Weekend Reading #238

This is the two-hundred-and-thirty-eighth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 7th October 2023.

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What we’re thinking. 

Many readers may be wondering why we don’t write blog posts anymore.  

Our entire process is based around the intersection of ideas and price action. We write a lot about price action but what does that actually mean? Price action is simply the price behaviour of a said instrument as evidenced by the charts in front of us. Some traders like to see the bid-ask spread; we like the charts. Every single input of the market’s collective imagination culminates in the tick-by-tick price action of an instrument. And it tells a story. So much so that we place emphasis on this price action over and above any fundamental or macro view we may have. Often, a fundamental or macro view of ours even results from the price action telling us to go and dig deeper. 

So, what does this have to with writing blog posts? Blog posts are generally about ideas and predictions. Many people in markets like to be thought leaders. Thought leadership is about ego. It’s why people retweet their own tweets showing how their predictions were correct or refer you to a note written months/years before. We are told by all and sundry that we need to get our ideas out there because it’s the ideas that people want to read. But here’s the thing: Ideas are a dime a dozen. And you know what? Many of the predictions we make, despite seeming really great at the time, turn out not only to be wrong but sometimes even result in the complete opposite happening. And while we don’t really care because in the end our performance is our outcome - not our ability to predict the future, our readers may! We don’t want our bad ideas getting you into trouble.  

This entire thought process was triggered by a conversation I had yesterday in a meeting when after spending a few minutes articulating my view on the US economy, I realised I was talking complete crap. I then proceeded to explain that I didn’t really have a view. I had lots of competing views, a jumbled mishmash of ingredients that to me are always only ever made into something logical by the patterns I see when the prices of hundreds of instruments I track move one way or the other.  

So, on that note, instead of asking us for predictions, ask us rather what it is that the market telling us. Firstly, it’s easier to work that way; secondly, it completely removes the ego. All we care about is performance. And making correct predictions funnily enough is not at all correlated to performance. 

It doesn’t mean to say that we’ll NEVER write a blog post again, but we’d probably steer clear of making huge thematic predictions for the future. 

What we’re doing. 

I had a rather strange but enjoyable dinner earlier this week when I went to a Thai/Indian fusion restaurant named the Radhuny Siam in Dartford (just outside of London in Dartford, Kent). It had initially started out several years ago as two separate but neighbouring businesses, although given a hike in commercial rates, they opted to merge forming what is now a unique culinary experience. I tried to find a link to this, but they still retain their individual listings on Google Maps. Interestingly, the way it works is that there still remains to be a distinct Indian menu and a Thai menu, although as you start to reach closer to the end, you are presented with some questionable choices that remain unclear as to which country’s cuisine they pertain to. I opted for a mostly Indian meal, with a Lamb Vindaloo, Pilau Rice and a Peshwari Naan, although I ventured into the Thai section for a starter of some garlic prawns. Nevertheless, it was a great experience, and I shall happily go again to enjoy a pint of Cobra alongside some prawn crackers! HS 

What we’re reading 

Spotify’s uncanny ability to assemble and repopulate playlists with tracks that over time slip through the cracks of memory is probably one of the best gifts to humanity. This week it dished up an old classic which, over the past 20 years, has gone from chart topping hit to annoying to evergreen classic – none other than Carlos Santana’s collaboration with Matchbox 20’s Rob Thomas, Smooth. As with all things, history takes time to be written, and this article in Rolling Stones retells the story of “Smooth” over the past 2 decades, including how before the fact, it looked like a musical train wreck waiting to happen, and ultimately became one of the best-selling singles of all time. Just goes to show how sometimes it is through breaking all the rules that you get a near-evergreen hit. More than 20 years later, “Smooth” has arguably outdone many of its contemporaries – including 343m plays on Spotify. EL 

As I told some friends over dinner this week, Ozempic or Wegovy, whatever you call it is like porn – everybody does it but no one talks about it. The weight loss drug’s impact has been so big it has caused Denmark to restate its GDP without Novo Nordisk, its manufacturer. But it’s also somewhat of a social taboo. Nobody really knows the long term direct side effects of prolonged use of the medication but the short term effects are clear. Lots and lots of weight loss. How? It makes you stop being hungry (and feel a bit ill in fact). This superb thread on Twitter gives some cool insights into the direct and indirect effects on both users of the drug and the economy itself. Well worth your time especially if you are taking the drug.  

Remember DAOs? Decentralised autonomous organisations were all the rage in the crypto bubble and thereafter have been summarily dismissed. It was very refreshing to see a very positive article written on the topic in Nature Magazine. We have previously mentioned something called Vita Dao, a project focused on funding research into longevity and this article gets it right when covering the need for an alternative model to raise funding for some types of scientific research. Vita Dao is mentioned as a pioneer (which it is) and the article does a good job of summarizing the pros and cons of a DAO. More important is where it appears – in one of the top science research publications. It's all very experimental but it does make sense. We continue to watch closely. DC 

What we’re watching 

Almost 2 years after Amazon aired the first season of The Wheel of Time, the second season became available on Prime video, interestingly to much less fanfare than Season 1. There certainly wasn’t a big advertisement for the series on Piccadilly Circus (or if there had been one, wasn’t something that caught as much attention as the original one did in the depths of Covid lockdowns). Given the gap in between, the recap needed to be much more comprehensive, but that would be the only complaint. While the season naturally ended on a cliffhanger (as is customary), it was well-made in terms of the producers and directors’ choice of what to cut out vs retain from the original books, while maintaining a pace that keeps everyone tightly riveted to the screen over seven episodes, without losing any critical information or plot details along the way. EL 

Michael Lewis’s 60 Minute interview about his new book on Sam Bankman-Fried, was the stuff of dark comedy legend. It is hard to believe how someone whose books caused so much enjoyment can fall far so far into the abyss. He has bought SBF’s narrative hook, line and sinker. After looking forward to his book, “Going Infinite”, for so long for a proper inside look into what happened, I was disgusted to see how he has portrayed the man. Sure, innocent until proven guilty in a court of law right. But this take made me reach for the barf bag. DC 

What we’re listening to 

A fast-paced interview with Peter Thiel was on the roster first up this week and he did not disappoint. Talking about politics, innovation and creativity in America, Thiel expounded on his view that there have been no major innovations outside the computer science field for 50 years. He is also not quite sure how to fix this. Amongst a host of other quickfire topics, this is a good one. 

Still on the topic of politics, I continued my quest for truth by listening to a gentleman named James Carville, a colourful speaker, who appeared on Honestly with Bari Weiss. Carville is a Democratic Party consultant who at nearly 80 years of age has been around and seen everything. Most famous for masterminding Bill Clinton’s run to the presidency all those years ago, he had a lot to say. From Biden’s age to Trump to how to fix American politics, this was a thoroughly entertaining listen. Highly recommend. DC