Weekend Reading #288

This is the two-hundred-and-eigthy-eighth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 19th October 2024

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What we're thinking.

Many learned this week that AI is not one size fits all as the differences between ASML (reported a shocker on Monday as the rest of its business outside AI collapsed) and TSMC (shot the lights out on Wednesday due to AI demand) became clear. After a scare on Monday, Nvidia was back to intraday all-time highs by Thursday. Stan Druckenmiller in his interview with Bloomberg said he made a mistake selling his Nvidia early. Bitcoin hovers threateningly poised for another shot at its all-time high.  Meanwhile gold just drifts higher and higher. US elections are getting close as this week Polymarket came into the limelight after it showed Trump with a massive lead. Criticism of the site seemed to centre around it being possible for one party to push up Trump’s odds. The counter argument is that if Harris’s prospects were mispriced why didn’t everybody rush in to capitalise on the arbitrage? Still quite hard to tell but Polymarket (and its seeming divergence from mainstream polls) is definitely the topic of the week. 

What we're reading.
 

This week saw the end of Yahya Sinwar, head terrorist of Hamas and a generational evil in charge of orchestrating the October 7th attacks. Matti Greenspan in the Free Press wrote this article which covers the details and what it may mean for the rest of the war etc. What I found interesting anecdotally (if such a thing exists in this context) was the choice to release almost immediately the picture of his dead (and very damaged) body to the public. The only time I can remember something like this happening was the release of a similar image of former Iraqi leader, Saddam Hussein. I would love to be a fly on the wall listening to the conversation between political and military leaders debating the merits of public release versus not.  

From the article in the Free Press some key points worth remembering regarding the “advice” given by a group of Western leaders who have continuous delusions of adequacy. 

“The killing of Sinwar shows that Israel’s patience in prosecuting this war—despite the high price in the lives of our soldiers, and the constant fear of civilians under rocket fire from a half-dozen enemies—is yielding results. And so, it must be said, is Israel’s attitude toward the often hysterical and misguided advice of its allies, who have repeatedly sought to force a ceasefire that would leave Hamas and Hezbollah on their feet. We’ve heard repeatedly, from Western officials who have never fought wars, that military force is counterproductive and that Hamas is an “idea” that can’t be defeated. It was just this spring, amid a broad international pressure campaign to keep the Israeli army out of Rafah, that Vice President Kamala Harris said a major incursion into Rafah would be a “huge mistake.” “ 

Time Magazine seems to be continuing its shift from woke to back with this perfect cover late on Friday. 

This is a timely and fantastic quote from Paul Tudor Jones which ties into many of the themes I’ve been exploring in recent times. One thing I have never understood since the very beginning of my time in the market has been the obsession with fundamental analysis to the exclusion of much else. This undying belief that if one gets the fundamentals right everything will work. Buy the dips on high conviction in fundamentals! That’s how one blows up. I even remember in my first week in the hedge fund game asking my new boss why numbers estimated on a spreadsheet have anything to do with the stock market’s price action. While OBVIOUSLY fundamental analysis is an important part of investing in public markets it is not even close to being the entire picture. It’s just another belief system. If everyone believes in it then it is all that matters. But markets are not like that. It goes alongside the discussions and research I’ve been doing on left versus right brained thinking – i.e.: so-called rational and scientific analysis versus intuition and patterns of human behaviour. The market consciousness as I like to call it is most definitely not limited to pure fundamental analysis. 

Tyler Cowan said on a podcast I listened to recently that this guy has perfect taste in movies. I have no idea who he is or whether this is true (for me anyway), but the website lists all his movie reviews, and he has some eclectic taste which is right up my alley. If you happen to watch one on his recommendation let me know if he was accurate or not! 

Ted Gioia’s newsletter is simply so cool. He wrote earlier this week about why music has a good future ahead of it and how the past couple of decades of formulaic, record label instructed music may not be representative of what is to come which is great news for innovation and creativity. And most importantly for enjoyment of music. Well worth a read. DC 

What we're watching.

Many years ago, when we first started the business, we came across this long blog post by Tim Urban about AI, in which he postulates about an AI going rogue and turning the entire world into paperclips. So, it was highly amusing that one of our conversations this week about doing simple things well and accurately at scale landed back on the topic of paperclips and how they’re made. Fortunately, it’s not manually done, but this video of a paperclip machine from quite some time ago (it’s quite old-school) is an enthralling video to watch – how a galvanised wire gets bent at high speed into paperclips. Viewed in slow motion at around 2:25 of the video, it’s truly a feat of engineering. Have to watch it to believe it. EL 

What we're listening to.

Winner of this week was a sensational conversation between two of my favourites, Rick Rubin and Tyler Cowen. Almost the entire time was dedicated to Cowen’s travels and his stories and observations on his travels from places as varied as Venezuela to Yemen. An absolute pleasure to listen to this and it gave me a major desire to get on the road again. He also did a bonus podcast with Rubin on his music taste which I only just noticed so will get to that next week and report back. 

Jim Rogers is always fun to listen to. Interestingly, he often appears on obscure podcasts and YouTube channels all over the world. This time he featured in a less obscure conversation on a podcast I have listened to quite a bit recently – Thoughtful money with Adam Taggart. He opined in on his usual favourite topics – the US debt spiral, the Dollar, commodities, war, China and such like. One is never going to come away with immediate action points on markets from Rogers these days but certainly lots to throw into the mix. He had some gold in his pocket this time. DC