A Few Things: State of Culture, Economist on AI & GLPs, What Does The Quran Say, Female Mental Health Crisis, GQG on Investing, News and Charts, New Era For Chinese Tech, BTC Nation States....
March 15, 2024
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
If you missed last week’s discussion: The Surveillance State, Daily Habits for Longevity, Election 2024 Investment Implications, Be A Supercommunicator, Power of Noticing, Chaos in Politics, The Fund, Building Perplexity....
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Quotes I Am Thinking About:
“He is a wise man who does not grieve for the things which he has not, but rejoices for those which he has.”
- Epictetus
“Success usually comes to those who are too busy to be looking for it.”
- Henry David Thoreau
“We need to redefine "problems" into opportunities. Problems are an opportunity to create value. Problems are an opportunity to strengthen relationships. Problems are an opportunity to differentiate yourself from others. Every problem is an opportunity in disguise.”
- Shane Parrish
“The greatest enemy of learning is knowing.”
- John C. Maxwell
“The maturation of every investor starts with absorbing almost everything and ends with filtering almost everything.”
- Ian Cassel
“I learned this method for dealing with these kind of moments, which is: You just make a little progress every day. So today, I’m going to wake up, I’m going to make progress. I’ll make progress in the litigation. I’ll make progress in the portfolio. I’ll make progress with my life. And progress compounds a bit like money compounds. You don’t see a lot of progress in the first few weeks…. You can’t look up at the mountaintop where you used to be because then you’ll give up. But you just…make step by step by step…. Just keep making progress, progress, progress and progress really does compound. And one day you wake up and you’re like, ‘Wow, it’s amazing how far I’ve come.”
- Bill Ackman
“All governments suffer a recurring problem: power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible.”
- Frank Herbert
A. A Few Things Worth Checking Out:
1. The State of the Culture in 2024 by Ted Gioia.
In his recent must-read piece, Ted Gioia shared a chart on what he called ‘dopamine culture’. The “new culture”, he explained, is defined by “the absence of Culture (with a capital C).” The new culture is not even entertainment. Everything is being replaced by “compulsive activity.”
In other words, it’s a culture of addiction to stimulating distraction. This culture “can last forever”, Gioia warned, “because it’s based on body chemistry, not fashion or aesthetics.” It’s haunting and impossible to unsee.
Everything is “getting turned into TikTok” because it is profitable and presents a kind of prisoner’s dilemma: if you don’t exploit the dopamine loop, your competitors will. And there’s no need to lose sleep about it. Engagement metrics show that you’re just giving consumers the moist robots what they crave. “Some companies get people hooked with pills and needles,” Gioia explained. “Others with apps and algorithms. But either way, it’s just churning out junkies.” He called the corporate overlords of this wasteland the “dopamine cartel.”
2. The Economist had a timely piece titled: The battle over the trillion-dollar weight-loss bonanza.
It discussed the tremendous impact of weight-loss drugs called GLP-1 agonists, such as Wegovy and Zepbound, on various industries and the companies that make them.
Novo Nordisk and Eli Lilly, the makers of Wegovy and Zepbound respectively, have seen significant growth in their market value and are expected to dominate the weight-loss drug market, which could reach $80 billion by 2030.
To expand their market, the companies are working on proving additional health benefits of the drugs to convince insurers to cover them for a wider range of patients.
Despite the challenges, Novo Nordisk and Eli Lilly are investing heavily in innovation to maintain their edge over potential competitors, with several new drugs in various stages of development.
3. The Economist had an interesting piece titled: How businesses are actually using generative AI.
It discusses the impact of generative AI, such as ChatGPT and GPT-4, on the white-collar workforce and productivity. Despite the AI-driven stock market boom, real-world adoption of generative AI by businesses has been cautious.
They highlight three main categories of AI use cases: window-dressing, tools for low to mid-skilled workers, and tools for a firm's most valuable employees.
4. The month of Ramadan started last weekend, which means about 2 billion people will be fasting from sunrise to sunset - based on the 5 Principles of Islam outlined in the Quran and Hadith.
Over a billion copies of the Quran exist – yet it remains an enigma. Its classical Arabic language resists simple translation, and its non-linear style of abstract musings defies categorisation.
Timely podcast with Michael Shermer of the Skeptic show to discuss: Who Wrote the Quran, Why, and What Does it Really Say? with Mohamad Jebara.
5 Key Insights from the conversation:
The Quran was revealed orally to the illiterate prophet Muhammad over 22 years, then compiled and edited under his direction in the final years of his life. The Arabic language evolved significantly soon after, so the original meanings of many words differ from modern Arabic.
Many extremist groups cherry-pick and mistranslate passages of the Quran to justify violence, when in fact the full context delivers a very different, more peaceful message. For example, "jihad" refers to inspiring people through lofty conduct, not terrorizing them.
The Golden Age of Islam was a time of great learning, tolerance, and advancement, with women making up 40% of scholars. Colonialism and other external factors disrupted this, leading to the less progressive norms seen in some Muslim societies today.
Female genital mutilation predates Islam and is not condoned by it, though the practice persists in some areas. The Quran teaches avoiding harm and treats men and women as spiritual equals, though with some different roles.
Muhammad's true miracle was the message of the Quran, not mythical feats. Most traditional stories of him performing supernatural acts were likely invented later to compete with other religions. The Quran depicts him as an exceptional but mortal man.
Jebara aims to revive the original teachings of the Quran and example of Muhammad, which he argues are much more progressive, peaceful and intellectually rich than many modern practices done in the name of Islam. He sees extremism as a perversion of the faith.
5. Deconstructing the Female Mental Health Crisis. Chris Williamson at Modern Wisdom spoke to Freya India, a writer and journalist focussed on female mental health and modern culture.
As a father of two pre-teen girls this one had me thinking.
Gen Z girls are not doing ok. No matter how badly you think men have it right now (and they do), girls are doing no better. From therapy culture to advertising your anti-depressant use on Instagram, it's no surprise they're struggling and confused.
Five Key Insights from this conversation:
Gen Z girls are facing a mental health crisis, with rising rates of anxiety, depression, eating disorders, self-harm and suicide. Social media seems to be a major contributing factor, as it enables harmful social comparison, targeted advertising exploiting insecurities, and inundation with unrealistic beauty standards.
There is an overemphasis on "destigmatizing" mental health issues to the point of glamorizing them, with influencers encouraging young people to publicly share their diagnoses and medications as a form of activism. This pressure to overshare vulnerabilities online may cause issues later on.
Gen Z girls have become extremely risk-averse in dating and relationships out of a fear of getting hurt. Dating advice is cynical, framing normal relationship behaviors as "red flags." This stems from family breakdown, divorced parents and a lack of positive role models for healthy long-term relationships.
A cultural emphasis on careers and individualism over family has led many young women to see marriage and children as unimportant for a fulfilling life compared to job satisfaction and friendships. Pop culture role models promote a materialistic, fame-oriented lifestyle incompatible with family.
Mainstream feminism has been co-opted by corporations to sell products and an individualistic, consumerist version of empowerment to women. It no longer provides positive guidance to girls navigating the challenges of growing up in the social media age. More honest conversations are needed to address the roots of the crisis.
6. Rajiv Jain the PM at GQG, a $120B global equity firm was on the Insightful Investor podcast discussing insights about running a successful business, his investment framework, the importance of adapting and his market outlook.
5 Key Insights:
Adaptability is the key to long-term investing success. Rajiv emphasizes the critical importance of being able to evolve your approach as markets change. Refusing to adapt and clinging to past methods, even if they were very successful before, is the most common reason investment firms fail.
Fostering "healthy friction" and debate within an investment team surfaces the best ideas. Rajiv intentionally seeks out analysts who think differently and encourages open disagreement. He'd rather resolve such debates internally than have the market prove the team wrong.
Position sizing should reflect conviction, while still managing risk. Make bigger, more concentrated bets on the highest conviction ideas, but define a sell discipline and don't be afraid to cut losses quickly if the thesis starts to break down. Many of the biggest mistakes come from holding on too long when fundamentals deteriorate.
Go where the opportunities are, regardless of geography or sector. Having a broad opportunity set provides more potential sources of alpha and the ability to find attractive investments in varied market conditions. Overly narrow specialization can lead to stretches of underperformance when that area is out of favor.
Use macro analysis for risk management, not to drive bottom-up stock selection. While Rajiv doesn't make macro calls to find stocks, the macro climate influences his position sizing and risk exposure. He's currently underweight China on a macro basis, despite finding some compelling individual Chinese stocks.
The overarching theme is that a flexible, opportunistic approach, grounded in fundamental stock picking but informed by macro context, has been key to GQG's strong performance. Rajiv combines high conviction bets with risk management through tailored position sizing and selling. A culture of openness to change and new ideas, rather than rigid adherence to a narrow style, prepares them to adapt to evolving markets.
7. Marko Papic at Clocktower had two great reports sharing his latest thinking, summary pages below:
8. The Dumber Side of Smart People by Morgan Housel.
"The biggest risk to an evolving system is that you become bogged down by experts from a world that no longer exists. The more evolution you have, the more you should expect that expertise has a shelf life. And those most susceptible to that risk are the people you’d least suspect: The smartest and most intelligent, who at one point flashed their brilliance but struggled to admit that it can’t be repeated."
10. Five Simple Tests You Can Do At Home To See How Long You Will Live by Dr Paddy Barrett: one leg stand, VO2 Max, pushups, heart rate recovery, grip strength, and blood pressure.
B. News and Charts You Might Have Missed
1. Luxury gyms like LifeTime and Equinox are acquiring weight loss clinics to serve members using GLP-1 medications, such as Ozempic and Wegovy, which have seen over 9 million prescriptions in the US in the last 3 months of 2022.
By 2030, over 30 million people, or 9% of the US population, may be taking GLP-1 medications.
2. This always amazes me. The most intimate things about our lives has been transformed.
3. Max Roser has been continuing the work Hans Rosling started, and he recently updated his: Short History Of Global Living Conditions.
4. UBS shared their Global Investment Returns Yearbook.
5. JPM shared their 14th Annual Energy Paper. Key Ideas:
Electravision, the predominant vision for the future, involves electrifying everything powered by renewable energy. However, while the grid is getting greener, electrification is advancing at a slower pace due to various challenges. Achieving Electravision in the U.S. would require significant changes in energy consumption and generation, with intermittent renewables representing a much larger share of the grid.
Building the required transmission infrastructure might be the most challenging aspect of Electravision. The Department of Energy estimates that a scenario similar to Electravision would require significant growth in transmission and interregional transfer capacity by 2035. Legislative and cultural changes are needed to allow transmission to expand at the same pace as other major infrastructure projects.
China, the world's largest energy user, is investing heavily in all forms of energy - coal, renewables, nuclear, and electric vehicles. It is the primary driver of global energy transition investment. However, unlike the stagnant energy demand in the West, China's growing energy demand means that renewable shares of its energy mix are not as indicative of emissions declines as they are in developed countries.
Lazard's annual Levelized Cost of Energy (LCOE) analysis finally acknowledges the need to incorporate the cost of "firming the intermittency" of wind and solar power, rather than simply comparing the raw LCOE of renewables to baseload power. This results in significantly higher cost estimates for wind and solar in some regions.
The paper highlights the challenges and uncertainties surrounding the costs and construction timelines of new nuclear power plants in the West. Recent large cost overruns and delays in the US, UK, France, and Finland serve as cautionary examples.
C. The Science and Technology Section:
1. Emerging as a formidable rival to GPT-4, Anthropic’s Claude 3 family introduces Opus among its trio of models, all strongly marketed towards business applications. An advancement on previous models, Opus exhibits enhanced precision and efficient recall, as well as a significantly reduced refusal rate, directly addressing the previous model’s frustrating tendency for unwarranted rejections.
I’ve been using Claude a bunch more recently. It’s a serious upgrade.
2. Demetri Kofinas at Hidden Forces spoke with Paul Triolo, Senior Vice President for China and Technology Policy Lead at Albright Stonebridge Group, where he advises clients in technology, financial services, and other sectors as they navigate complex political and regulatory matters around the world.
It was a detailed discussion on the New Era for the Chinese Semiconductor Industry, which was also the title of a recently published American Affairs article by the same name by Paul. In it, he examines how semiconductor export controls levied by the US Commerce Department have been received in Beijing and how China’s domestic semiconductor ecosystem has responded.
5 Key Insights from the conversation:
The US government's export controls on advanced semiconductors and chip manufacturing equipment to China since October 2022 have been more extensive than expected by industry. The controls aim to freeze China's capabilities at current levels and prevent Chinese firms from manufacturing leading-edge chips that could have military applications. However, the specific goals and metrics for success remain unclear.
The controls are negatively impacting the revenues of US and allied semiconductor firms that rely heavily on the Chinese market. This could undermine their ability to invest in R&D and innovation long-term. The industry is pushing back on the scope of the controls and argues policymakers don't fully grasp the global, interconnected nature of the semiconductor supply chain.
In response, China is pursuing an updated industrial policy involving more state support for the domestic chip ecosystem, funding open-source chip architectures like RISC-V to avoid reliance on restricted Western IP, and leveraging innovative private firms like Huawei. However, it will be very difficult for China to achieve self-sufficiency across the entire complex semiconductor supply chain.
The US CHIPS Act provides subsidies to re-shore semiconductor manufacturing but doesn't fully make up for industry's lost China revenues. Questions remain around the scale required and ability to sustain a robust workforce and funding across political administrations. More dialogue is needed between government and industry.
China's state-supported push into electric vehicles, leveraging a strong battery supply chain and charging infrastructure, shows it can achieve dominance in strategic sectors. The US and allies need a coordinated, long-term industrial policy and shared export control framework to compete in semiconductors and other key technologies, but implementing this remains a major challenge.
3. 13D WILTW this week had a section on the growing possibility of nation-state adoption of Bitcoin, highlighting four main reasons:
Bitcoin mining can monetize stranded energy sources (solar, wind, hydro, natural gas) in geographically isolated areas, allowing countries to convert otherwise wasted energy into Bitcoin for their national treasury or cross-border trade.
Bitcoin mining can monetize wasted energy, such as gas leaks from oil rigs and natural gas fields, reducing emissions and improving the economics of renewable energy projects or desalination plants.
Bitcoin mining allows states to diversify their reserve holdings into a neutral, non-sovereign, censorship-resistant hard asset, which is particularly relevant in the current multipolar world order.
Acquiring Bitcoin can help nations project digital power in the 21st century, as Bitcoin represents the ability to send large amounts of economic energy across space and time in a permissionless, censorship-resistant manner.
They provided examples of countries like Bhutan, Ethiopia, the UAE, Oman, and Qatar exploring or implementing Bitcoin mining initiatives. It also suggests that nation-states may accumulate Bitcoin reserves under stealth mode, similar to how they hold gold bullion, to maximize their share of power in the world.
Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you got value out of reading, please let others know!
This was a great watch on Netflix (just the trailer has been watched 12 million times):