Weekend Reading #257

This is the two-hundred-and-fifty-seventh weekly edition of our newsletter, Weekend Reading, sent out on Saturday 2nd March 2024

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What we're thinking.

For a hedge fund manager, each month end is a milestone. On the last evening of every month, we breathe a huge sigh of relief that our number is crystallised (one way or the other) in our factsheet and have a relatively better night sleeping until the clock begins again and the hamster gets back on the wheel the next day. 2024 is only 2 months old and if this is what it continues to be like it's going to be a long year!  

It does feel like we are getting to the silly stage of the melt up when a stock whose ticker is AI, goes up 25% on their latest loss numbers. It follows from Beyond Meat, a relic from 2021’s madness rising 86% in the post market after similarly pathetic numbers. And not to be left out, our favourite short from years gone by, Jumia, doubling its share price after results which showed they have not much clue. On the adult side, Nvidia reach another all-time high and Bitcoin is within 10% of its prior high as we type this with previously unfathomable inflows each day from the newly minted ETFs pouring in as the crypto bros await each daily number with great anticipation. In crypto, the AI names decided that this week was the one to begin participating in the overall bubble and in crypto things move a lot faster. It's still not clear what any of them actually do though. It's crypto, it doesn't matter. Yet. This is going to be fun.  

In China, the annual Two Sessions policy meeting could ignite some fireworks in Chinese stocks and miners should there been some real action points to get things going. There has still been no real breakout from either China or miners (with the exception of some copper stocks) despite far better trading.  

What we're doing.

I discovered another pub in Chelsea which was particularly pleasant and coincidentally it was called, The Surprise. Located just a short walk off the Kings Road (maybe 5 mins from the Saatchi gallery), it was a bit of a nightmare to get to, but once there it was pretty good. There was a good crowd of young people and the selection of beers they had available on tap proved to be much more interesting than your standard pub offering. It struck a good balance of having a good atmosphere but meanwhile able to order a drink in a reasonable time. This seems to be a problem with some of the pubs in the area, the notable example being the Anglesea Arms where despite being a very nice pub, I’ve seen wait times at the bar of around 20 minutes or more! The food at The Surprise also looked very nice, although I’d already eaten dinner when I arrived last Friday and so I’ll have to go back again to give it a try. HS 

What we're reading.

Remember the German fraud from a few years back, Wirecard? Well, if this expose is to be believed, its COO, Jan Marsalek, was also a Russian spy! This is a very tasty piece illustrating a case of real-world espionage. This has to be read to be believed. It reads like an overplotted spy thriller. The Germans will not be sitting comfortably this weekend. DC 

Brandon Sanderson is probably one of the greatest fantasy authors of our time and could probably one day go down in history alongside the likes of Tolkien and CS Lewis, rivalling Frank Herbert’s Dune, with his work being epic fantasy rather than sci-fi. For those unfamiliar with his work, the last 3 books of the Wheel of Time collection by Robert Jordan were actually co-authored and completed by Sanderson. The plots are incredibly complex with beautiful illustrations, multiple planets, a plethora of religions and societal systems within a universe he calls the Cosmere. Starting with the Mistborn series and moving on to the Stormlight Archive (reading currently in progress – 10 books are expected in this series, but only 4 have been published so far), his books are a masterclass in world building and character complexity, while keeping everything coherent (rather than for example Game of Thrones or even the latter parts of the Witcher storyline in the books). In fact, he was so productive and organised that he was even accused of using ghostwriters. No spoilers here, but to see the same story told by maybe 20 different characters in the first person, touching on nuance, history and unspoken thoughts is to read a different level of fiction – certainly coming out of the mind of one single author. But even more intriguing is the nature Brandon Sanderson’s process, being able to write multiple books at the same time (to mix things up and keep the variety going) and having them all at the same quality of writing, as well as his ability to communicate and engage with his fans, keeping them in the loop through his blog and weekly Youtube update videos. In a world where Amazon is the largest seller of books (and Sanderson has himself attempted to stand up to Amazon on behalf of writers in general), it turns out that being a writer requires not just writing well but becoming a marketing machine in and of oneself. EL 

What we're listening to.

Le Shrub is an anonymous twitter handle operated by someone who has been in the industry as long as I have (17 years) and his take on where we are in the market is fun to hear. This week he was on the Forward Guidance pod. He borrows a phrase from another Twitter handle, Paulomacro, in saying that we are in the “max stupid” part of the market as evidenced by some really silly price behaviour. His favourite is the reaction of a number of Nvidia’s investments – all of which are public companies, reacting and surging after Nvidia released a 13K saying they are invested in them. The funny thing is that this was not new information and he says goes to show how retail is fully participating in this market. He had some good ideas around small caps as a proxy for credit spreads, which warrants further analysis and overall was a great listen if you are interested in some of the nuance of where we may be in markets.  

Demis Hassibis, the founder and CEO of Deepmind appeared on the Dwarkesh Podcast this week and wowed with his technical knowledge as well as a few predictions on where this is all headed. He is of the view that AGI is inevitable, but we still have a couple of years before it arrives. This was quite a technical discussion to be honest. It's pretty hard not to be impressed by him. But as he got into his stride, I remembered that Deepmind is behind Gemini, Google’s ChatGPT competitor. Gemini made headlines last week when it was released when quite simply it refused to provide images of white men even when asked to generate pictures of America’s forefathers! So, with all the brains in the world, the finished product’s inbuilt biases somehow managed to elude him. DC