Weekend Reading #265

This is the two-hundred-and-sixty-fifth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 27th April 2024

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What we're thinking.

We have seen a correction of some kind in the US markets. While the indices were down mid-single digit percentages at the lows off this move, Nvidia fell 20% from its peak before the rally of the past days. The sentiment is bearish everywhere we look, and Twitter is alight with calls for a crash. While this may prove to be the case, the price action itself is rather strong. A 20% correction in the leading stock of its time (NVDA) has resulted in it trading at around 30 times earnings. Is this a bubble? Is it time to sell or to buy? We’ll let you work that out. Commodities continue to rally, and their associated stocks are running. Could this May be different? That's up to Janet Yellen it seems. Her fiscal performance almost makes the Fed impotent. Is it designed this way? Who knows. The price action will tell. Its making a strong case! 

What we're watching.

A couple of weeks ago I shared a very brief talk by a chap named Tom Morgan at the Sohn Conference where he spent 5 minutes telling everyone why it is so important to be curious. His brief salvo into the left-hemisphere vs right battle inside our brains rally sent me down a rabbit hole. I have in recent years become more aware that I am very right-brained but this was a whole new world of info to get me going. His research highlighted an individual named Ian McGilchrist and a book called “The Matter with Things”, a 1500-page tome. The book, which I have not yet read, delves (no there is no AI help here) into the left-brain vs right-brain way of seeing the world. It argues that we live in a world where science and reason are heralded and used as the primary way of interacting with our surroundings. What we need, he says, is to trust more in intuition and imagination and our world will be unlocked in all its glory. The left (analytical) brain needs the right brain to contextualise it and cannot operate alone. I can readily identify with this. As a right-brained fund manager constantly pitching to left brained allocators who want a scientific show of process and methodology rather than trying to understand how my brain works, I would be very keen for some more right-brained people to interact with! There is so much in this and what resonates with me is the INTERCONNECTEDNESS of everything and how this man brings it all together. Religion, meaning, the cosmos, physics, reality, consciousness. Everything. 

Here is a talk McGilchrist gave at a gathering called the Realisation Festival last year and covers all his ideas. Its brilliant. 

“We take the lived experience. We then turn it into a map, a theory, a diagram. Take it apart. Leave it in bits all over the floor and then say well it doesn’t mean anything to me. And this is surely a very bad way to be understanding the vibrant, living complex, rich, beautiful world around us.” 

More than anything, this talk is just beautiful. And given the divisiveness in the world, everyone could do well to pay its core ideas heed. DC 

For the audiophiles among us, this video which I came across – a documentary about Ken Fritz, an audiophile who built what was probably the world’s best sound system, is likely going to be extremely fascinating. The extent to which Fritz went to assemble what he felt was the perfect set up, as well as the further extent to which he went to be able to enjoy the beauty of the sound when diagnosed with ultimately fatal ALS – a record loader with suction cups that would load records without him having to hold it – is simultaneously a prime example of determination and ingenuity. This piece in the Washington Post about what Fritz sought puts it perfectly: an environment precisely engineered for the one-of-a-kind acoustic majesty he craved. But where this was fascinating, the story also ends in tragedy – partly with his death from the disease, but perhaps even more so how the setup he spent almost 3 decades putting together was ultimately, against his last wishes, sold off piece by piece for a grand total of $156,800. The conclusion to the WaPo piece is tragically poetic: 

“But perhaps that was always going to be its fate. Last summer, when pressed about the value of Ken Fritz’s life’s work, Staples had demurred. The value, the auctioneer said, was whatever somebody else was willing to pay for it.” EL 

What we're reading.

Kamran Bokhari is someone I’ve followed since I subscribed many years ago to the geopolitical service that Stratfor once offered. So, when he released a very comprehensive “dossier” on the “The Future of Evolutionary Regime Change” in Post Khamenei Iran, I dove straight in. Contrary to what the title may suggest, he does not expect a green revolution with democracy surging forwards but rather more pragmatically expects a rebalancing away from the theocrats (Mullahs) towards the military. Accompanying this he offers, would be a shift away from the fanatical ideological objectives of the current regime towards a more pragmatic and nationalistic way of running the show. This is definitely worth digging into if you are interested in the political dynamics inside Iran and understanding which of the paths ahead may unfold. And dare I say a path to possible relative optimism. 

After a surprise appearance in the epic finale of Larry David’s Curb Your Enthusiasm, Jerry Seinfeld popped up in an interview with GQ. Candid as always and full of fun, this also touched on a few more serious things. If you’re a Seinfeld fan, you’ll enjoy this.  

And finally, an FT article caught my attention entitled “The Young South Africans Rethinking Nelson Mandela’s Legacy”. This is a grim read and an insight into the mindset of many young South Africans who are desperately poor and unemployed with little hope. 30 years after the end of apartheid, these young people don’t care about Nelson Mandela and his legacy. They care about food and opportunity. With elections coming up next month, one can only hope for a positive outcome for the country in what is likely to be the first time we see coalition politics in South Africa as the ANC loses share. Unfortunately, the share is likely to be taken by demagogues Zuma and Malema. DC

What we're listening to.

A Twitter favourite of mine is Harris Kupperman who runs his Praetorian Capital Fund. He appeared on the Forward Guidance podcast this week. His style is completely different to mine but as with all the opinions and interpretations around, it is a good ingredient to go into my personal mix for what makes the market. He has spoken of what he calls Project Zimbabwe, something which as a South African, I understand well. I had always thought of what may possibly unfold in the US as more akin to what's happened in Turkey, but his analogy is similar. Unbridled inflation will lead to a melt up in asset prices in local currency (in this case the dollar). The only question he (and me) has is whether we see a frightening correction/crash before this becomes the mainstream view. I don’t know that and obviously have both outcomes in mind but the rallying in the commodity space we have seen tells me the genie is on its way out the bottle. Worth a listen. DC