This long form thesis on FEMSA is worth reading if you are unfamiliar with the Mexican retailer. In the piece, the authors highlight how FEMSA can and should capitalize on the ubiquity and popularity of its physical network of OXXO convenience stores in order to unlock a large digital opportunity. Describing the popularity of OXXO stores, the authors write: "Every day, 14 million, or more than 1 in 10 Mexicans, shop in an OXXO. An average of 735 people frequent each small OXXO per day, and most multiple times per week. When the OXXO is only two minutes away, people can visit OXXO more conveniently and frequently than they visit most websites." With a large and loyal customer base, the authors see OXXO as being capable of building a "super app" that would partially come in the form of a platform for payments and other digital transactions, along the lines of China's WeChat and Alipay, or Indonesia's Gojek: "Building the digital wallet is a multi-billion opportunity in its own right. But it also means grabbing the lead position to add more services and build the leading Mexican, and potentially Latin American, SuperApp." To sum up: "The bull case for FEMSA is that it leverages its distribution advantage and consumer touch-points to launch the leading digital wallet in Mexico."

The recent turnaround at McDonald's, started by former CEO Steve Easterbrook and now stewarded by Chris Kempczinski, centered around the overarching idea that the company had become too complex, offered too many food items, and that stores had begun to look worn out. The solution was "a simple decision that is surprisingly easy to get wrong: go back to basics," this short Economist overview says. "From 2015 onwards, it pared back its array of menu offerings and focused on price and quality." Illustrating the adage "never let a crisis go to waste," the adaptations have continued during COVID, partially made apparent through digital initiatives: "McDonald's has used the crisis to step up the pace of its transformation, resulting in big sales surges in recent months, especially in America. With the interiors of many of its restaurants closed, it has relied on the roll-out of its digital, drive-through and delivery initiatives, all of which encourage a more 'contactless' experience that it believes will outlast the pandemic." Coming out of COVID, I'm curious to see how digital investments continue to pay off. 

Morgan Housel recently published another thoughtful blog post – this one about how to best understand, interpret, and learn from history. Housel, a partner at the Collaborative Fund and a former Wall Street Journal columnist, sums up his thinking toward the end of the piece when he says, "An important lesson from history is that the risks we talk about in the news are rarely the most important risks in hindsight." In other words, the future is unpredictable, and what we prepare for isn't what surprises us. Housel illustrates this point through a number of historic examples, weaving in other lessons along the way. One of my favorite insights: "It's intuitive to think you should either be an optimist or a pessimist. It's hard to realize there's a time and a place for both, and that the two can – and should – coexist. But it's what you see in almost every successful long-term endeavor." Balancing the good and the bad, being prepared and understanding that you can't always be prepared – embracing and living these contradictions appears to be a recipe for a happy life.

Talking of optimism and pessimism, let's end with this article from The Atlantic, a fascinating (albeit depressing) foil to Housel's piece. The author profiles Peter Turchin, who has come to believe that he can predict the future by applying mathematical models to history. And he's not exactly upbeat about the coming decade: "He has been warning for a decade that a few key social and political trends portend an 'age of discord,' civil unrest and carnage worse than most Americans have experienced. In 2010, he predicted that the unrest would get serious around 2020, and that it wouldn't let up until those social and political trends reversed. Havoc at the level of the late 1960s and early '70s is the best-case scenario; all-out civil war is the worst." So…yay. Underpinning Turchin's analysis is a trove of data, which has highlighted a 50-year cycle: "In 2012, Turchin published an analysis of political violence in the United States, again starting with a database. He classified 1,590 incidents—riots, lynchings, any political event that killed at least one person—from 1780 to 2010. Some periods were placid and others bloody, with peaks of brutality in 1870, 1920, and 1970, a 50-year cycle." Only time will tell how accurate Turchin turns out to be. However, I'm reminded of allegedly similar phenomena in the economic world: does anyone remember the Kondratiev wave, partially popularized by Joseph Schumpeter? Another ~50-year cycle, the Kondratiev wave is an apparently identifiable phenomenon that explains the timing of expansions and recessions. I wonder how well that maps onto Turchin's models.

And on that optimistic and uplifting note, I'll wish you all a Happy Thanksgiving!

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