The Interesting Times: Terminator Mode

Hi there!

Had a good move last week and it was a reminder that hiring people who know what they are doing (movers/packers) is much better than my usual tendency to just plow into it myself...

My Mutiny Fund partner Jason did an interview with legendary Turtle Trader Jerry Parker. If you're not familiar with trend-following as an investment style, Jerry is one of the OG trend-followers and has a 30+ year track record to prove it.

There was also a nice writeup in ETF Trends on Long Volatility that mentioned Mutiny as well.

If you enjoy or get value from The Interesting Times, I'd really appreciate it if you would support it by forwarding it to a friend or sharing it wherever you typically share this sort of thing - (Twitter, LinkedIn, Slack groups, etc.) You can read past editions here.

Terminator Mode

Have you ever brought home an exercise bike and let it gather dust in the basement? Ever started and quit a diet? Do you have a project 80% of the way done that is sitting on your hard drive not doing you any favors?

If you are, I welcome you to the club. I have done all of these things (multiple times)!

This is as near a universal human phenomenon as I can imagine. I think the answer as to why can be found in the Hero’s Journey.

The Hero’s Journey is a story structure that Carl Jung originally noted that was popularized by Joseph Campbell in the 1970s. Jung and Campbell observed that across societies, from Native Americans to Africa to Eurasia, myths tend to follow a similar structure.

The start was always similar: a hero received a call to adventure, something in their world changes fundamentally.

Initially, the hero refuses the call - they fear the difficult journey ahead and back down.

Eventually, the hero chooses to undertake the journey, crossing the threshold into the unknown world.

George Lucas famously used this structure for the original Star Wars trilogy:

Call to Adventure: Luke meets Obi Wan Kenobe and learns about his father being a Jedi.

Refusal of the call: Luke says he wants to stay at home and can't leave his Uncle and Aunt.

Crossing the Threshold: When he returns to find his home destroyed, he agrees to go with Obi-Wan on his quest and they enter the unknown world, initially symbolized by a bar full of different where they meet Han Solo.

Beyond just being a structure to tell a good story, Campbell and Jung believed that this “monomyth” was so pervasive because it represented a natural pattern in everyone’s life.

Whether it’s growing up and leaving home, starting a job, quitting a job, finding a partner, changing jobs, starting a business, having kids or any other major life event, you can pretty much always map it to the hero’s journey.

You start to do it, then you get worried and refuse the call. (Often this is not a conscious act, only in retrospect do I tend to see that I waited too long to make most big decisions.)

Either you eventually accept the call and embark on the new path or you don’t.

The critical moment is this crossing of the threshold where the hero moves from their known and comfortable world to an unknown and frightening world.

This is the day of the wedding, the product launch or when you land your first customer.

Once this threshold has been crossed, there is no going back. You are irrevocably committed to the new path. Once you’ve turned in your resignation, announced your project launch date, or said “I do” you have passed into an unknown world.

While it’s interesting and simple to look at this in a story format, the lived experience of the fear and worry that accompanies the period before the crossing of the threshold is no joke.

Quitting a job to move to a new field, starting a business, making a big investment is almost always accompanied by a real sense of fear.

In his wonderful book The War of Art, Steven Pressfield gives a name to this particular type of fear: The Resistance.

The Resistance is that voice in the back of your head that tells you that you aren’t good enough, that you don’t have enough time, or that it will never work.

The bad news is that The Resistance is real and it's omnipresent. The good news is that it lets you know what direction to move in.

Here's Pressfield:

"Are you paralyzed with fear? That's a good sign. Fear is good. Like self-doubt, fear is an indicator. Fear tells us what we have to do. The more scared we are of a work or calling, the more sure we can be that we have to do it. Resistance is experienced as fear; the degree of fear equates to the strength of Resistance. Therefore the more fear we feel about a specific enterprise, the more certain we can be that that enterprise is important to us and to the growth of our soul. That's why we feel so much Resistance. If it meant nothing to us, there'd be no Resistance."

The Resistance is what causes the Hero to refuse the call. The Resistance is normal, indeed omnipresent in basically everyone’s life.

Where that Resistance lies changes over time. It can be scary to live by yourself when you are a teenager. It is not so scary at 40, but something else likely is: maybe raising a family, changing careers or taking care of aging parents.

Procrastination is the most common manifestation of Resistance because it's the easiest to rationalize. We don't tell ourselves, "I'm never going to write my book." or "I'm never going to change jobs." Instead we say, "I am going to write my book; I'm just going to start tomorrow" or "I'm going to make a change next year."

Every major life decision I’ve ever made was accompanied by a strong dose of The Resistance.

To forever refuse the call, to give into the Resistance is a terrible state. It is an admission to yourself that you are incapable of growth or transformation. In retrospect, all the periods of my life where I was refusing the call tended to be accompanied by some level of self-loathing.

Creative exploration is impossible without acknowledging the unknown, without accepting the possibility of failure, without crossing the threshold.

Naming The Resistance is powerful. It helps to distinguish it from similar emotional feelings. When I look over the railing of a tall building, the emotional feeling I have is pretty similar to when I worry about making some big change.

Obviously, that’s a different and more legitimate fear. Jumping over the railing really will end badly in a way that publishing a blog post will not.

My friend Sebastian Marshall coined another term that made dealing with The Resistance a lot easier for me: Terminator Mode.

One feature of The Resistance is that it is strongest at the finish line. When you start writing your book, it’s all fun and games.

The month before the launch is when you start sweating bullets. So too with any other project. When you are about to cross the threshold, to irrevocably commit yourself to a major change and enter an unknown world is when you start coming up with all sorts of reasons why it’s actually a bad idea.

When the finish line is in sight, The Resistance knows we're about to beat it. It hits the panic button. It marshals one last assault and slams us with everything it's got.

“Well, maybe I’ll just hang around at this job I hate for another year and it might get better.”

“This book could use some extra revisions, maybe I’ll just do that 32nd revision to make sure it’s ok.”

Terminator Mode prevents this.

Terminator Mode means is that when you get to 80% complete, you go full Schwarzenegger and start obsessively focusing on the project that’s 80% complete.

You want to quit at 30%? 50%? Sure, maybe it wasn't a good idea and you should give it up. No one makes perfect decisions.

But, once you get to 80%, you must ship it. No rationalizing, no delaying.

The mind will play all sorts of tricks on you when you get to 80% complete with a task. It will try to seduce you into doing something unrelated or new. Never give in to that.

An “almost done” project is just like a project you haven’t started. The half-written books on my hard drive are doing me no good! The worst thing you can do is get a project to “almost done” and quit.

Always be asking yourself “how has the world changed due to my work here?” If the world isn’t any different then you haven’t accomplished anything, no matter how hard you’ve worked. You have to cross the threshold.

The Resistance never goes away. Henry Fonda was still throwing up before each stage performance, even when he was seventy-five. In other words, fear doesn't go away. The warrior and the creative live by the same code of necessity: the battle must be fought anew every day

The Terminator knows this.

He will not be distracted.

Be The Terminator.

Volatility Clusters
Breaking the Market

I’ve written previously about the phenomenon that volatility tends to cluster. In markets and life, things tend to happen all at once.

We even have folk sayings that say this in a more relatable way: “When it rains, it pours” and “Good things take time, but great things happen all at once.”

This post looks at how we can take that observation and apply it to an investing framework.

“Simple mathematical calculations prove that prior volatility does in fact partially predict future volatility.

Is it perfect? No. There is still randomness here. It’s just not pure randomness. The past informs us about the future.

You can make an educated prediction for near-term volatility.”

Playing Different Games
Everett Randle

As longtime readers will now, I am a fan of the work of John Boyd and his OODA Loop framework for how to win in a complex and fast-changing environment.

Naive understandings of Boyd and OODA tend to emphasize moving fast, but a better way to interpret the core philosophy is around redefining the playing field through what Boyd called fast transients.

A fast transient is a rapid change in strategy that leaves the opponent confused and uncertain. In Boyd’s native context of planes dogfighting, his favorite move was to wait for the moment of supreme confidence of his opponent, when got behind him and was just about to get a missile lock. At that moment he would slam the brakes, the opponent would lose sight of him and fly past him and he would drop in behind them for the kill. (Yes, just like the scene in Top Gun)

It is not that Boyd’s plane was faster than his opponent, but that he created this rapid transition.

In a business context, this often looks like redefining the playing field in a way that incumbents can’t adapt to.

Social media platforms maybe moved fast, but, more importantly, they redefined the business model of media in a way that incumbents couldn’t adapt to.

A recent attempt to do this is happening right now in the late(r) stage venture capital space.

Some traditional hedge funds, most notably Tiger Global, have moved in to compete against traditional venture funds.

They are notorious for writing huge checks with little due diligence and not providing much ongoing support after they invest, basically the opposite of a traditional venture fund.

In the past two years, Tiger Global has developed an entirely unique investment platform in venture/growth based on Maximum Deployment Velocity and Better/Faster/Cheaper Capital for Founders. These two pillars represent the most significant development in venture strategy since the advent of the growth fund.

This piece looks at the precise nature of their innovation and why it could work: the core of it being that by deploying capital faster they can accept lower returns at the individual company level while providing superior returns to their LPs and being less of a headache for founders.

As always, if you're enjoying The Interesting Times, I'd love it if you shared it with a friend (or three). You can send them here to sign up. I try to make it one of the best emails you get every week and I'm always open to feedback on how to better do that.

If you'd like to see everything I'm reading, you can follow me on Twitter or LinkedIn for articles and podcasts. I'm on Goodreads for books. Finally, if you read anything interesting this week, please hit reply and send it over!

Newsletter Past Editions: Read past editions of The interesting Times Newsletter.

Interesting Essays: Read my best, free essays on topics like bitcoin, investing, decision making and marketing.

Consulting & Advising: Are you looking for help with making decisions around scaling your company from $500k to $5 million? I’ve been working with authors, entrepreneurs, and startups for half a decade to help them get more out of their businesses.

Internet Business Toolkit: An exhaustive list of all the online tools I use to be more productive.

Futures and options trading involves a substantial risk of loss. You should therefore carefully consider whether such trading is appropriate for you in light of your financial condition. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author. The mention of specific asset class performance (i.e. S&P +3.2%, -4.6%) is based on the noted source index (i.e. S&P 500 Index, etc.), and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self-reporting, and instant history.

DISCLAIMER

This email provides information regarding the following commodity pools: The Long Volatility Fund LLC and The Cockroach Fund, LLC (collectively the "US Funds") and Mutiny Funds Cayman Ltd. (together with the US Funds, collectively the “Fund(s)“), which are managed and operated by Attain Portfolio Advisors LLC and Mutiny Funds LLC (the “Managers”). Investments in the US Funds are only available to Accredited Investors as defined in Rule 501 of Regulation D of The Securities Act of 1933. This content is being provided for information and discussion purposes only and should not be seen as a solicitation for said Fund(s). Any information relating to the Fund(s) is qualified in its entirety by the information included in the Fund’(s)’ offering documents and supplements (collectively, the “Memorandum(s)”) described herein. Any offer or solicitation of the Fund(s) may be made only by delivery of the Memorandum(s). Before making any investment in the Fund(s), you should thoroughly review the Memorandum(s) with your professional advisor(s) to determine whether an investment in the Fund(s) are suitable for you in light of your investment objectives and financial situation. The Memorandum(s) contain important information concerning risk factors, including a more comprehensive description of the risks and other material aspects of an investment in the Fund(s), and should be read carefully before any decision to invest is made. This site is not intended for European investors, and nothing herein should be taken as a solicitation of such investors.