Weekend Reading #50
Photo by Umberto Cofini on Unsplash
What we're doing.
First week back in the office after the holiday break and already things are ramping up. We’ve been out and about meeting partners and prospective clients across all three arms of our business – fund, brokerage and deal platform.
And we continue to work hard on getting our PPM finalised. We like to think we have a pretty progressive approach to storytelling and sharing what we’re up to as a business, and we hoped to put our own unique stamp on the PPM, but the more we grapple with it, the more we realise “it is what it is”. i.e. A dry but critically important document with little scope for innovation. We look forward to sharing it with those interested in investing in our fund and we promise to bring our investment approach to life via the accompanying presentation!
We also got out and about and did some exercise. Mr David Kemp continues to hit the gym for hardocre HIIT sessions that put us all to shame, so some of us have responded by taking leisurely walks around the park, which afford us the opportunity to update each other on going on in the different parts of the business.
Three Body’s multiple business arms are designed to complement and reinforce each other, so it’s critical that we share information and learn from each other’s successes and failures. And it’s nice to mix things up with a new environment and a bit of exercise. We think walking makes us more creative and it’s a great way to chat to each other without distractions. Some of the greatest minds in history came to the same conclusion, so we’re in good company. We heartily recommend reading Frederic Gros’ A Philosophy of Walking, which explores great lives that have been shaped by walking. Kant walked through his town at the same time daily to escape the “compulsion of thought”, and Thoreau, Nerval, Rousseau and Nietzsche all walked for different, very compelling reasons.
What we're reading.
We took a break from TV this week, after a lot of screen time over the holiday.
Instead, we dipped into Fierce Pyjamas, an anthology of humorous writing from The New Yorker. When The New Yorker was founded in 1925, it was positioned as a “comic weekly” and this book is a tribute to its irreverent DNA. It’s like a whistle stop tour of the best comic fiction (and non-fiction) of the 20th and 21st centuries, including Groucho Marx, F Scot Fitzgerald, Woody Allen and Steve Martin. Buy it. It will make you smile.
This week, Bytedance (which owns both Tiktok and Douyin) released a 2019 data report on the user behaviors and trends on Douyin. It’s only available in Chinese, but Notation Capital’s Katherine Wu has taken the time to translate it. For those of you who haven’t come across the company, it’s the Chinese counterpart to Tiktok, only available to users in mainland China. Wu draws our attention to some fascinating cultural differences between China and the US, pointing out that things that trend in these two countries are insanely different.
We also enjoyed reading this article from VC Matthew Ball on 7 Reasons Why Video Gaming Will Take Over. It’s a smart piece, one that correctly observes that, “the gaming ecosystem — from its products to its packaging and the diversity of its content — is finally meeting this potential.” As regular readers of this newsletter will know, we love gaming, and we love gaming companies (some of them, anyway). Drop us a line if you want to hear our thoughts on the industry, or if you have anything interesting to teach us.
Finally, it was good to see Drew Dickson alluding to our theory of “risk drift” on Twitter, quoting Callodine Capital’s Jim Morrow as saying:
“Investors are being forced out the credit risk spectrum in search of yield. This behavior may extend into equities and significantly reshape markets as investor preferences shift."
The distortion of traditional risk profiles is hugely important and something that we believe demands constant vigilance from investors going forward.
What we're watching.
For some inexplicable reason, we can’t get the theme tune of 80s TV game show “Going For Gold" out of our heads. Maybe it was watching the move in the gold price this week! Watching this video will take you back.
The concept of contestants from different countries coming together to compete for prizes was actually really cool – perhaps it’s time they freshened up the production values and brought it back?!
Back to the gaming theme and this week we also got stuck into The Witcher on Netflix (okay, so we did watch a little bit of television!), which we have been hotly anticipating for a year at least. As you will know, we are massive fans of CD Projekt who brought the original author, Andrzej Sapkowski’s novels to life with their record breaking video game trilogy culminating in success of The Witcher 3: Wild Hunt. In fact, just this week (nearly 5 years after its release), it reached all time highs in terms of Steam concurrent players at 100,000 players, which is utterly remarkable.
We were not disappointed and the show delivered immediately – we binge watched it all in one weekend. Henry Caville who plays Geralt, The Witcher, does a brilliant job (especially the voice).
What we’re writing
Always believe in... Gold.
As most of our readers know by now, we’re keen watchers of market narratives and firm believers in the power of narratives to drive mass behaviour and, as a result, asset prices.
The past week has undoubtedly been a textbook example of how the development of a global macroeconomic narrative works the levers of asset prices, with the US assassination of two senior Iranian military figures potentially precipitating what some predicted could become World War 3. No wonder that Gold managed to re-take 5 year highs, as everyone went risk-off.
What a terrible, inane opening paragraph that would’ve made for. And perhaps an even more boring newsletter. If you’re looking for a real trick of financial engineering in the metals space, check out how the Chinese did it.
The part about us being keen watchers of market narrative is true, but we would hardly be insightful going down that path. For one, if you think that Gold reaching 5 year highs this week is a function of a missile strike in Iran, think again – this rally was at least two years in the making.
This is a story about narratives within narratives, and about how they came to matter so much for markets.