A Few Things....

September 25, 2019

1. What’s going on in markets ?

A mix of political and economic news in the last few weeks has knocked us off the September highs, which were already below the July highs.

Are we going into a global recession ?

Will Elizabeth Warren be the next US President ?

Is the US dollar about to selloff ?

Are the repo headlines the harbinger of the next LTCM ?

Is the WeWork / Softbank saga the beginning of a venture market mark down ?

That’s a sample of questions keeping people up at night.

Investing is a game of probabilities and possibilities.

What risks are underpriced versus overpriced. There are no certainties.

I come out on the biggest risk being a Warren presidency. That would be a sea change and a reversal of what Trump has done over the last ~3 year and would have unintended consequences across the board. That is the event I think markets haven’t fully discounted and one that will become front and center soon.

I also need to look more into repo market stress, my old boss Alan Brazil, ex-Head of the Hedge Fund Strategies team at Goldman Sachs wrote a great piece discussing: Is The Current Stress In Repo Reflecting Another LTCM Type Event? Highly recommend reading it. I do agree with Alan that the demand for US assets is changing / going down.

Which takes me to the old Wall Street adage of “What’s the pain trade here?”

Historically, prior Bull Markets typically end with epic rallies, usually lasting several months and with every region in the world participating. While it’s impossible to know if this Bull Market will follow the same script, one thing seems absolutely clear – almost no one is ready for such an outcome given the negativity and positioning out there. This continues to be the most hated bull market.

This is a good time to read Bruce Kovner’s speech given at the 20th anniversary of Caxton in 2003 at the NY Metropolitan Museum, a key passage below:

There is no certainty that Caxton will be able to adapt successfully to these and other risks and changes, but we do structure ourselves to be able to analyze such changes and risks and try to respond to them. And certainly those institutions which do not have the capability to respond leave themselves at the mercy of events. The premise of our operational philosophy was always and still is: The World Changes. Nothing is Permanent. Those who fail to adapt to change risk everything. Look around you, here in this beautiful room. Look at the magnificence of the Temple of Dendur and of the civilization of Egypt. The World Changes and nothing is permanent. If that is one of the lessons that family history and education taught me, it is also the lesson that imbues the practice of Caxton. Study the world. Study markets. Listen to the markets. Then, perhaps, with a little luck and skill, you may be able to find ways not simply to be a victim of circumstances but to profit from them.

Disclaimer: The information presented above is provided for informational purposes only and is not to be used or considered as an offer or a solicitation to sell or an offer or solicitation to buy or subscribe for securities, investment products or other financial instruments, nor to constitute any advice or recommendation with respect to such securities, investment products or other financial instruments. I might, from time to time, have a position in the securities mentioned and may purchase or sell these securities in the future. Please do your own research before making an investment decision.


2. Time Can Make You Happier Than Money

The fact that time matters more than money seems to be true for all ages and stages — even for recent college graduates: people who value time over money tend to be happier. The reason:

“People who value time make decisions based on meaning versus money. They choose to do things because they want to, not because they have to”

I hear this from my friends and clients all the time. They might be rich, but they are stressed and rushed off their feet - “I just wish I had more time”.

Perhaps that helps explain why so many of us suffer from what the researchers call a “famine of time.”

The sense of “having enough time” is at an all-time low, they wrote earlier this year in the Harvard Business Review, adding that this feeling doesn’t just reduce happiness, it raises levels of anxiety, stress, and depression.

To reduce “time stress,” you need a change in mindset, they advise. Start by making plans for free time. You may favor spontaneity, but lack of planning leads to wasted nights and weekends, they say.

Consider volunteering. “Even giving up a few hours of a paycheck to volunteer at a food bank may have more bang for your buck in making you feel happier,”. Multiple studies have found that people who volunteer their time are happierhealthier, and live longer. One study even found that volunteering time makes people feel like they have more of it, perhaps because “giving away time boosts one’s sense of personal competence and efficiency,” the researchers speculate.

And get active. Hanging out with friends, exercising, heading to the mountains or the beach for a dose of awe, or doing just about anything physical “is profoundly better at combating time stress than passive leisure” such as watching TV.

Full research piece here.


3. A few things worth checking out:

A. There has been a lot of discussion on Google’s quantum computer, this MIT Tech review article, helps simplify it.

B. A number of people have been reading Range by David Epstein, which over turns many of the ideas discussed in Malcolm Gladwell’s Outliers. If you want to skip the book, this article on The Case for Being a Multi-Hyphenate will do the job.

C. Entrepreneur, Professor and Investor Jerry Neumann wrote a great post on the taxonomy of moats attempting to categorize the best-known moats in order to evaluate them systematically in the context of starting a company.

D. If you’re fascinated by the WeWork saga, the best and most insightful person to read is Prof. Galloway, author of The Four.

E. I’m a big fan of Entrepreneur’s First, and what they have built. They just had their demo day, you can see their new batch of startups.


Quotes I’ve been thinking about:

I was prepared for a regime change, whereas other people were acting within a prevailing regime. And that is where I think my awareness that conditions can undergo revolutionary change was useful.

- George Soros

I do believe in simplicity. It is astonishing as well as sad, how many trivial affairs even the wisest thinks he must attend to in a day… So simplify the problem of life, distinguish the necessary and the real. Probe the earth to see where your main roots run.

- Henry David Thoreau