Weekend Reading #98
Photo by Renee Fisher on Unsplash
This is the ninety-eighth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 19th December 2020.
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What we're doing.
This week we got together as a team for only the third time since March. Remaining fully COVID-compliant, we met in Maida Vale for a long, outdoor business lunch in the glorious winter sunshine. It was a great chance to see each other in the flesh and celebrate the significant achievements that we’ve managed to accomplish as a business during this extraordinary year – in addition to finalising our plans for January.
Unlike previous Christmas parties, we didn’t carry on into Soho after dark, but the chance to share a good meal and a few beers was very welcome, reminding us, yet again, how much we all miss the camaraderie of an office. As we move into 2021, it’s unlikely that we’ll be back in an office together until Q2 at the earliest, and this means that these informal get-togethers will become even more important as we continue to grow and scale in the face of COVID-related challenges.
Our Three Body Fund concluded its first annual period and we earned some performance fees! As you may know, our period ends on the 15th of each month and 15th December has come and gone with a strong finish for us. We are deeply appreciative to all our investors for their continued trust and belief. Our process is robust and we would like to believe we are getting better and better as we learn more about ourselves and improve the execution of our process.
What we're thinking.
This week has been all about Bitcoin again as it convincingly surged to new highs. Bitcoin is following its bullish narrative as the institutions have finally arrived. What was interesting to us was that in Bank of America Merrill Lynch’s November institutional survey, Bitcoin was the tied 2nd biggest consensus trade (with a short US dollar position) amongst participants at 17% of respondents, still way behind a long US tech position (52%). With the Coinbase S-1 filing and Bitcoin trending on Twitter, as well as all over CNBC, one has to ask whether we are a lot deeper into this bull market than many would imagine. As ever, we let the price action do the talking but we are prepared for any outcome!
This from Seth Godin got us thinking about risk and reward in many facets of our lives:
In chess, a blunder is a mistake that no one can excuse. Even one blunder and you’re probably going to lose. In our vigilance to avoid blunders, sometimes we try to eliminate mistakes as well.
For understandable reasons, we spend a lot of time trying to avoid blunders and minimizing mistakes. But if that’s all we do, we’ve given up the chance to do something magical.
If you’re working on the frontier, if you’re leading, creating or inventing, you’ve signed up for mistakes. That’s the price of innovation. After the fact, it’s easy for an attempt at great work to look like nothing but a blunder. But it might simply be a mistake that we can learn from.
Considering the year we’ve all endured, it can be all-to-easy to play it safe and seek the low risk option, especially as 2020 draws to a close. But, ‘safe’, be it in chess or in life, can be the reason why you don’t push along and beyond the frontier that you’ve chosen to explore. As Seth says, mistakes are the price you pay for innovating and trying something new. And that is a small price to pay should you get the results you’re striving for.
When it comes to paying prices, we’re once again reminded that something that’s “too good to be true” is often just that. This week, the engine behind the retail stock market frenzy, Robinhood, found itself on the wrong end of the law. Yet unlike its Northern English namesake, it isn’t facing up to a greedy Sheriff of Nottingham for looting from the rich to give to the poor. Instead, it’s found itself on the receiving end of an SEC penalty for doing the opposite: while providing trading services ostensibly for “free”, Robinhood was only able to do so profitably by selling that flow to principal trading firms, resulting in Robinhood’s clients receiving executions that were of far inferior quality to the “best execution” responsibility owed to clients. Everything comes at a price – the question is whether one knows the price before or after the fact.
Robinhood has since agreed to pay the $65m penalty as part of a settlement, though without admitting or denying the SEC’s allegations.
What we're reading.
John le Carré’s passing prompted us to reach into his back catalogue and pick up, in our opinion, one of his best but most often overlooked novels. A Most Wanted Man was written by le Carré in 2008 in the midst of the financial crisis and the War On Terror. Its plot touches upon both of these events in history, landing a half-starved young Russian man in a long black overcoat in Hamburg at dead of night. This young man holds claim to an incredible fortune in a Swiss private bank. And the story takes off from there with all the twists and turns that you’d expect from a great spy thriller, especially one written by the master of the genre. It’s also an excellent film, starring the irrepressible Philip Seymour Hoffman.
In the wake of his passing, feel free to select any le Carré to remember him by. They are all, without fail, exceptionally entertaining and meticulously planned novels, lesser versions of which are now churned out by a myriad of authors at an almost-depressingly rapid cadence. But truly great spy fiction, in our opinion, like a fine wine, largely relies on the ageing process and the life experience of the author to give it real gravitas and body. Le Carré’s many years working for MI5 gave him the raw material and his years living as a writer through the Vietnam and Cold wars, the technology boom, the War on Terror, as well as recent storms such as Trump and Brexit, anchors his writing in real-world events. Arguably, his most recent works were some of his very finest, his quality never diminishing. His last release, the excellent Agent Running in the Field, was released but 14 months ago in October 2019.
Read a Le Carre this weekend to remember him or enjoy this excellent profile from Simon Schama in the FT explains why John le Carré really was a writer of substance.
We’ve been waiting a long time for the IPO for one of the world’s most exciting new-age stocks, Roblox. For those of you who don’t know what Roblox is, just ask someone with kids. In the IPO beauty parade we have seen over the past weeks, what has been again noticeable is the first day spikes of the likes of AirBNB, Doordash et al. The executives at Roblox have also apparently been paying attention and they have postponed their IPO. If we were selling our own stock and we knew that we were leaving half the value at the table we would also wait and reconsider our options. Are we to possibly expect a direct listing? Who knows? But this is possibly yet another sign of where we are in the markets.
As we get into the real depths of winter and the days get shorter, one almost wonders if we end up seeing more of the moon than the sun these days. As far as satellites go, our planet’s oldest satellite has inspired wonder and intrigue over the millennia. We have put astronauts on the moon on various occasions but the reality is that we know very little more about it. Last month, China’s latest lunar mission Chang-e 5 (named after the mythical Chinese goddess of the moon) completed a harvest of lunar material (not cheese, unfortunately) and is due to return any day now. As it happens, the moon – tranquil as it may seem – used to be volcanically active, with its surface scarred by volcanic activity. Chang-e 5’s payload of frozen lunar lava, drawn from the moon’s Ocean of Storms, may provide some clues as to its history.
Alternatively, in a throwback to years past, we could just ask this guy for some clues.
What we're watching.
A very welcome sporting event that we stumbled across this week was the Australia v India cricket test series from Australia. Two huge and evenly matched sporting nations, fans in the stadium, beautiful Aussie sunshine… the perfect spectator sport, especially when it’s 7 degrees and drizzling in London.
Also, the action from the Adelaide Oval started in the early morning when some of us are getting up to have a bit of breakfast. There are few better accompaniment to the day’s first cup of coffee than watching Virat Kohli face Josh Hazelwood in the sunshine. It certainly sent us into the day with a spring in our step.
We’ve been getting into Yellowstone, a show described by The Guardian as, a “bloated ranch-based drama with an unengaged lead”. This couldn’t be farther from the truth. This is a tightly paced show that manages to combine the aesthetics and sensibility of a western with the familial psychodrama and bare-knuckle brutality of the Godfather films.
John Dutton (played by none other than Kevin Costner) is a man with a lot of enemies. Like his father before him, he is the owner of The Yellowstone, the largest ranch in Montana, and his children tussle and maneuver for their father’s favour.
The show is written by Sicario screenwriter Taylor Sheridan and cleverly fuses old and new to create a modern western that is slick, luxurious and supremely watchable, mixing internecine family drama with larger-scale power plays. Warning: it will make you want to buy an entire wardrobe of lumberjack shirts!
What we're listening to.
We listened this week to Guy Raz’s excellent podcast, “How I built this”, in which he interviews the founders of Riot Games and unpacks their origin story. Brandon Beck and Marc Merril, talk in detail about their journey and how for many years they did not even know they had a sustainable business, never mind a runaway success story. Often in this social media infused world we live in, the hardships of building a business are glossed over in the winning narrative of the world’s biggest companies. We found this interview rich with the honest story of how they struggled to raise money originally. Even 3 years in they had little to show for their efforts and didn’t even know that their product would succeed at all.
We’ve been fans of Sam Harris’ Waking Up app for a while. It’s not your run-of-the-mill mediation app. Waking Up is a guide to understanding the mind, for the purpose of living a more balanced and fulfilling life. Harris – a high profile neuroscientist, philosopher, and New York Times best-selling author – explores the practice of meditation and examines the theory behind it.
This week we listened to Sam’s conversation with William Irvine on the wisdom of Stoicism (accessible once you’ve subscribed to the app). The pair discuss what it means to have a philosophy of life, the similarities between Stoicism and Buddhism, tranquility as the goal of living an examined life, negative and positive emotions, how to respond to setbacks, Stoic techniques like negative visualisation, how to avoid regret, and other important topics.
And if you’re interested in a great introduction to Stoicism, check out Irvine’s book The Ancient Art Of Stoic Joy. We recommended this via the newsletter many months ago, and it’s already become a classic of the genre.