Weekend Reading

Where to focus?

Everyone knows that focus matters. Most people don’t know where to focus. Telling people “to focus more” is about as helpful as telling them to “make better decisions.” Common advice but useless in practice.   Not all focus is equal. Some focus is asymmetric. Knowing where to focus makes a difference.   How do you know where to focus? The answer is a deep fluency in the problem. You need to embed yourself in the problem and the details. You need to try things, reflect, and learn. Sooner or later, you start to understand the hidden asymmetry.   A lot of business people treat all decisions the same, no matter the implications. They’ll spend as much time trying to decide a trivial decision as a major one. A lot of authors focus on the work and miss that how it’s positioned for the audience matters more. A lot of people go to the gym 4 days a week only to miss that what goes into their body and the amount of sleep matter more.   The visible problem might appear to be a lack of focus, but the invisible problem is often not knowing where to focus to get the best results. https://fs.blog/brain-food/june-5-2022/

Bullshit and the cost of success

There are three important facts about bullshit: It’s everywhere, it’s influential, and it’s dangerous. Bullshit can go unnoticed because people are more concerned with lies. Lies, once spotted, are unmistakable and their damage is obvious. But bullshit stops just short of a lie, mixing the integrity of the truth with the deceit of a lie in a way that leaves both the bullshiter and his recipient feeling satisfied.   The whole history of investing is simple: Long-term returns can be extraordinary but to achieve them you must put up with an endless parade of volatility, mania, and panic. Two sides of the equation. When anyone presents the one side (potential return) without the other (volatility, chaos) they are bullshitting about the entire arrangement. It’s as if someone says, “Ferraris are really nice,” without any mention, or even knowledge, that they’re nice because they cost a third of a million dollars.   Lots of things fall into this category, and it’s a key source of unhappiness in people’s lives.   The assumption that you’ll be happier with more money leads to disappointment because we overemphasize the reward (money) with no regard to the cost (working longer hours, student debt, the risk of entrepreneurship, etc.). It’s a package deal, and you can’t pick and choose the reward while ignoring the cost.   The saying, “Never meet your heroes” is true because the way we imagine people we admire, or the successes we desire, tends to be a bullshit construction that emphasizes advantages while discounting the associated costs. https://www.collaborativefund.com/blog/bs/

The fall of Cathie Wood

Cathie Wood’s willingness to make such calls so far ahead of reality — and so out of step with Wall Street’s old guard — has earned her a rockstar reputation among stonks-obsessed retail investors, making her a mascot for buy-the-fucking-dip Robinhood traders, some of whom have dubbed her “Cathie Bae” on Reddit. In an industry loath to make guarantees about the future, Wood’s brand was like price-prediction porn: To hear her talk was to feel your mind liquefy in a clickbait-like flood of dopamine-inducing buzzwords — her portfolio a cornucopia of self-driving cars, crypto, genomic cancer cures, AI, streaming, and gaming. She told risk-drunk investors exactly what they wanted to hear. In her view, it seemed, tech stocks only went up and to the right.   Wood’s collapse has started to seem emblematic, not just of the current bear market in tech, but of the excesses that fed into what now appears to be a pandemic bubble. A professional who espoused the “to-the-moon” mentality of many amateurs, Wood may now be unintentionally teaching them a valuable lesson: Stocks (and cryptocurrencies) do, in fact, go down, too. There’s a generation of young traders that has yet to experience a true crash in their investing lives — the COVID bear market of 2020, after all, lasted only two weeks — and now, through Wood, has a front-row seat to a bona fide true bear market. https://nymag.com/intelligencer/2022/05/the-rise-and-fall-of-cathie-wood.html (BTW, there is a reason why this article is right after the one on bullshit!! )

The start of a new cycle of bond rates

The most important price in the world is the price of money: namely, interest rates. And interest rates are suddenly on everyone’s minds, as rates shoot upward for the first time in decades. The effects or this rise will be felt in the markets, the economy at large, in households, and at the election booth.   The striking thing about the bond market and interest rates is that they tend to rise and fall in generation-length intervals. No other financial security that I know of exhibits that same characteristic. But interest rates have done that going back to the Civil War period, when they fell persistently from 1865 to 1900. They then rose from 1900 to 1920, fell from 1920 or so to 1946, and then rose from 1946 to 1981—and did they ever rise in the last five or 10 years of that 35 year period. Then they fell again from 1981 to 2019-2020.   So each of these cycles was very long-lived. This current one has been, let’s say, 40 years. That’s one-and-a-half successful Wall Street careers. You could be working in this business for a long time and never have seen a bear market in bonds. And I think that that muscle memory has deadened the perception of financial forces that would conspire to lead to higher rates. https://octavian.substack.com/p/the-end-of-an-era-jim-grant-on-interest

Life form is back in Chernobyl

Chernobyl has become a byword for catastrophe. The 1986 nuclear disaster, recently brought back into the public eye by the hugely popular TV show of the same name, caused thousands of cancers, turned a once populous area into a ghost city, and led to an exclusion zone 2,600 sq km (1,000 sq miles) in size.   But Chernobyl’s exclusion zone isn’t devoid of life. Wolves, boars and bears have returned to the lush forests surrounding the old nuclear plant in northern Ukraine. And when it comes to vegetation, all but the most vulnerable and exposed plant life survived. Even in the most radioactive areas of the zone, vegetation was recovering within three years.   Humans and other mammals and birds would have been killed many times over by the radiation that plants in the most contaminated areas received.   Life is now thriving around Chernobyl. Populations of many plant and animal species are actually greater than they were before the disaster.   Given the tragic loss and shortening of human lives associated with Chernobyl, this resurgence of nature may seem surprising. Radiation does have demonstrably harmful effects on plant life, and may shorten the lives of individual plants and animals. But if life-sustaining resources are in abundant enough supply and burdens are not fatal, then life will flourish. https://www.bbc.com/future/article/20190701-why-plants-survived-chernobyls-deadly-radiation

Bottomline: Quiver - a concentrated smallcase

https://intelsense.smallcase.com/smallcase/INSMO_0005