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Plus Expected Returns & Why South Africa is Doing so Badly
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"Millions long for immortality who don't know what to do with themselves on a rainy Sunday afternoon."
— Susan Ertz

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Antti Ilmanen

A comprehensive introduction to estimating expected returns across asset classes (stocks, bonds, commodities, etc.) and style premia (trend, carry, value, etc.). I would classify this as a firmly intermediate book. It's going to seem basic if you have a degree in quantitative finance or something but it's assuming a solid understanding of business and investment concepts.

Ilmanen's work delves into historical performance data of various asset classes to give investors a foundation for understanding the drivers of expected returns. It's effectively a review of a large body of finance literature that's structured to help investors form realistic expectations about future returns by considering historical perspectives, theoretical frameworks, and current market indicators.

Though not an easy read, I would say that this is required reading for anyone that wants to seriously consider themselves an investor. Even if you disagree with certain conclusions, you should be able to understand them and articulate why that is.

Articles and Podcasts


Why Americans Suddenly Stopped Hanging Out [Article]
The Atlantic

I don’t know about you, but I am at the point in life where there’s not anything much better than a good hang. Like most people (at least Americans), the fabric of life up through college is pretty well constructed to just hang out. Running into friends on the quad at school and deciding to go play a round of disc golf felt natural and easy in a way that it doesn’t so much anymore.

"People in their 30s and 40s have less leisure time than they did two decades ago. As Anne Helen Petersen has said, Americans have a tendency to spread out, and the built environment of the U.S. housing market forces many people to move away from friends and family, which means they ultimately buy a bit of loneliness with their money.
We come into this world craving the presence of others. But a few modern trends—a sprawling built environment, the decline of church, social mobility that moves people away from friends and family—spread us out as adults in a way that invites disconnection."

I think a major trend in our lifetimes is going to be a trend in the built environment back towards density. Austin, where I live, recently passed some housing reform that is intended to substantially increase the density of the city and I’m pretty excited to see how that pans out.

In the interim, finding ways to regularly hang out with friends has been a major goal. Hobbies (e.g. golf) have been great as have just hosting hang out sessions (game night, Superbowl party, etc.).


Dwarkesh Podcast

Sarah Paine is a military historian at the Naval War College. This is a wide-ranging conversation with a few counter-narrative takes that I found thought-provoking.

Her ‘big idea’ is the notion of Continental vs. Maritime powers and the world view of each of these. She argues historically continental powers (Russia and China) have a fundamentally different worldview than historically maritime ones (UK and USA) which explains much of what we seeing happening in geopolitics today.

"I gave the Marshall lecture, was published in the general military history. And in it, I summarized my views on what the difference was between a continental and maritime power. And that's one of my big career takeaways. It's a fundamentally different way of looking at the world. So Putin honestly looks at the world, if I can call territory, as what makes him secure.

Maritime powers, start[ing] with Britain, [think] ‘mine's secure if I can maximize money from commerce, because then I can buy Navy and buy allies with armies and stuff.’
This is an international order that, when you join it, you get security, you have input on how it evolves, because it's a work in progress. Whereas this continental thing is negative sum.

And you can see it in Ukraine. So Putin wants more territory. Okay, he's got a zone. He took the eastern Ukraine and he took Crimea in 2014. But it's negative sum because he destroys whatever businesses have been being run in the Donbas [region]. And he absolutely killed the most of the tourist industry.
He is destroying wealth at a really rapid clip. It's really a stupid way to run to. And if you go up to Taiwan, so if PRC tries to take Taiwan, it's a continental view, more territory, sorry, somehow we think it's going to improve our security. Now they'll level it. And they'll hurt themselves. Whereas if they just ignore the Taiwan thing and say, oh, they're so annoying, let them run their own place who wants them anyway. And then trade with them. They'll both make money."

Perhaps a very broad version of the notion that Metaphors Rule Everything Around Me.


I don’t know much about the history or economy of South Africa but I’ve followed the work of economist Ricardo Hausmann on development economics and found his perspective the most convincing one I’ve read about how countries actually build stronger economies.

He’s worked somewhat closely with South Africa over some period of time and things have not gone as he hoped.

This interview shows some of the complex interplay of culture, politics, and economics in South Africa. In particular, it looks at how the State has failed to achieve reforms in certain critical areas like the electric grid despite widespread desire to do so.

"Second is the gridlock that has been most visible in the electricity sector since loadshedding started in 2007. We tried to find another electricity crisis in the world that lasted this long, but we could not find any. Other countries, like Chile and Colombia, have had electricity crises, but once the political system realises that there’s a shortage of electricity, decisions and actions are taken, and three to five years down the road there is ample electricity again. In South Africa, it took until the summer of 2022 for the state to lift the prohibitions on the private sector investing in generation and allowing metros in good standing to procure electricity directly from the market.

When society has a problem, a decision must be made. But in this instance, some people are pro-coal, some are pro-green, some are pro-state, some are pro-market, resulting in gridlock and decisions not being made.

The reason why gridlock is overcome in other societies is that if you do not fix the problem, you lose the next election. Therefore, the fear of losing the next election forces the political parties in power to reach an agreement.

Democracies usually generate a sense of urgency around salient issues. But in South Africa, the hold of the ANC on power has meant that it is less responsive to this mechanism. Hence the lack of either urgency or the resolution of gridlock."

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The Interesting Times is a short note to help you better invest your time and money in an uncertain world as well as a digest of the most interesting things I find on the internet, centered around antifragility, complex systems, investing, technology, and decision making. Past editions are available here.
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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.


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