you can derive so many insights! GDP= f(K, EL, A) The relation of capital (K), Labor and technology to GDP The law of diminishing returns and its implication to the steady state equilibrium (investment on capital vs. depreciation) The impact of education and labor (EL) and its investment to sustain the level of growth also will leads to a steady state equilibrium and will lead to conditional convergence. Technology or ideas (A) how it contributes to growth, that has a multiplier effect on growth and makes the difference between catching-up growth and cutting edge-growth. A good recap on basic economic principles, that when you think it also applies to company valuation (to be further developed in a future note or post). Enjoy! https://marginalrevolution.com/marginalrevolution/2024/03/teaching-the-super-simple-solow-model.html https://youtube.com/playlist?list=PL-uRhZ_p-BM6L_I3IHvE85NHooK2Ln9Rm&si=tqMNXL-DApeStem7

- Pedro

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FIDE Candidates Chess Tournaments 2024

Where we are after round 8! Up to Fabiano everything is possible. Gukesh (17 years) and Pragg (18 years old) are doing a great tournament. 6 rounds to go!

- Pedro

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A stealth attack came close to compromising the world’s computers

A image is worth 1.000 words and the picture tells it all. it’s really surprising, to say the least, that fundamental building blocks of internet code is developed and maintained by a handful of pro-bono experts that underpin the entire eco-system. Goes without saying that situations like the one exposed might be the rule and not the exception. Additionally, the attack was detected by another expert user that has detected that the system to log-on securely to another device was 500 milliseconds slower and while investing the root-causes for such delay found the attack (a back door that would impact all systems that use this code) that could have compromised almost all systems! The story explained in the Economist article, as an overview, and in greater detail in the YouTube link (in Spanish), sounds like a Bond’s movie with all the ingredients necessary to make a blockbuster. My takeaways are: how can an entire fundamental eco-system be created and maintained as an unpaid hobby by some highly expert geeks, how can it be easily hacked by malicious parties. how the controls in place are fragile and serendipitous, how many situations like that might have happened in the past or might happen in the future getting unnoticed. https://youtu.be/Wi2_x3Mjm90?si=6w9_N0EiooTILGHN A stealth attack came close to compromising the world’s computers https://www.economist.com/science-and-technology/2024/04/02/a-stealth-attack-came-close-to-compromising-the-worlds-computers from The Economist

- Pedro

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Modern Principles of Economics

A book that caught my attention. Added to the wish-list. https://marginalrevolution.com/our-textbook

- Pedro

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3 body problem - Netflix series

Finalized the first season of the “3 body problem” series. Great one & I do recommend it. Waiting for the other seasons to come. (please see below the link to the other substack i have published about this trilogy) https://substack.com/@pedrosantospinto/note/c-52384949 https://www.netflix.com/search?q=the%203&jbv=81024821

- Pedro

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The Gentlemen - Netflix

Finalized this very good series on Netflix that I recommend! Very entertaining, good dialogues and actors. Enjoy! https://www.netflix.com/title/81437051

- Pedro

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Great podcast from Mckinsey on what public companies can learn from PE in order to improve their performance.

A great podcast from Mckinsey on what public companies can learn from PE in order to improve their performance. The seven lessons are: Importance of FP&A in the company performance - > Via macro assumptions parameterized via a 3rd party, use P-Level, several inflation assumptions should be made by line item, momentum case model (assuming inertia from management, downside case modeled, back testing/continuous improvements. Clean sheeting → rethinking what every department does. Using KPI revenue by employee, killing low value work. Centralize the team under the best leader. Focus on the high performance (O-ring theory), move talent where it can make the difference. Breaking bad revenue → revenue growth is good as long is cash accretive - assess customer, geographic, product/service and asset profitability. Building business → how to increase revenue growth by looking at the how (test and scale in 2/3 years). The new business play by a different rule and should be managed differently. Look granular → go to the 2nd, 3rd , 4th layer of data of a business (segmentation, sub segmentation and “clusterization” of the data in order to treat each group differently. Programmatic M&A - > small to medium size (scan for adjacencies and non traditional companies) business regularly bought to acquire the know-how on the way to bring new companies onboard. Have an investment thesis supporting your investments. CEO return on time → align you time to your strategy. 6 key priorities of a CEO: (i) manage your time, (ii)building and selling the vision, (iii)build a strategic plan, (iv) monitoring current performance, (v) leading internally and (vi) leading externally. https://podcasts.apple.com/es/podcast/inside-the-strategy-room/id1422814215?i=1000651989733

- Pedro

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