The Interesting Times: Trade-offs in Friendship, Finance, and Form

Articles and Podcasts

Where Did All My Male Friendships Go? [Podcast]

Modern Love

Building and maintaining adult friendships seems to be hard in general. Men, it seems, are particularly bad at it.

“A study in 2024 by the Survey Center on American Life found that only 26 percent of men reported having six or more close friends. Polling a similar question in 1990, Gallup had put this figure at 55 percent. The same Survey Center study found that 17 percent of men have zero close friends, more than a fivefold increase since 1990.”

I remember around age 30, I realized I hadn't really done anything to maintain or build new friendships and started actively trying to change that.

Like many men, I find texting and calling kind of uncomfortable and weird (though I've been doing it more anyway and it's actually been really nice). Having some sort of recurring trip with long-distance friends and in-person weekly/monthly meet-ups with friends around hobbies (golf and rock climbing for me lately) has been really nice and I'm really glad to have prioritized it.

A helpful tip from the podcast:

“TCS,” which stands for “text weekly, call monthly, see quarterly.” “The great hack about having a regular event,” Karo says, “is you don’t have to worry about calling — it happens automatically.”

In the 1890s, Argentina was the richest country, in the world. Today, their GDP per capita is barely higher than it was 120-130 years ago. What happened? [Post]

Reddit

I lived in Argentina for a year in the late 2000s. I loved my time there and have many fond memories of the country and its people, so I follow it a bit more closely than I do some other countries. It would be hard to deny that the 20th and 21st centuries have not been great for Argentina.

I remember reading this paper that compared Buenos Aires to Chicago in the early 1900s.

Wages in Chicago were higher but not insanely so. Both Buenos Aires and Chicago grew enormously over the late nineteenth century as nodes of a transportation network that brought the produce of America's rich, but relatively unpopulated West to the tables of the world. Both cities specialized in meat-packing and grain shipments, and about one-half of the populations of both cities were immigrants who had come to take advantage of high wages in these urban areas.

By the end of that century, their paths had diverged markedly and Chicago was a much wealthier and more prosperous city than Buenos Aires.

This thread had some good discussions as to what the primary drivers of that divergence were: Poor economic policy and political policy/culture seem to lead the pack.

For the flip side, I always think of Joe Studwell's book How Asia Works, which shows how some of the poorest countries after World War II, such as Japan, Korea, and Taiwan, developed so rapidly and so effectively in the second half of the 20th century.

My TL;DR: The Asian countries redistributed the agricultural land and then used high import tariffs to protect national industries so they could develop globally competitive manufacturing bases. Argentina and most of Latin America got stuck in the agricultural exporter phase and were never able to really develop a manufacturing base. I’ve ridden in lots of Korean and Japanese cars, but not many Argentine ones.

We are a couple of years into the Argentine Milei experiment now and I’m following with rapt fascination.

Leverage Aversion And Risk Parity [Article]

AQR

The authors demonstrate that investors systematically shun leverage and bid up risky assets in pursuit of higher returns, creating a systematic mispricing: safer assets offer superior risk-adjusted returns while riskier assets underperform relative to their risk. They show that this isn't just a stock/bond phenomenon—they find the same pattern within every major asset class, from equities to commodities. E.g.

Low-beta stocks outperform high-beta stocks on a risk-adjusted basis
Shorter-duration bonds beat longer-duration bonds

The pattern repeats globally across 19 of 20 developed markets. If some investors can't or won't use leverage, these investors pile into high-beta assets, depressing their risk-adjusted returns, while those willing to lever can profit by overweighting the neglected lower volatility assets.

There are reasons for this, both structural and psychological. Many institutional players, like mutual funds and pension funds, have mandates that prohibit or limit the use of leverage.

Many retail investors seem to have ‘leverage phobia’ but not ‘risk phobia.’ I’ve met a lot more people with huge crypto or tech stock exposure than I have with leveraged 2-year US bond exposure, even though the bond exposure is very likely a lot lower risk. There’s also a structural component on the retail side: it’s a lot easier to buy a high beta tech stock than it is to manage a leveraged bond position in futures.

The authors argue that this is the primary explanation for the success of risk parity, which leverages safer (i.e., lower volatility) assets to equalize the risk weighting of different assets in a portfolio:

“Over 1926–2010, the RP portfolio realized a Sharpe ratio that was 0.27 higher than that of the market portfolio, meaning that an investor with an average volatility of 10 percent invested in the value-weighted market portfolio underperformed the RP portfolio by 2.7 percent a year”

I think there's an open question about the explanation for risk parity's historical success and it's future prospects. The 2020s have not been kind to the strategy for sure. Most of its live and backtest performances in a bond bull market, when a leveraged bond position has been particularly favorable. There are also questions of whether it's become too popular and crowded, though I think that's relatively unlikely. There are also many implementation details (e.g., asset class composition, lookback periods and volatility targeting) that vary quite a bit across implementations.

However, I've yet to hear a decent argument as to why a modestly leveraged portfolio of well-diversified assets isn't a better approach than a more concentrated portfolio of riskier assets. When I've probed people on this, it basically always comes down to "I just don't feel comfortable with leverage." That's fine, and it's important to understand what you’re comfortable with, but it makes me more convinced that this argument is true and likely to hold up.

A Pattern Language [Book]
Christopher Alexander

I'm mulling over building an ADU in our backyard, so I picked up what is probably both my most re-read and most gifted book. I read through maybe a third to half of it over the last month. I posted a summary of Christopher Alexander's work in last month's edition - I think that's still the best place to start, but if you watch that and have a building project you’re thinking about, I can't say enough how much I love A Pattern Language. It's such a thoughtful and interesting approach to architecture.

I've been thinking about the concept of a pattern language more broadly as a way to think about what is "optimal" in a complex domain like architecture, business, or investing. If you look at a lot of business or investing advice, it tends to boil down to some sort of suggested best practice.

I think that's an overly naive approach—a best practice works in a complicated domain, but not a complex one. For example, there is a best practice for how to rebuild a carburetor, but there's no best practice for how to rebuild a human body. A human body is constantly changing and responding to treatments in a way that a mechanical object is not.

This idea of a pattern language is, I think, a much more nuanced and subtle way of looking at specific context and specific systems (whether an individual human being, a structure, or a business or investment portfolio) and thinking about what is optimal in that particular context. Or maybe "optimal" is the wrong work—perhaps it's better to think about what is pretty good or as close to optimal as we can get, with optimal is being unachievable if not unknowable.

Contrasting Concepts of Harmony in Architecture [Debate/Article]

Katarxis Nº 3

There was a debate in the 1980s between a (post)modernist architect named Peter Eisenman and Christopher Alexander, who had a much more classic approach. It got famous in architecture circles because at the end of the debate, Alexander accuses Eisenman of “fucking up the world." But, the overall debate is actually quite civil and both parties are acting in good faith, which gives an interesting lens on their philosophies and postmodernism more generally.

First, I loved this section from Alexander about his goal when building something:

“...when I make an arcade I have a very simple purpose, and that is to try to make it feel absolutely comfortable -- physically, emotionally, practically, and absolutely. This is pretty hard to do. Much, much harder to do than most of the present generation of architects will admit to. Let's just talk about the simple matter of making an arcade. I find in my own practical work that in order to find out what's really comfortable, it is necessary to mock up the design at full scale. This is what I normally do. So I will take pieces of lumber, scrap material, and I'll start mocking up. How big are the columns? What is the space between them? At what height is the ceiling above? How wide is the thing? When you actually get all those elements correct, at a certain point you begin to feel that they are in harmony.

Of course, harmony is a product not only of yourself, but of the surroundings. In other words, what is harmonious in one place will not be in another. So, it is very, very much a question of what application creates harmony in that place.”

There are two things here that really resonate with me and I think exemplify Alexander’s philosophy:

The goal that if someone is designing a building in my mind, it's obvious that the goal is it should be comfortable and pleasant to be in. The idea that there would be another goal in designing a building just seems kind of weird and bizarre to me.
The comfort is a context-dependent phenomenon based on the surroundings. The individual's preferences, the climate, the neighborhood, where the sun moves across the lot are all going to impact what makes it comfortable or not and harmonic.

I think about these two general insights as applying to any complex system, whether it's a business, an investment portfolio, or a relationship. You want it to "work" (AKA be comfortable), and you need to recognize that some generic best practices may or may not be appropriately suited to the context that you're in.

And here's an exchange that I thought was kind of illuminating about architectural post-modernism (and maybe post-modernism more broadly).

**PE**: I am not preaching disharmony. I am suggesting that disharmony might be part of the cosmology that we exist in. I am not saying right or wrong. My children live with an unconscious fear that they may not live out their natural lives. I am not saying that fear is good. I am trying to find a way to deal with that anxiety. An architecture that puts its head in the sand and goes back to neoclassicism, and Schinkel, Lutyens, and Ledoux, does not seem to be a way of dealing with the present anxiety. Most of what my colleagues are doing today does not seem to be the way to go. Equally, I do not believe that the way to go, as you suggest, is to put up structures to make people feel comfortable, to preclude that anxiety.

…

**CA**: Don't you think there is enough anxiety at present? Do you really think we need to manufacture more anxiety in the form of buildings?

…

**PE**: Let me see if I can get it to you another way. Tolstoy wrote about the man who had so many modern conveniences in Russia that when he was adjusting the chair and the furniture, etc., that he was so comfortable and so nice and so pleasant that he didn't know -- he lost all control of his physical and mental reality. There was nothing. What I'm suggesting is that if we make people so comfortable in these nice little structures of yours, that we might lull them into thinking that everything's all right, Jack, which it isn't. And so the role of art or architecture might be just to remind people that everything wasn't all right. And I'm not convinced, by the way, that it is all right.

Because some things in the broader world aren't great then we should design lots of structures which reflect that and provoke a feeling of anxiety? In some sense, I can see that you want people to be aware of the reality around them and not shielded from it. But actively manufacturing that reality and making it more anxiety-provoking seems really bizarre to me.

Here are a few more things you might find interesting:

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.