Weekend Reading

10 June 2016 | by Paul Perrino, CFA

A summary of this week’s best articles. Follow us on Twitter (@INTRINSICINV) for similar ongoing posts and shares.

Apple is working on an AI system that wipes the floor with Google and everyone else (Steve Kovach, @stevekovach, Tech Insider)

Anyone who has gotten frustrated while using Siri will be excited for this recent development. Apple’s purchase of VocalIQ is expected to make Siri a much better assistant. The AI is able to understand normal language questions and return helpful answers. “For example, imagine asking a computer to ‘Find a nearby Chinese restaurant with open parking and WiFi that’s kid-friendly.’ That’d trip up most assistants, but VocalIQ could handle it. The result? VocalIQ’s success rate was over 90%, while Google Now, Siri, and Cortana were only successful about 20% of the time, according to one source.” The system is designed to get better after each use. The current capability is after 10,000 dialog requests from the system. People ask Siri ~1 billion questions a week! This should help the AI get better and better.

Cleaning Out Your Investment Fridge (Wade W. Slome, @WadeSlome, Investing Caffeine/Value Walk)

Similar to the turnover in your fridge Wade compares the low Q1 2016 GDP and dismal January/February stock market returns to spoiled or rotten food. The improving employment picture and consumer spending are the fresh spots in the economy, but Brexit could sour the global economy. The market is always going to fluctuate. It’s important to review your investment plan to make sure your portfolio matches your needs, goals and risks.

Michael Lewis Explores Why People Tend to Go With Their Guts (Alexandra Alter, @xanalter, NYT)

Michael Lewis, the author of “Moneyball” and “Big Short,” has a new book that takes a deep dive into the famed research of Daniel Kahneman and Amos Tversky. We view Kahneman’s book Thinking Fast and Slow to be foundational reading for investors.

The fall of cash payments?

The Shift to a Cashless Society is Snowballing (Jeff Desjardins, @jeff_desjardins, Visual Capitalist)

Digital transactions are not a new concept, but the proliferation of smart phones has made it easier for people to exchange money electronically. The US is at a tipping point in payment types. 45% of all transactions are made via non-cash payments. Other countries have already tipped, such as Singapore at 61%, France at 59%, or Canada at 57%. Governments, such as France, are supporting this trend because it has the additional benefit of a paper trail, which “decrease crime, money laundering, and tax evasion.”

The Future of Banking Is in China (James T. Areddy and Alyssa Abkowitz, @jamestareddy and @AlyssaAbkowitz, WSJ)

While China is still in the transitioning phase of using non-cash payment (10% of all transactions are non-cash – see article above), there are 450 million people using the Alipay phone app to make payments. The government has been supporting the use of these payments to spur consumer spending, but regulations and oversight hasn’t grown as fast as the non-cash payment industry.

Ensemble Capital’s clients own shares of Apple (AAPL).

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

The information contained in this post represents Ensemble Capital Management’s general opinions and should not be construed as personalized or individualized investment, financial, tax, legal, or other advice. No advisor/client relationship is created by your access of this site. Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. If a security discussed in this blog entry is owned by Ensemble Capital or one or more of its clients you will find a disclosure regarding the security held above. Should Ensemble Capital subsequently purchase or sell any position in a security discussed in this blog entry, we will not update the above disclosure nor revise any archived blog entry after the date it is originally posted. If reviewing this blog entry after its original post date, please refer to our current 13F filing or contact us for a current or past copy of such filing. Each quarter we file a 13F report of holdings, which discloses all of our reportable client holdings. Ensemble Capital is a discretionary investment manager and does not make “recommendations” of securities. Nothing contained within this post (including any content we link to or other 3rd party content) constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instrument.