A Few Things: Papic's Outlook, Narrative Driven Markets, 7 Personal Questions, Market Surprises and Risks, Raising Kids For The Long Term, Future of Software Dev, The Immortality Key....

January 7 2023

Quotes I’m Thinking About:

"I'm astounded by people who want to 'know' the universe when it's hard enough to find your way around Chinatown."

- Woody Allen

"You can ignore reality, but you cannot ignore the consequences of ignoring reality."

- Ayn Rand

“It has been my experience that folks who have no vices have very few virtues.”

- Abraham Lincoln

“You’re only as young as the last time you changed your mind.”

- Psychologist Timothy Leary

"The gravity of aging is more vicious than people realize. The height of your glider needs to be much higher than you think if you want to be enjoying life when you're 90."

- Peter Attia

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A. A Few Things Worth Checking Out:

1. Marko Papic at Clocktower Group had two great January pieces to start the year.

Here are the key ideas from his 2023 Macro Forecasts.

Marko states that the stimulus pivot in China combined with the Fed pivot away from extreme hikes would create the conditions that would let 2023 rhyme with 2016.

His second piece focused on the implications of a multipolar world.

His bottom line (emphasis mine): The geopolitical, demographic, political, and macroeconomic trends are all clearly more inflationary than the disinflationary 1990-2010s. That much is clear and investors should position accordingly (by not, for example, overweighing bonds on a secular basis and by investing in commodities). But the 1970s are too much of a stretch as a point of comparison. 

The 1970s were embedded in a firmly bipolar geopolitical context. As such, the world remained economically bifurcated, with ~70% of humans on the planet either living behind the Iron Curtain, under Maoism, or inside a softer version of socialism in India. 

The conflicts of the 2020s are multipolar in nature. As such, great power conflict is most definitely underway, but not only will it not completely reverse globalization, it may in fact spur a capex boom that will increase supply. And given technological progress over the past half century, that capex boom may produce much greater supply in a much shorter period of a time than is expected and certainly as compared to the capex booms of the past. Two examples of such optimistic capex surprises are Europe’s ability to transition away from Russian natural gas in mere months and the world’s ability to “solve” COVID-19 by discovering, producing, and distributing a functioning vaccine in an astonishingly short period of time. 

Global multipolarity kicked off one of the greatest bouts of technological innovation, starting in 1870. The reason is simple: competition between states focuses the minds of policymakers towards technological innovation. Human, physical, and financial capital is then steered by the state towards solving the very difficult problems, leading to the kind of meaningful innovation that can be harnessed for state-on-state competition. 

2. Markets are narrative driven.

My friend Niall Boland and team at ClearMacro had a great mental map of the public market drivers of the last few years and where we might be going. I love their outlook pieces.

This was a good way to remember the key headlines by month last year.

3. Super Annual Report from Shane Parrish at Farnam Street with the simple title:

7 SIMPLE QUESTIONS TO HELP YOU REFLECT ON THE PAST YEAR AND MAKE THE NEXT YEAR UNSTOPPABLE.

These are my three favourite:

• Imagine you took over your life today. If you wanted to be more successful, what would you stop? What would you start? What’s getting in the way? If I took over my life from scratch today, what would I immediately stop doing? What would I start doing?

• The most successful people don’t wait around for things to happen to them, they make things happen by going positive and go first. Where am I waiting for another person to make the first move? What can I do to go positive and go first?

• The most successful people are always planting seeds for the future. What can I do in the next week that will make the rest of the year easier? What can I do this year that will leave me in a better position for next year?

I will be doing this over the weekend.

4. I love thinking about what could surprise me and the markets for two reasons: a) we learn from surprises since they make us question our assumptions and beliefs and b) surprises move markets, since by definition they aren’t priced in.

Three great reads / listens on Surprises, Risks and Predictions for 2023:

a) Byron Wien released his Ten Surprises for 2023, the most interesting ones were:

• The Fed remains more hawkish than other central banks, and the US dollar stays strong against major currency pairs, including the yen and euro. This creates a generational opportunity for dollar-based investors to invest in Japanese and European assets.

• China edges toward its growth objective of 5.5% and works aggressively to re-establish strong trade relationships with the West, with positive implications for real assets and commodities.

• Because of medical breakthroughs across the board, many people decide on a cryogenic burial, expecting to be defrosted when a cure for the disease that caused their demise is discovered. Funeral homes across the country advertise that “It’s Nice to Be On Ice.”

b) The Eurasia Group had their Top Risks of 2023 Report.

Ian Bremmer was on CNBC this week discussing his views:

c) The besties at the All-In Podcast shared their 2023 Predictions, the most interesting moments are at:

(21:57) Prediction 3: 2023's biggest business winner (42:03) Prediction 5: 2023's biggest business deal (52:41) Prediction 6: 2023's most contrarian belief (1:03:03) Prediction 7: 2023's best-performing asset (1:07:50) Prediction 8: 2023's worst-performing asset

5. Thoughtful article on How to Raise Kids for the Long Run.

Key bits I liked:

When we think of how to raise our children, we usually consider time on a woefully myopic scale. We worry about what we do that day, week, or month. Sometimes, particularly during a tantrum, we count the minutes. Occasionally, parents will stretch their minds to think of how they're preparing their child for that season or the school year. Rarely do parents endeavor to consider how they raise their children on a macroscopic scale, not just in years but in decades, lifetimes, and generations.

One of the best things you can do is teach a child to cultivate grit, which encourages a growth mindset. Grit is like emotional stamina, passion, and perseverance for long-term goals in the future, despite any adversity. Grit has five primary characteristics: courage, conscientiousness, perseverance, resilience, and passion. Each of these features is noble individually but combined, they can confer success in life.

Research suggests creativity is another essential ingredient for success. Creativity sparks innovation, accelerates and deepens learning and adds meaning and satisfaction to life. It optimally challenges us to explore our imaginations through expression. Additionally, creativity can be immensely joyful and bring people together. Acting creatively encourages open-mindedness, empathy, risk-taking, and critical thinking.

Cultivate gratitude by acknowledging the goodness around you. Levels of gratitude are consistently strongly correlated with happiness. Gratitude can increase positive emotions, help to relish good experiences, improve health, counter adversity, and build strong relationships. The benefits of gratitude may seem evident to us, but it's important to spell them out explicitly for children, encouraging acts like thank you notes and gratitude lists. Bolster appreciation with other core characteristics like kindness, tolerance, and empathy.

Kindness permeates every aspect of a family. In fact, researchers found that it was the single most important predictor of satisfaction and stability in a marriage. Kindness is not all about doing for others, it is immensely rewarding for the individual as well. Research shows that acts of kindness can boost confidence, happiness, and sense of control of the world around us. It affects levels of empathy, self-esteem, compassion and improves mood. Being kind can even offer neuroprotective factors through reduction of stress hormones like cortisol and boosts of serotonin and dopamine.

Finally, model good behavior. There are many influences in your child's life that are out of your control, how you behave is not one of them. All the lessons in the world are worthless if you're not walking the walk. Behave in a manner you would like to see reflected in your child. Be someone they look up to. Our family looks back fondly on those who have behaved with integrity as inspiration.

6. Loved this share from my friend Nicolas Dard of Paul Graham’s: The Top Idea In Your Mind.

What one thinks about in the shower in the morning is more important than I'd thought.

Now I'd go further: now I'd say it's hard to do a really good job on anything you don't think about in the shower.

I think most people have one top idea in their mind at any given time. That's the idea their thoughts will drift toward when they're allowed to drift freely. Which means it's a disaster to let the wrong idea become the top one in your mind.

I suspect a lot of people aren't sure what's the top idea in their mind at any given time. But it's easy to figure this out: just take a shower.

7. Great Invest Like The Best episode on The Future of Software Creation. Amjad Masad is the founder and CEO of Replit.

Some key ideas I didn’t know:

• The future of software development are IDEs. An integrated development environments is a software application that helps programmers develop software code efficiently. It increases developer productivity by combining capabilities such as software editing, building, testing, and packaging in an easy-to-use application. The future of IDEs is to make software development so easy, that all of us can learn it and build things.

• He spoke about the Steve Jobs black pill - where by Apple was one of the companies which took computing from a building, hacking open-loop environment to a passively consuming software in a closed loop environment. We have lost our ability to tinker with and build software.

• In a world where software is easy to build, the upside isn’t in knowing how to code (although he encourages you to learn the basics) but in being an ideas person who knows how to think about problems. Someone with analytical skills to understand what needs to be built.

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B. The Immortality Key

Regular readers know that one of the themes that we explore on a "A Few Things” is the human experience and how both at an individual and societal level we can live more fulfilled and impactful lives.

Given this, one of the areas I have been exploring since reading Michael Pollan’s book in 2018: “How To Change Your Mind”, are psychedelic compounds like Psilocybin and Ketamine.

The space is becoming mainstream with Netflix documentaries like removing the stigma:

and recent WSJ articles on the drug companies getting involved:

This week, Oregon became the first state to allow adult use of psilocybin.

One of the books I’ve been checking out about “our” long term relationship with psychedelics is: “The Immortality Key, the secret history of the religion with no name”. A New York Times Best Seller.

The big idea that the author discovered is that humans have been using psychedelics as part of the religious experience for a long time.

The author Brian Muraresku, graduated Phi Beta Kappa from Brown University with a degree in Latin, Greek and Sanskrit. He is an alumni of Georgetown Law and a member of the Bars of both New York and Washington D.C.

The book aims to answer the following questions: Did the Ancient Greeks use drugs to find God? And did the earliest Christians inherit the same, secret tradition? Did a profound knowledge of visionary plants, herbs and fungi pass from one generation to the next, ever since the Stone Age?

Brian spoke to Lex Fridman in 2021. The most interesting bits are at:

[21:30] Psychedelics as a source of collective intelligence

[34:30] 2-mins on what the book is about according to the author

[56:10] The future of human experience

Is the psychedelic space investable and how are you approaching it?

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C. News You Might Have Missed

A collection of bits that I found interesting in this week’s news.

1 in 3 US adults reported having a mental illness or substance abuse disorder in 2021. People aged between 18 and 25 reported the highest rate of mental health issues of all adult groups, with 1 in 3 Gen Z adults reporting that they suffer from a mental illness.

FTC proposed a ban on noncompete causes, which typically bar employees from joining a competitor or launching a competing business for the stipulated period in the contract. The rule was initially implemented to stop high-level executives from taking away trade secrets from an organisation to its competitor. Eventually, the clause was applied to lower-wage workers. The plan would make all new and existing noncompetes illegal, as well as require companies to inform employees that any previous noncompete agreements are void. But there’s no date set for a final vote, and the plan will face challenges even if it does cross the finish line. The US Chamber of Commerce, which represents many powerful corporations, threatened legal action against such a change in 2021.

UK Prime Minister outlined his 5 priorities for the nation in his first major policy address since assuming the role of Prime Minister in October. Promised to expand the UK economy, improve the National Health Service (NHS), reduce inflation by half this year, tackle illegal immigration and reduce the national debt.

SpaceX is raising $750 million at a $137 billion valuation, say reports. Last month, was reported that it was allowing insiders to sell at $77 per share, which would have put the company’s valuation near $140 billion. The company raised more than $2 billion in 2022, including a $250 million round in July, and was valued at $127 billion during an equity round in May.

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Last week’s Guilty Pleasure:

Glass Onion" has become Netflix's 3rd most-watched film in 10 days with 209 million hours streamed.

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Wishing you a great 2023.

And one final thing to help you in networking….