Weekend Reading #293

This is the two-hundred-and-ninety-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 23rd November 2024

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What we're thinking.

Bitcoin almost touched $100,000 this week but the real action was in Microstrategy as it roared higher, and the volatility of the name soared. There were 4 double-digit days this week (Friday hasn’t ended yet) with a plus 12, plus 11, plus 10 and a minus 16 on Thursday undoing the gains from the two days before. This is classic bubbly behaviour and on Wednesday Microstrategy was the most traded stock by value in the entire US market! The intellectuals will moan of its “ridiculous” premium to its underlying NAV. The historians will tell you about how Michael Saylor blew up in 2000 and fleeced his investors. The momentum guys will tell you there is no limit. The too-clever-by-halfs will tell you of how Bitcoin’s rise on top of the low funding cost to buy it is genius. The technical guys will talk of Fibonacci's and the like. There is something there for everyone. Whatever your belief systems say, what Saylor has clearly managed to build is a self-reinforcing, reflexive instrument which is becoming entangled with Bitcoin itself. What do we think? We don’t think anything. We observe price action is parabolic, and the biggest gains are usually made at the end in this kind of move. It’s a dancing close to the door kind of thing. Is it over? Absolutely no idea but we have our levels we are watching closely each day. This thing can go a long way still, but it can also be over tomorrow. If you were hoping for a concrete answer, then sorry to disappoint but that’s not how markets work. The beauty is in the eye of the beholder. The uncertainty is the entire point and that's what we love more than anything. 

Elsewhere somewhat dully, Nvidia’s results came and went with zero attention or fanfare.  

Interesting!  

What we're listening to.

I really do have fatigue for this type of conversation after listening to literally dozens of politically linked podcasts before and after the election but Bari Weiss’s interview with Peter Thiel was compulsory for me. Thiel is clearly one of the puppet masters behind the Trump campaign and indeed he was the one who went against the crowd and first backed Trump before the 2016 election. As Weiss points out, Thiel is often early to see trends and this one was no different. There is a lot to unpack in this one but if you want to understand some of the thinking behind the new Trump presidency and his likely actions, this is a must-listen. 

This was an excellent interview with Eric Peters of One River and Coinbase Asset Management on the Empire pod. In it, Peters unpacks his view of crypto regulation and policy after the election and what the impact of the Trump victory should mean for crypto. Obviously, he is bullish but as he points out, we are still so early into what crypto can do for the world. His biggest takeaway, something I agree with, is the disappointment with Ethereum in this crypto cycle is completely overblown. His view is if the future financial infrastructure is going to be built on crypto rails, then it very likely to be majority done on Ethereum. And that surely has to be bullish. DC

What we're reading.

I was pointed to this article by a friend about the human brain and transformer – no, not robots that turn into vehicles or animals, but the models that underpin LLMs like ChatGPT. It turns out that the inference/probability-based model used in LLMs is something that the prior understanding of the human brain isn’t really able to replicate in terms of methodology, at least until the discovery of the function of a type of brain cell called astrocytes. Astrocytes support the function of neurons by creating a memory buffer, as a function of them operating at a slower pace than fast-firing neurons, leading to a sort of persistence in neuron activity – a form of short-term memory (like RAM?) that facilitates the brain functioning like a transformer. Bottom line: with that mystery potentially solved, it’s time to turn back to the human brain for inspiration for the next iteration of AI development. It’d be exciting to see what comes. EL

What we're watching.

I watched the first season of Industry, which oddly is on the BBC of all places. The premise is of the inner workings of the London office of an investment bank and its new grads who are seeking a permanent spot at the bank. I could possibly place every character to a real world sell-side person I knew back then! And I guess it's only now that I understand properly just why I always got treated so well! Great show with lots of salaciousness all round.  

I went to see a film this week called Heretic with Hugh Grant. After the teaser looked so good to a fan of suspenseful, psychological thrillers, this was time in my life I will never get back. It often boggles my mind how much effort and resource goes into something so pitifully poor. And boggles my mind even more that it got a rating of 91% from the critics on Rotten Tomatoes. It turns out critics are a bit like political polls – usually wrong. Don’t bother (just in case you were going to). DC 

What we're doing.

The last couple of weeks I’ve been quite all over the place. In one of our recent updates, I wrote about my short escape to Spain to catch another Athletico Madrid game, although since then I’ve also spent some time in Athens, Beijing and now find myself in Singapore. In Athens, I got to once again meet with our development team, meanwhile Beijing was an extended layover as part of my flight to Singapore.  

Athens is great this time of year, although the locals will certainly give you some strange looks for wearing shorts whilst they are thoroughly wrapped up for winter (despite it being 24^c). The food is fantastic, but something that I’d never noticed so much was the city’s coffee culture which stood out for me given the lateness to which the Athenians will continue to drink coffee. It is not unusual to see queues outside a cafe well into the evening, and it’s not decaf they are drinking either! A menu item I was extremely shocked to see regularly appear was a quadruple espresso. Alongside the usual overload of gyros from my favourite spots, I also got to indulge in much of the local seafood given the proximity to the sea being just a short 20-minute metro ride from the city centre.  

Beijing was quite a stark difference in terms of cuisine but equally delicious. Given I had just 10 hours back in the city, I started in 后海 in the North-East of the city, with a 煎饼. Jian Bing’s are essentially a Chinese omelette/pancake, which is a typical Beijing breakfast. After strolling around the lake and nearby hutongs, I took a cab over to 798 where I found a small cafe and setup to work for a few hours. 798 is the city’s newest art district with popup exhibitions from all kinds of contemporary artists so I visited some of those before grabbing dinner and heading back to the airport. HS