A Few Things: Why Young Men & Women Are Drifting Apart, What Are Gold & BTC Signalling, Navigating Energy Transition, How To Be More Resilient, Do It, Regrets of The Dying, The Technology Section....
March 22, 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: 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....
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Quotes I Am Thinking About:
“Information cannot serve as an effective substitute for thinking”
- Bernard Baruch
“When you counsel someone, you should appear to be reminding him of something he had forgotten, not of the light he was unable to see.”
- Baltasar Gracian
"Tomorrow is only found in the calendar of fools.”
- Og Mandino
“Good judgment comes from experience, and a lot of that comes from bad judgment.”
- Will Rogers
“Live as if the light is within yourself; there is no other light”
- Gautam Buddha
“Feeling gratitude and not expressing it is like wrapping a present and not giving it.”
- William Arthur Ward
A. A Few Things Worth Checking Out:
1. The Economist had a thoughtful piece titled: Why young men and women are drifting apart.
The growing political divide between young men and women is a global phenomenon, evident in countries like Poland, France, Germany, Portugal, South Korea, and China. The gap is substantial, with young women being far more likely to lean left than right, while young men are only slightly more liberal than conservative.
The educational gap between young men and women is widening, with the share of women aged 25-34 with tertiary degrees rising faster than that of men in the EU and US. This disparity affects not only their political attitudes but also their life experiences and relationship dynamics.
To bridge the divide, policymakers need to address the root causes, such as making schools work better for underperforming boys (e.g., hiring more male teachers, having boys start school later), and providing vocational training to prepare young men for a more diverse range of occupations. A more nuanced approach to discussing gender issues could help draw immature boys and men into a constructive dialogue rather than driving them to online echo chambers.
We discussed some of this when we reviewed the book: Of Boys and Men.
5 Key Insights:
Liquidity drives everything in the current macro environment, while interest rates are a "red herring". Traditional economics focuses too much on the uses of funds rather than the sources and flows of funds. Monetary policy is subordinate to fiscal policy and financial stability concerns.
Monetary inflation is here to stay and will be the dominant regime going forward. Fiscal deficits will require debt monetization on a massive scale, through a combination of QE and financial repression forcing banks and investors to absorb government debt. This is the only way to reconcile markets with economic reality.
The Bretton Woods I system is fraying at the edges but still intact for now. The dollar remains hegemonic but faces increasing challenges from China. Geopolitical tensions between the US and China will shape capital flows, real exchange rates, and prospects for inflation and monetization.
Bitcoin is proving itself as "digital gold" - an amplified bet on liquidity expansion and a powerful monetary inflation hedge. Its price action leads gold and provides a cleaner read on global liquidity conditions. Every investor must consider their allocation to this new asset class.
US assets, especially large cap stocks, will remain the best game in town from a global capital flows perspective. America's fiscal splurge and liquidity injections will draw capital from the rest of the world, especially as other economies stagnate. Favor US equities but be selective as the cycle matures.
3. Meb Faber had an interesting conversation with Peter Atwater and Grant Williams.
Peter is a professor and author of The Confidence Map: Charting a Path from Chaos to Clarity. Grant is the author of the newsletter Things That Make you Go Hmmm… and host of The Grant Williams Podcast. He was also a co-founder of Real Vision.
It is a masterclass in how to analyze market sentiment, which seems particularly timely given how the market has been lately. Peter shares his framework for looking at the world through the lens of certainty and control and how that drives consumer confidence. Then he and Grant kick around a bunch of topics, including the relationship between natural gas and Nvidia, Elon Musk and the velvet rope economy, gold and Bitcoin, the opportunity in Japan, and much, much more.
5 Key Insights:
Confidence in markets is driven more by feelings of vulnerability and lack of control in the external world than by self-esteem. COVID showed that when people feel vulnerable, that drives market behavior more than confidence. Understanding vulnerability becomes a useful tool to interpret market participants' actions.
There is a dangerous disconnect between the focus on abstract, future possibilities (AI, crypto, Elon Musk) versus the realities facing average people in the real economy. Too much attention is paid to left/right political divides instead of the growing gap between the top and bottom. This divergence is unsustainable and a reconciliation likely looms ahead.
A breakdown in trust is evident in many areas - inflation eroding trust in institutions, political divisions, countries buying gold to diversify from the U.S. dollar. This loss of trust has major implications for the functioning of economies, markets, and society as a whole. Rebuilding trust will take a long time and likely requires a full reset.
Luxury goods have become over-extended, with brands catering to mass market consumers who all feel entitled to luxury. Many luxury buyers are the same people who own luxury stocks, creating a vulnerable feedback loop. The luxury sector appears frothy and due for a correction once easy money and confidence recede.
Emerging trends indicate a shift back to favoring established, predictable players over speculative upstarts. This is evident in the newfound appreciation for Toyota's steadiness over Tesla's hype, the focus on mega-cap tech leaders rather than unprofitable growth stocks, and the potential resurgence of Japan's long-ignored market and corporate champions. A flight to stability is often a signal of waning confidence.
The most important overall theme is that the era of easy money, overhyped narratives, and misplaced trust in people and institutions is likely coming to an end. A reset in confidence and a reconciliation between financial markets and economic realities is approaching, which will have major repercussions across the investment and socioeconomic landscape. Focusing on real-world fundamentals, selectivity, and a healthy respect for risk will be essential going forward.
4. MacroVoices spoke with former Goldman Sachs Partner and current Veriton partner, Arjun Murti in a conversation titled: Navigating the 2020’s Energy Transition Landscape.
They discuss Arjun’s outlook for where energy markets are and where they’re headed in the coming energy transition.
The conversation ties in well with last week’s Economist Deep Dive into the Oil Industry.
5 Key Insights from Arjun:
Chronic underinvestment in oil and gas supply, combined with too-optimistic assumptions about the speed of transitioning to renewables, is setting the stage for recurring energy crises and price volatility in the coming years as demand outpaces supply. Investors should prepare for a bumpy ride.
The energy transition will take multiple decades and require an all-of-the-above approach including oil, gas, renewables and nuclear. Betting on a swift demise of fossil fuels is risky. Companies with a balanced and realistic approach to the transition may fare best.
Growing energy needs of the tech sector, especially to power AI, could make tech giants important energy policy influencers alongside traditional industry. Investors should watch for tech to advocate for reliable baseload power like nuclear, not just intermittent renewables.
Saudi Arabia and other Gulf producers are preparing for an oil demand peak, potentially making them less willing to bail out undersupplied markets in the future. Geopolitical power may shift and the marginal barrel may be harder to obtain during shortages.
After a terrible decade, the stage is set for a potential new supercycle in energy and materials as supply limitations bite. Investors should watch for further upside breakouts in oil, uranium, copper and related equities. However, the ride will likely be volatile, requiring nimble trading.
5. Karl-Theodor zu Guttenberg, was a German policy maker, Minister of Defense, Minister of Economics & Technology and Member of German Parliament and the Council of Europe.
Then his life fell apart because of something he had done decades earlier.
This is the speech he gave about failure and fall from grace.
He discusses the concept of attention, and the importance of focusing on the present moment (which neuroscientists say lasts for a maximum of 3 seconds) and giving attention to others without prejudice or judgment. He then relates it to failure, both in terms of lack of attention leading to mistakes and an excess of attention leading to a sense of invincibility and poor decision-making.
Karl explains how the concept of "pure attention" helped him to become a more balanced and happier person, no longer driven by the expectations of others, fears, or the need to please. He encourages the audience to practice giving "pure attention" to themselves and others, and to not be defined by their past failures.
Thank you Can Elbi for sharing.
6. Chris Williamson at Modern Wisdom spoke to Dr. Orion Taraban is a psychologist specialising in men’s mental health.
Everyone wants to become more resilient. To be less perturbed and at the mercy of life, fears, emotions, everything. Thankfully there are strategies we can use to improve all of these and after decades studying the human mind, Orion has accumulated a lot.
5 Key Insights:
Setting end dates for new habits, goals, or challenges creates a defined timeline that encourages commitment and allows for sufficient effort to determine effectiveness. Most endeavors take 2-3 times longer than expected to yield results. Having a clear end point provides motivation to persist through difficulties and avoid premature quitting.
Achieving socially programmed goals often leads to disappointment because they don't align with an individual's authentic desires. Discovering personal fulfillment requires shedding external expectations and gaining accurate self-knowledge. This process takes time and introspection but is essential for pursuing a truly meaningful life.
Hope is a complex force that can both alleviate and prolong suffering. It provides motivation to persevere through hardship but can also tether people to unlikely outcomes. Balancing hope with realism is a profound life skill. Recognizing when to maintain hope versus accept difficult realities is crucial for personal growth and emotional resilience.
Self-improvement practices like therapy or intensive skill-building phases (e.g., "monk mode") have important purposes but can become traps if pursued indefinitely. The point is to develop the tools and insights needed to navigate life more effectively, not to accumulate knowledge while avoiding real-world engagement.
Wisdom is recognizing when to focus inward and when to apply one's growth to career, relationships, and life in general. Ultimately, self-optimization efforts must serve the larger goal of living well.
7. Enjoyed this: 20 Lessons From 20 Years of Managing Money.
My favourite three:
Intelligence doesn’t guarantee investment success. Warren Buffett once wrote, “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
I’ve met so many highly educated individuals who are terrible investors. They can’t control their emotions because their academic pedigree makes them overconfident in their abilities.
Emotional intelligence is the true sign of investment smarts.
The market doesn’t care how clever you are. There is no alpha for the degree of difficulty when investing.
Trying harder doesn’t guarantee more profits.
Being right all the time is overrated. Making money is more important than being right in the market.
Predictions are more about ego than making money.
8. Watched this 10 times in the last week. Should have watched it more!
B. The Top 5 Regrets Of The Dying.
Some time ago, Bronnie Ware, an Australian nurse, began writing on a blog about the regrets of dying people she had cared for. Over the following months, the article gained momentum in ways that only the Internet can explain.
The article, called "The Top 5 Regrets of the Dying," brought responses from all over the world. In the months that followed, over three million people read the article, which led to a book by the same title.
The 5 Regrets are as follows:
1. I wish I'd had the courage to live a life true to myself, not the life others expected of me;
2. I wish I hadn't worked so hard;
3. I wish I'd had the courage to express my feelings;
4. I wish I had stayed in touch with my friends;
5. I wish I had let myself be happier.
I try to think about this daily.
C. The Science and Technology Section:
1. Wired Magazine had good piece titled: Large language models can do jaw-dropping things. But nobody knows exactly why.
Three Key Insights:
Deep learning models sometimes exhibit surprising behaviors that challenge our understanding of how they work. Examples include "grokking" (sudden performance leaps after prolonged training), double descent (improved performance in very large models despite overfitting risks), and the remarkable generalization abilities of large language models.
The success of deep learning has outpaced our theoretical understanding. Many advances come from trial-and-error and empirical findings rather than a solid grasp of the underlying principles. Researchers are still grappling with fundamental questions about why these models work so well, especially for complex tasks like language modeling.
Developing a theoretical foundation for deep learning is crucial for future progress and safety. Better understanding could enable more predictable and efficient model development, help anticipate the capabilities and risks of ever-larger models, and provide greater control over increasingly powerful AI systems. This challenging but important scientific endeavor may yield profound insights into the nature of intelligence itself.
2. Learnt a ton from this presentation on: Why Generative AI is Well Suited to Revolutionise Life Science by the esteemed Geoffrey von Maltzahn.
Key Ideas:
Virtually no biology works in ways that human brains are well-suited to understand. The future of biology will be thoroughly generated by AI. This has immense implications for medicine, food systems, and science at large.
Generative AI models trained on DNA sequence data and protein crystallography data can gain mastery of what DNA sequences encode proteins with various properties, and learn principles that dictate how proteins interact and function. This enables generating proteins that can bind to specific targets.
Two key categories of AI models will be transformative for life sciences: 1) Transformer language models that can empower scientists by translating intentions to experimental designs and automation, and 2) Diffusion models that can understand and predict biomolecular properties and interactions. Combining these with automated experimentation will enable increasingly autonomous scientific discovery.
3. A beautiful free FT story titled: Inside the miracle of modern chip manufacturing. It’s got great amazing visuals.
4. Cerebras has launched the world’s fastest AI chip, claiming it can train Meta’s Llama 2 70B in a single day (vs. the month it took Meta).
5. Gavin Baker had a good take on the Inflection AI / Microsoft deal.
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 is a beautiful series.
Luxury goods comment is interesting. From my observations of going to malls over the last year (usually in non NY/LA US cities), is that the regular folk are all standing in lines to be let into LV or Gucci or wherever, while most of the wealthy folk I know opt for basic Costco style cheap clothing (outside of wearing nice suits for professional occasions).
A particularly high-signal edition from a publication with a high batting average! Thank you mate.