A Few Things: Algebra of Wealth, Longevity, How To Have A Good Day, An Institutional Investor on Crypto
February 5 2022
“A man may be a fool and not know it, but not if he is married.”
- H.L. Mencken
“The most important step in becoming successful in anything is to first become interested in it."
- Sir William Osler
“A wealth of information creates a poverty of attention.”
- Herbert Simon
“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.”
“Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).”
- Mark Twain
A. A Few Things Worth Checking Out:
1. Prof. Scott Galloway had a great piece on the Algebra of Wealth. Thank you Alexander Mavros for sharing.
He summarises: Focus on what matters. Be a Stoic in the face of temptation. Use Time to your advantage. Diversify your investments.
Good opening paragraph:
People conflate a lack of focus with a lack of talent. Intelligence and talent are correlated with success, but the strongest signal of future success is your perseverance and resilience: what the books in airport bookstores call “grit.” Unless you are supremely disciplined, your career will have to be something that gives you some enjoyment. But don’t mistake focus for your “passion.” People who tell you to follow your passion are already rich. Follow your talent. The accoutrements that accompany being great at something (relevance, admiration, camaraderie, money) will make you passionate about whatever “it” is.
2. Can you believe that the whole GameStop, AMC saga was just a year ago? Spencer Jakab is the Editor of the Heard on the Street column at WSJ and has just written a great book titled:
He discussed it in this Jan 2022 WSJ article titled: Who Really Got Rich From the GameStop Revolution? and was on this awesome Hidden Forces podcast.
It really is an amazing story running from Roaring Kitty on Reddit, to Melvin Capital, Citadel, Goldman Sachs, Bill Gross, Jason Mudrick, Elon Musk and more.
On a related note, are the FAAMG’s going to go the way of the prior five largest stocks in the S&P.
3. Fascinating piece by my friend Dror Poleg titled Progress and Volatility on how Crypto could change markets and innovation to be more narrative and meme driven. This is critical to pay attention to in a far more retail driven market than we have ever seen.
This does not mean that traditional equity markets are rational or even good at selecting the best ideas. But it means that they, at least, try to understand the possibilities in front of them and make conscious choices. Notably, investment markets do end up steering most of the capital to businesses that produce economic returns: The most valuable companies in the world — Apple, Microsoft, Google — are very efficient at turning money into more money.
Seen through an evolutionary lens, McKenzie-Landell points out that "markets incentivize self-interested actors to coordinate in the creation and dissemination of new knowledge, which is primarily technical innovation, in the pursuit of economic growth." Markets are an engine for the evolution of ideas that produce economic growth. This comes at a cost and may conflict with other human goals, but that's a separate story.
From an evolutionary perspective, crypto markets are very different from equity markets. The former select for ideas that are most likely to produce economic returns. The latter select for ideas that are most likely to be liked by other people. Or, as he puts it:
"Therefore, if traditional markets exhibit a selection pressure for knowledge that produces economic returns above all else, then blockchain markets exhibit a selection pressure for knowledge that produces ideas with high transmissibility (i.e. memes) above all else and these ideas dominate the rest."
This does not mean that crypto markets will never produce companies that create actual economic returns. But it does mean they'll get there through a process of trial and error that includes investing a lot of money in a (relatively) large number of failed projects and that these failed projects will attract such investment due to their inherent appeal to consumers.
4. George Soros on China: Remarks Delivered at the Hoover Institution
5. FED rate hikes seem fully priced in when they are making magazine covers.
6. A few interesting conversations on Longevity:
David Sinclair the author of the great book Lifespan started a podcast series.
Episode 1: Discussing the science behind why we age.
Episode 4: NMN, NR, Resveratrol, Metform and other Longevity Molecules and podcast notes from that conversation.
Christian Angermayer was on the Pomp podcast discussing investing in human longevity.
B. How To Have A Good Day:
Annie Dillard wrote:
How we spend our days is, of course, how we spend our lives.
So how do we make sure we get the best out of every day, so we can get the best out of our lives.
This is probably one of the most useful books I’ve read in a long time. Caroline Webb is an economist and former McKinsey Partner. She gathered research from behavioural economics, psychology and neuroscience to provide a scientifically grounded plan to transform your day.
The book is broken out across seven sections covering: Priorities, Productivity, Relationships, Thinking, Influence, Resilience and Energy. This picture shows how they fit together:
In this Talks at Google, she discusses 3 Big Ideas:
- Reality: how we can change the reality we experience
- Time: how can we get more time in the day
- Intelligence: how can we be more intelligent
C. The Tech and Crypto Section:
1. John Pfeffer was on the Invest Like the Best Podcast. John was an early partner at KKR and was exposed to Bitcoin by Wences Casares.
John is perhaps best known for his paper: An (Institutional) Investor’s Take on Cryptoassets.
Which had the following opening paragraph - feels like it was written yesterday:
Amidst the indiscriminate speculation, sensationalist and mostly misguided media coverage and roller-coaster price volatility, this paper sets out to consider cryptoassets from the perspective of a rational, long-term investor. As investors, we look for things that generate sustainable, ideally growing economic rent—an economic surplus that will accrete to us. This paper evaluates the extent to which cryptoassets offer the foregoing. It aims to assess the potential future value of cryptoassets at mature equilibrium, on the assumption that they develop successfully and achieve widescale adoption. By design, it does not dwell on the significant risks that a given cryptoasset could fail, for technical, regulatory, political, or other reasons. These risks are very real, and are well documented elsewhere. Temporarily setting them aside allows for an objective analysis of the potential value of different kinds of cryptoassets and their use cases.
A number of big ideas in the podcast, but the ones I went back to were around the notion that:
Crypto could change where the economic surplus would follow - from the developers, capitalists to the users. So start using these new rails that are being built.
Why he uses Bitcoin as the benchmark for all investments. I increasingly do too after a conversation in 2020 with my friend Yaser.
What the impact of crypto and venture investing be to index dependent public market investors - not good.
2. Ari Paul, managing partner and CIO of BlockTower Capital (and previously at University of Chicago’s Endowment) was on Web3 Breakdowns discussing the evolution of crypto investing.
Ari assessed the current phase of cryptocurrency adoption, how to value Bitcoin, contrasting traditional finance with DeFi, and why NFTs could be crypto’s killer app.
3. Haseeb Qureshi, GP at Dragonfly Capital, was on the Bankless podcast discussing an interesting framework: Blockchains are cities, which he wrote about in detail in this medium post.
4. I am interviewing Emil Woods of Liberty City Ventures, one of the best Blockchain Infrastructure investors on February 15th for Pi Capital, please email for the private invite. LCV most recently led a $5bn round into Animoca Brands.
Stoic philosopher Epictetus on Taking Action:
"Now is the time to get serious about living your ideals. How long can you afford to put off who you really want to be? Your nobler self cannot wait any longer.
Put your principles into practice – now. Stop the excuses and the procrastination. This is your life! You aren’t a child anymore. The sooner you set yourself to your spiritual program, the happier you will be. The longer you wait, the more you’ll be vulnerable to mediocrity and feel filled with shame and regret, because you know you are capable of better.
From this instant on, vow to stop disappointing yourself. Separate yourself from the mob. Decide to be extraordinary and do what you need to do – now."