The Great Divide, The Art of Possibility, The Good Life....

May 7 2020

“Beware the bareness of a busy life”

- Socrates

“To attain knowledge, add things every day. To attain wisdom, remove things every day.”

- Lao Tzu

“Life is the hesitation between an exclamation mark and a question mark. After doubt there is a full stop.”

- Fernando Pessoa, The Book of Disquiet (thank you Dror)

A. The Great Divide

I was speaking to a friend of mine on the continued divide between the rich & poor. Between Wall Street and Main Street. After each crises, there is stimulus and that divide stretches further.

Even today, with millions jobless and the stock market approaching highs we are in a world where asset owners are rewarded and income earners are left in the cold.

How long can this continue for?

I was reminded of how these cycles turn when I read Kiril Sokoloff’s Lunch with the FT last week when he spoke about the market moving from wealth accumulation to wealth distribution. Kiril mentioned the book: The Fourth Turning by William Strauss and Neil Howe.

It’s a fascinating book about the cycles of wealth accumulation and distribution in human society and the four stages that it goes through.

I had discovered the book initially since Steve Bannon (ex-chief White House Strategist) made a movie about it a seven years ago called Zero Generation.

Quick Frontline snippet here:

The Four Cycles in History:


The First Turning is a High, which occurs after a Crisis. During The High, institutions are strong and individualism is weak. Society is confident about where it wants to go collectively, though those outside the majoritarian center often feel stifled by the conformity.


The Second Turning is an Awakening. This is an era when institutions are attacked in the name of personal and spiritual autonomy. Just when society is reaching its high tide of public progress, people suddenly tire of social discipline and want to recapture a sense of "self-awareness", "spirituality" and "personal authenticity".


The Third Turning is an Unraveling. The mood of this era they say is in many ways the opposite of a High: Institutions are weak and distrusted, while individualism is strong and flourishing. Highs come after Crises, when society wants to coalesce and build and avoid the death and destruction of the previous crisis. Unravelings come after Awakenings, when society wants to atomize and enjoy.


The Fourth Turning is a Crisis. This is an era of destruction, often involving war or revolution, in which institutional life is destroyed and rebuilt in response to a perceived threat to the nation's survival. After the crisis, civic authority revives, cultural expression redirects towards community purpose, and people begin to locate themselves as members of a larger group.

Do these sound familiar ?

I do wonder how the divide will be resolved.

Is it taxation, is it inflation, is it devaluation ?

What do you think comes next ?

One of the Investment Play books that often come is Japan.

Related to this Hugh Hendry (ex-Eclectica) was on Real Vision discussing Japan, and the likelihood that the FED follows the BOJ play book.

How far can we go ?

Quoting my friend Ateet at Bracket Capital:

In order to match Europe and China, the FED could double its balance sheet relative to GDP. In order to match Japan, the FED could quintuple its balance sheet from $5.2trl to ~$25Trl in assets. 

What would that do to market prices ?

One of the non-consensus views Hugh Hendry talked about is S&P 10,000 if the FED follows the BOJ play book, which my friend Harris Kupperman affectionately calls: Project Zimbabwe.

If the FED truly expands its balance sheet, what would you want to own and could the divide between the real economy and financial assets widen ?

One of the books Hugh discussed in that interview was Princes of The Yen, which was also turned into a documentary about how the BOJ jawboned the economy and corporates. Powerful stuff.

B. The Art of Possibility

Do you find that each day is like the one before it ?

Is it easy to lose track of days ?

I’ve been feeling more anxiety than I normally do (went back to meditation this week).

It’s been hard to read new books while feeling like this, so I've gone back to some of my old favorites.

One of those amazing books is the Art of Possibility, quite possibly a top 5 book of all time, and one that changed my attitude. It's by Benjamin Zander a composer and conductor.

There are three big ideas relevant to today that I discuss with my kids:
1. Be Open To Possibility. What unsaid assumptions are keeping you trapped ? Where are you limiting possibilities ? This a reminder to myself to make sure that I am creating possibilities for myself and others, rather than holding beliefs that lead to dead ends. 

2. Give Everyone You Meet An 'A'. Things are hard for everyone right now. So I assume that everyone is amazing and worthy, and treat them as such. Give them high expectations and trust to live into. That approach empowers and energizes others versus the alternative of assuming anything else. We all have the responsibility and ability to lead and create.

3. Don’t Take Yourself Too Seriously: Most things don’t matter and most things around us are made up. Yuval Hariri would say “It’s just a shared narrative”. So when you fail smile and shout “How fascinating”.

He’s a great presenter and you’ll enjoy this clip of him presenting, promise me to give it 5 minutes.

C. A Few Things Worth Checking Out:

1. Kevin Kelly, the founder of WIRED magazine, recently turned 68 and offered some lessons on life. Here are a few that stood out:

"Learn how to learn from those you disagree with, or even offend you. See if you can find the truth in what they believe."

"Being able to listen well is a superpower. While listening to someone you love keep asking them “Is there more?”, until there is no more."

"The purpose of a habit is to remove that action from self-negotiation. You no longer expend energy deciding whether to do it. You just do it. Good habits can range from telling the truth, to flossing."

— 68 Bit of Unsolicited Advice

2. I’ve been trying to use some time on weekends to take online courses. Yale lectures are the first place I look whenever I want to study a new subject.

I've been listening to the lectures from SOCY 151: Foundations of Modern Social Theory. It’s great background on all the things we believe today and where those ideas come from.

3. Sam Harris recently had Prof. Laurie Santos on his podcast. Laurie runs the most popular class at Yale (one fourth of undergraduates enrolled), which later became the most popular class on Coursera too: Psychology and the Good Life. Which is all just about how we can go about being happier in our day to day lives.

4. Great Reddit thread with a number of Hedge Fund Letters.