A Few Things: Learning From The Greats, Becoming a Learning Machine, Zoltan on Bretton Woods 3.0, Origins of Life, Career Advice, Doomberg onWhat's Next For Europe, Marko on Markets, The ETH Merge...

September 14 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.

You can check out last week’s edition here: DALL-E2, Balaji on Lying Media, Doomberg & Marko on the European Energy Crisis, Uncharted, Niall Ferguson on Inflation, A Shortage Of Trust, Simulacra and Simulation

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“Authenticity is about being true to who you are, even when everyone else wants you to be someone else. That doesn't mean you don't have to play fair or conduct yourself in a respectful manner. But it’s a lot harder to become the best you can be when you’re focused on trying to be the best version of someone else. There’s nothing authentic in that, and if it’s not authentic, then it’s not going to last.”

- Michael Jordan

"Learn to get in touch with silence within yourself and know that everything in this life has a purpose. There are no mistakes, no coincidences; all events are blessings given to us to learn from. There is no need to go to India or anywhere else to find peace. You will find that deep place of silence right in your room, your garden or even your bathtub."

- Psychiatrist Elisabeth Kübler-Ross on finding yourself

“A downturn normally has two stages, and investor sentiment goes through two fairly predictable phases. First there’s the guillotine stage—the sharp decline. That creates fear. That’s what happened in 1974. Then, the second stage goes more slowly—there’s the feeling of being sandpapered to death. The investor is whipsawed by a choppy market, and then worn down gradually. In place of fear come feelings of apathy, lack of interest, and finally, hopelessness. That is what happened for the rest of the seventies.”

- Bob Farrell

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A. A Few Things Worth Checking Out:

1. I like the idea of reading biographies, but haven’t actually read a single one.

Luckily, David Senra has devoted his life to studying great entrepreneurs. He's read more than 270 biographies and distills key insights from a biography into each episode of his podcast - simply called “Founders”.

He was Invest Like The Best discussing what he’s learned.

My favourite bits were:

[00:13:45] - How often obsession is apparent in the founders he’s studied across hundreds of biographies

[00:22:45] - The dynamic and relationship between inspiration and perspiration

[00:38:34] - How often do great founders break the law or enter gray areas of it

[00:41:22] - The role constant learning and listening plays in success

[01:14:55] - Major aspects of people he’s studied that haven’t been discussed yet

I really learned enjoyed his episode on John D. Rockefeller!

You can just see how passionate he is and how much time he’s spent on the biographies.

2. One of the goals of this weekly email is to have the highest signal to noise ratio.

In this presentation titled Learning for Analysts and Future Portfolio Managers, Alix Pasquet shared his framework for becoming a learning machine. Despite the title, many of the concepts apply to life and business more generally.

This is one of the highest signal to noise presentations I have ever heard.

Here is the podcast version and highlights / summary.

3. Everyone in finance is quoting Zoltan Pozsar and his Bretton Woods 3.0 thesis. He was on the Bloomberg Odd Lots podcast with his mentor Perry Mehrling, debating Bretton Woods 3.0. Perry doesn’t buy it.

4. Prof. Nick Lane was on Lex Fridman Podcast discussing the “Origin of Life, Evolution, Aliens, Biology, and Consciousness”. He is a professor in evolutionary biochemistry at University College London. Prof. Lane is the author of a number of books, the most interesting of them are:

We covered his work in February this year.

His work deals with a big questions like:

• What is Life?

• Where did multi-cellular life come from?

• What was so special about primordial Earth to make life possible?

• What would life look like on other planets? Are Carbon and Water necessary?

The key bits in the podcast were:
(00:31) - Origin of life
(19:51) - What is life?
(36:41) - Prokaryotic vs eukaryotic cells
(1:32:29) - Consciousness
(2:04:03) - AI and biology
(2:33:22) - Evolution

5. Derek Thompson of the Atlantic, had five great pieces of career advice, shaped by economics, psychology, and a little bit of existential math.

• Your career is not your life

• Explore, then exploit

• Don’t do the job you want to tell other people you do. Do the job you want to do

• Be ruthlessly honest with yourself about what you value—and how much professional success matters to you

• Flow comes from voluntary, difficult, and worthwhile work

6. Anyone have a theory on why this is happening in physical Commodity markets? Thank you Max L for sharing.

7. The Doomberg team was interviewed by NY Magazine about “How Europe Stumbled Into an Energy Catastrophe”.

Key bits below:

You recently wrote that “with each passing day, Europe risks crossing the point of no return.” What does the point of no return look like in your view?

The point of no return is literally heading into the winter of 2022–23 with insufficient molecules — think natural gas, oil, and so on — to get through that winter, based on any sort of reasonable, Monte Carlo simulation of the degree of winter’s severity. But also, and just as importantly, no efficient mechanisms for rationing.

You can’t print molecules. You can’t print energy. If you head into the winter without enough energy — and because of Putin’s decisions, Europe almost certainly will — and then you also have a very sloppy, guaranteed-not-to-work rationing mechanism, you could have chaos. And that’s our main concern. We’d argue we’re kind of already there. What we’re experiencing today — bailouts by the hundreds of billion — electricity prices up by a factor of 14 or 15 before coming down by a third and everybody cheering … this is Weimar-like stuff.  If even just three months ago we had said this was going to happen, we would have been dismissed, and I would say correctly, as alarmists.

What can possibly be done about the crisis now? Is there any good way out of it, or just less-terrible scenarios? 
I would say there are signs of hope with Liz Truss’s announcement about the U.K.’s recommitment to a rational-supply strategy — with a focus on producing more gas, oil, and nuclear power. Her proposal for a broad-based bailout of the British consumer for energy costs does, I think, place extra pressures on limited supplies because there’s no price signal that people should be saving. You end up with less faster. So I would’ve let the prices roll a little bit longer. But there’s no good choices here.

Our main critiques of European leaders have been about their broader lack of knowledge about how the world actually works. It’s unthinkable that Germany would still be debating whether they should keep the nuclear power plants on. It’s unthinkable that Germany would be debating whether or not to go turn back on the ones they just turned off. And we keep saying, How much pain do you need to suffer before you reacquaint yourself with reality? And it’s just kind of sad to watch.

This is why we actually are very hopeful about Truss’s policy pronouncement, which has since been drowned out of course by the death of the Queen. But she’s committed to an all-of-the-above approach on energy, which we think is sensible. And she’s the first leader on the continent in a position of power, at least, that we’ve seen come clean with her constituents in this regard. In Germany, there’s still a deep, deep delusion about their relative place in the power struggle that is ongoing. This is a war. The hybrid part of this war that surrounds energy is almost as important, if not more important, than the hybrid part of this war that surrounds the kinetic aspect of it. And in that regard, we’re failing badly.

Do you think Europe will be in a better position to exert leverage over Putin after this winter?
Can’t get worse. This is the apex of the challenge, no question about it. We’re hoping that by some miracle, winter in Europe is extremely mild. But don’t forget, there’s still going to be significant economic damage, much of it exported to the countries that will not be getting that incremental carrier of liquid natural gas. Look at what’s going on in Pakistan today and at what happened in Sri Lanka. As is always the case, the emerging world suffers when the Western world burps. And it’s quite the burp that we have going on in Europe today.

There’s no doubt that if they can muddle through, things only get better from here, and Putin probably knows that. LNG import terminals are being put up at a record pace. People have gotten serious again about reconnecting with physics. Unfortunately, but by necessity, Germany is burning coal as fast as it can. It’s hopeful that around the world, there seems to be a reconnection with the power of nuclear energy. For example, Governor Gavin Newsom in California extending the life of the Diablo Canyon nuclear power plant is an important milestone. We’re seeing reports that the Palisades nuclear plant in Michigan may have a second life. I think both Boris Johnson and Truss committed to nuclear in their plan. Let’s see if it gets executed. Nuclear power would represent 25 percent of the United Kingdom’s electricity production in a few years. Truss has promised that never again shall the U.K. find itself in a position of being short of molecules. And that’s wonderful and we applaud it.

Again, as we’ve said repeatedly, we would love nothing more than if a year from now, you call us back and you’re doing another piece about what alarmists we were and how much we got wrong. That would be great. It’s literally the character of Doomberg — Chicken Little. So that would be fine.

8. Amor Towles, the author of A Gentleman in Moscow and The Lincoln Highway was on EconTalk with Russ Roberts discussing the writer’s craft.

9. The amazing Marko Papic was on the Market Champions podcast discussing CCP Meeting, European Energy, Buenos Aires Consensus.

10. This is interesting. Some of the numbers are way out of the norm. Thank you William Favrot for sharing.

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B. The Tech and Crypto Section:

1. If you enjoyed last week’s discussion on DALL-E then you’ll enjoy this one by Rex Woodbury titled: When Art and Technology Collide.

2. The Ethereum Merge happens tomorrow, when the network goes from a Proof-of-Work to Proof-of-Stake. If you want to know what this means, this piece by Paul Veradittakit at Pantera Capital is a good short read.

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Let’s end with a salute to Queen Elizabeth II, for shepherding the country through so much. Rest in Peace and Thank you.

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