A Few Things: How To Read, What We Got Wrong About E-commerce, Is This a Recession?, Niall Ferguson on The Politics of Catastrophe, Seize The Day....
A Few Things: How To Read, What We Got Wrong About E-commerce, Is This a Recession?, Niall Ferguson on The Politics of Catastrophe, Seize The Day....
July 29 2022
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
“Do not spoil what you have by desiring what you have not; remember that what you have was once among the things only hoped for.”
- Epicurus
“Be the change you wish to see in the world”
- Gandhi
"I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.”
- Frank Herbert, Dune
If you missed last week’s note on: A Few Things: Zeihan vs Bremmer, Amateurs vs Professionals, Papic vs Currie, The Global Balance Sheet, Tony Fadell on Building, What To Do In Crypto Bear Market.....
A. A Few Things Worth Checking Out:
1. It’s summer time.
Many of us use the summer to catch up on reading. Here’s a critical and small Morgan Housel piece on How To Read, that changed my life.
Key opening paragraphs:
Years ago I heard Charlie Munger say “Most books I don’t read past the first chapter. I’m not burdened by bad books,” and it stuck with me. Reading is a chore if you insist on finishing every book you begin, because the majority of books are either a) adequately summarized in the introduction, b) not for you, or c) not for anyone. Grinding your way to the last page of these books – a habit likely formed early in school – can turn reading into the equivalent of a 10-hour work meeting where nothing gets done and everyone is bored. And once you see reading through that lens, your willingness to pick up another book wanes.
Which, of course, is tragic. “The man who doesn’t read good books has no advantage over the man who can’t read them,” said Mark Twain. Every smart person I know is a voracious reader who also says “every smart person I know is a voracious reader.” There are so few exceptions to this rule it’s astounding. College tuition at $25,000 a year comes out to roughly $100 per lecture. Good books – sometimes written by the same professor – can be purchased for fifteen bucks and can offer multiple times as much life-changing insight.
The conflict between these two – most books don’t need to be read to the end, but some books can change your life – means you need two things to get a lot out of reading: Lots of inputs and a strong filter.
My approach to reading is simple: if it’s not working for me today, I put it down, maybe I will come back to it later. If I am going to read something, then I want to go deep. I like to consume my books with pages dog-eared and notes written inside. Books are only useful to me if they are absorbed and applied.
Maybe the better question this summer isn’t “What book will you pick up” but rather “What book will you put down?”.
2. Shopify was meant to be the Amazon killer, but since its peak in 2021 the share price is down 80%. This week they announced a 10% cut in their headcount in this press release.
The key bit of the press release discussing US e-commerce adoption:
I highlight this because this is something that every internet / e-commerce company and investor needs to make a decision on. Was that surge permanent or temporary? Where those growth rates persistent or a pulling forward of demand?
50-100% YoY growth rates were observed in 2020 and then extrapolated. Maybe this wasn’t correct. We are now finding that some of the surge - was just a pulling forward of demand / adoption. This is one of the reasons every e-commerce business is now seeing headwinds and their stock prices are heading back to 2019 levels.
3. Many of you have checked out Four Thousand Weeks, we covered it twice in the last few months.
I highly recommend it.
Oliver Burkeman the author was on the Sam Harris podcast presenting the first part of an audio course on ending our struggle with time.
4. If you are a Real Vision subscriber, it’s worth watching Marko Papic’s chat with Chen Zhao of Alpine Macro.
It’s a wide ranging discussion, but main take aways are that Chen doesn’t sees inflation persisting, in fact he sees deflation coming. Which is why he thinks the market has probably priced in a recession around earnings and multiples here and is a buy.
He admits he could be wrong if inflation is more persistent.
They are both bearish on China, Marko in the short term, and Chen longer term, primarily because like Peter Zeihan, Chen also sees China at the end of it’s capex led growth.
5. Bloomberg Odd Lots Podcast had a great discussion with Bob Brackett - a senior research analyst at Bernstein on “What So Many People Get Wrong About The Energy Transition”
This is a great discussion across many dimensions of the transition.
6. You might have missed the White House trying to re-define the definition of a recession, and the White House press release.
B. Doom: The Politics of Catastrophe
It often feels like we are stumbling from one disaster to another catastrophe. Whether it’s war in Ukraine, COVID-19, Climate Change, China’s housing crisis to the US political crisis…..Why is that?
Niall Ferguson’s 400-page 2021 book is both a history and general theory of disasters and catastrophes. He explores a range of them, drawing lessons from each.
What can we learn from prior disasters going back to the Great Plague?
This is a deep and read able history book, even covering the true story of how the Titanic sank vs the story we know, more on that at the end.
The main thesis of the book is that while all disasters are different and yes they are hard to predict because we usually suffer from hindsight bias, expecting recent history to repeat, preparing for the last crisis. This then combines with political failures…institutions fail, humans make mistakes. Complexity gets in the way.
His solution to survive disasters is to have a resilient, adaptive society that can more effectively solve problems by preparing and innovating across an array of outcomes rather than specific, narrow visions of the future. Don’t fight one challenge you believe is certain and imminent, instead be prepared as a society to deal with many that will come your way. Don’t fool yourself by writing long white papers and passing new regulation attempting to prevent the crisis.
An interesting and more recent issue complicating disasters today is complexity. The world is much more complicated than ever. One example of that complexity is interconnectedness, whether that is information, capital or human flow.
One of the huge sources of complexity is social networks that lead to information cascades. Ferguson credits Prof. Nicholas Christakis work on Networks and how they impact us.
Niall Ferguson covered his thoughts on Complexity in a recent Bloomberg article: Nobody Knows How Long Inflation Will Last. That’s Life.
Key paragraphs from that:
Our cognitive bias in favor of things going back to normal has been exacerbated by the near-universal attention deficit disorder of the TikTok era. Not only are inflation, war in Ukraine and Covid nasty; we are also bored of them — so bored, in the case of Covid, that we no longer pay much attention to the latest wave currently sweeping the US (until we ourselves test positive).
The reality is that all three forms of disorder — economic, public health and geopolitical — seem likely to be protracted, not just for months but potentially for years. And the longer they last, the more disruption we shall see.
The central problem is that the world we have built has, over time, become an increasingly complex system prone to all kinds of stochastic behavior, non-linear relationships and “fat- tailed” distributions. When I am asked about the future path of inflation, or war, or plague, my answer does not begin, “It’s complicated.” My answer begins, “It’s complex.”
Social networks are the structures that human beings naturally form, beginning with knowledge itself and the various kinds of representation we use to communicate it, as well as the family trees to which we all necessarily belong. They come in all shapes and sizes, from exclusive secret societies to open-source mass movements. Some have a spontaneous, self-organizing character; others are more systematic and structured. All that has happened — beginning with the invention of written language — is that successive information and communication technologies have facilitated our innate, ancient urge to network.
The key point is that social networks today are much larger and faster than at any time in history. That is why the complex system we know as humanity is more vulnerable than ever to various forms of contagion. In the words of the sociologist Duncan Watts, the key to assessing the likelihood of a contagion is “to focus not on the stimulus itself but on the structure of the network the stimulus hits.”
This helps explain why, for every idea that goes viral, there are countless others that fizzle out in obscurity because they began with the wrong node, cluster or network. The same often goes for infectious microbes, only a very few of which succeed in generating pandemics.
Large social networks are themselves complex systems, with their own kinds of phase transition. A seemingly random network can evolve with astounding speed into a hierarchy. The number of steps between the revolutionary crowd and the totalitarian state has more than once proved to be surprisingly small. The seemingly rigid structures of a hierarchical order can disintegrate with equal rapidity.
Niall is such a great speaker that you really should hear him yourself. This was a great discussion he had late last year. The beginning is more about the book, and the last 40 mins is more about his view of the world.
He’s far more concerned about a new Cold War then climate change (he’s not a denier), but does think there is no point in discussing climate change without understanding and discussing where the bulk of the world’s population - China and India will get their energy from.
and he was on the Intelligence Squared podcast too, which is slightly shorter.
How the Titanic really sank - or how many variables coalesced into one disaster:
Captain Edward Smith of the Titanic was an experienced sailor, but he had been in command of the Titanic’s sister ship, the Olympic, when she collided with a British warship HMS Hawke, just seven month before. When Smith was informed of an ice field ahead, he did not reduce his speed.
The ship’s wireless officer, Jack Phillips, also bears some blame since he was busy sending out personal messages from wealthy passengers then to incoming warnings about icebergs.
The lookout, Fred Fleet, spotted the iceberg ahead at five hundred yards, but if he been using binoculars (which he couldn’t locate), he would have seen it when it was a thousand yards away.
The first officer, William Murdoch, who was in charge of the ship at the crucial moment, and thus had about 37 seconds and maybe just half that, gave the order”Hard a-starboard” and the engine room the order to stop the engines. While not an incorrect response, it may have had the unintended consequence of exposing Titanic’s starboard side for longer to the iceberg than if Murdoch had maintained full speed and tried to go around it or simply rammed it head-on.
C. Seize The Day
Let’s make this summer count.
One of the articles that changed my life was Wait But Why’s”: The Tail End.
It is a reminder that relationships are not evenly distributed through time.
Prioritise those that matter most to you.
This is your life in years:
This is your life in weeks:
This might already seem short, but I have bad news.
The really important parts of life aren’t spread out evenly through time like those charts - Those important parts are our relationships.
Take my parents for example, who are near 70. During my first 18 years, I spent some time with my parents during at least 90% of my days. But since heading off to college, working and now having my own family, I probably see them an average of only two times a year, for an average of maybe 2 weeks each time. 30 days a year. About 10% of the days I spent with them each year of my childhood.
Being in their early-70s, let’s continue to be super optimistic and say I’m one of the incredibly lucky people to have both parents alive into my 60s. That would give us about 20 more years of co-existence. If the 30 days a year thing holds, that’s 600 days left to hang with mom and dad.
It turns out that when I went to University, I had already used up 90% of my in-person parent time.
When you look at that reality, you realise that despite not being at the end of your life, you may very well be nearing the end of your time with some of the most important people in your life.
I’m now enjoying the last 5% of that time. We’re in the tail end.
This applies to time with your own children too. If for example, they are ten years old (like mine), I have already used up 40-50% of the total time I will ever have with her.
Borrowing his conclusion:
So what do we do with this information?
Setting aside my secret hope that technological advances will let me live to 700, I see three takeaways here:
1) Living in the same place as the people you love matters. I probably have 10X the time left with the people who live in my city as I do with the people who live somewhere else.
2) Priorities matter. Your remaining face time with any person depends largely on where that person falls on your list of life priorities. Make sure this list is set by you—not by unconscious inertia.
3) Quality time matters. If you’re in your last 10% of time with someone you love, keep that fact in the front of your mind when you’re with them and treat that time as what it actually is: precious.
Make it count!
My wife’s book: The Halfways is now out on Audible. I love audiobooks, especially for fiction.
Thank you to all of you for checking it and sending me pictures of you reading it. It means a lot to us.
Here’s a recent Amazon review:
The Halfways is a beautiful story about a family scattered across the world, brought back together after a sudden passing, after which secrets are revealed.
This story is beautifully told, well plotted, emotional, gripping and wonderfully cathartic. The characters brought to life in this novel are so incredibly human. They are frustrating and sympathetic, flawed and strong, full of spite and love and everything in between.
This story is almost entirely character driven and as such lives and dies on the characters and personally I enjoyed every moment I spent with them. I loved the descriptions of the locations in the book and I could imagine the hills of Wales, the rush in New York and the hustle and bustle of village life in Bangladesh. The references to food were also a delight. I also loved the use of a different language and how it talks about a different culture.
From the very first chapter this was a completely immersive novel. The writing is just superb. The story completely drew me in and I couldn’t put it down. An absolutely beautiful cover and an engaging synopsis drew me into this book.
An enchanting family saga that I adored. Well written with a riveting storyline and well developed characters that I took to my heart. An incredible read. I highly recommend this book.