Plus How Bad Did It Get?
 ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

"Every banker knows that if he has to prove he is worthy of credit, in fact his credit is gone."
—Walter Bagehot

Hey there,

Nassim Taleb has a bit in one of his books about how most days newspapers should be one page and some days it should be 1000 pages. This week felt like a week of 1000 page newspapers. Between the US elections, traditional markets, crypto markets and Ukraine there were more than a couple things that felt somewhat historic.

I used to try to ignore this but I've kind of decided that there's just two or three weeks every year where I'm going to sit around and read the news all day and that's ok. Anyway, that's my way of saying I spent a lot of this week reading news stories!

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.

The Best of What I've Been Consuming

Why Books Donʼt Work [Blog]
Andy Matuschak

I love books. This is about why books don’t work. I sort of agree though I think "user error" is a significant factor.

The argument of the piece is that for educational non-fiction, books aren’t very effective. You read a 300-page book but don’t remember anything.

"Picture some serious non-fiction tomes. The Selfish Gene; Thinking, Fast and Slow; Guns, Germs, and Steel; etc. Have you ever had a book like this—one you’d read—come up in conversation, only to discover that you’d absorbed what amounts to a few sentences? I’ll be honest: it happens to me regularly. Often things go well at first. I’ll feel I can sketch the basic claims, paint the surface; but when someone asks a basic probing question, the edifice instantly collapses. Sometimes it’s a memory issue: I simply can’t recall the relevant details."

This happens to me all the time! I have read all three of those books and I am not sure I could give a talk of more than a minute about the gist.

The post goes on to outline some suggestions for more effective tools of learning. I think the suggestions there are largely very good ideas. One reasons we use books so much is just because they’ve been around for a very long time and people are used to the form factor. You can read books on your kindle or on paper but you can’t consume interactive essays or courses in that format.

There are many subjects where this is true. The course I took which taught me this was maybe 7 or 8 years ago when I took the (free) Introduction Complexity course from the Santa Fe Institute.

Complexity and its cousin ergodicity have to do with how things change over time. Books are great for providing a snapshot but it’s hard to run a simulation showing how something changes over, say, 50 years in a book.

So, I’m bullish on new learning methods that require some simulation and interaction. A couple of favorites are:

These both do a much better job of teaching their core idea then I think you could in just written text.

However, I don’t think books are going anywhere. I think one reason people don’t get a lot out of books is that they don’t read them in a way that facilitates getting a lot out of them.

As the author notes:

"some people *do* absorb knowledge from books. Indeed, those are the people who really do think about what they’re reading. The process is often invisible. These readers’ inner monologues have sounds like: "This idea reminds me of…," "This point conflicts with…," "I don’t really understand how…," etc. If they take some notes, they’re not simply transcribing the author’s words: they’re summarizing, synthesizing."

One of the big evolutions in my reading style over the last ten years is just how many notes I take. My notes (not highlights, stuff I actually wrote in the Kindle notes section) for The Origin of Wealth clocked in at well over 10,000 words.

Whenever I read something interesting, I tend to summarize it in my own words in the notes and also make connections to other things I’ve read. This has increased my retention, but, more importantly, it has increased my understanding.

I think the ability to say, give a 5 minute summary of a book, is probably overrated and the subtle impact it makes on you and your worldview in ways you can’t articulate is probably underrated.

I can't recite a lot of facts from the books I've read since I was 18, but I have very different opinions on pretty much every issue and that's a cumulative result of a lot of reading.

So, I’m long books, but also long everything else in the future of learning!

Grace Huang

When financial advisors sit down with clients, they usually have some questionnaire about their risk tolerance. How much risk are they willing to take? How big of a drawdown can they stomach?

In my experience, these questionnaires generally don’t work. People’s answers aren’t very predictive of how they will actually react because the lived experience of losing a lot of money is a lot different than the intellectual exercise.

It’s one thing to think about bad times. It’s another thing to wake up every day and get punched in the face by ole' Mr. Market.

For this reason, I love detailed accounts of market periods that try to give a sense of what things were actually like for those who lived through that period. This has some great anecdotes from the stagflationary period of the late 1960’s to early 1980’s.

This one on how wage-price spirals happen is terrific:

Before Volker started raising rates, people did not really believe in the impact on their businesses and still continue to increase wages to match the inflation. It continued to feed inflation. This explains why inflation may not immediately respond to the increased interest rate. It is a psychological hurdle. The mood, and the continuing upward momentum of prices, was reflected at a lunch I had with a cross-section of small business owners and Arthur Levitt, then president of the American Stock Exchange. They listened patiently to my carefully polished analysis: times were tough, money was tight, but relief was on the way. Inflation would soon come down. A businessman sitting to my right was the first to respond. "That’s all fine, Mr. Chairman, but I have just arrived from a meeting with my union where I happily agreed to wage increases of 13 percent over each of the next three years."

One lesson from stagflation is that inflation expectations can become entrenched and once they do, it’s hard to root out. If managers expect inflation then they promise large wage increases. Higher wages mean higher prices. This means inflation which requires higher wages. There is much more to inflation than this simple example, but you get the idea.

Inflation acts as a gigantic corporate tapeworm. That tapeworm preemptively consumes its requisite daily diet of investment dollars regardless of the health of the host organism. Whatever the level of reported profits (even if nil), more dollars for receivables, inventory and fixed assets are continuously required by the business in order to merely match the unit volume of the previous year. The less prosperous the enterprise, the greater the proportion of available sustenance claimed by the tapeworm.

Inflation basically makes the cash flow cycle that growing Ecommerce businesses deal with exist worse for everyone. You need all of this year's profits for next year’s expenses. Running an inventory-based business is really hard! It is doubly hard if you are going through prolonged inflation.

My favorite piece though is this bit from Warren Buffet predicting inflation in 1984.

Surprisingly, in 1984, when inflation was contained and the stock market had broken out and hit a new high, Warren Buffett still believed the possibility of runaway inflation ahead. We believe substantial inflation lies ahead, although we have no idea what the average rate will turn out to be. Furthermore, we think there is a small, but not insignificant, chance of runaway inflation.

What happened at that point? Arguably the greatest deflationary bull market of all time!

Which arguably the greatest investor of all time called precisely wrong! Consider this your friendly reminder that macroeconomic predictions should be taken with a grain of salt and that the environment of the last decade is unlikely to be that of the next.

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!

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.
Enjoy the Newsletter?
Here are a few more things you might find interesting:

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.


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.

Email Marketing by ActiveCampaign