Weekend Reading #389

This is the three-hundredth-and-eighty-ninth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 7th November 2026.

To receive a copy each week directly into your inbox, sign up here.

*****

What we're thinking.

After the rotation trade went into overdrive on midterm results day, it is what happened the day after that will be remembered. The midterm crash of 2026 saw the Nasdaq fall 6.5%, the worst day since Covid in March 2020. 6.5% is a real number and there will be many casualties as the damage reports emerge. The price action was suggesting such a possibility for weeks, but it is still quite breathtaking to see 10-20% declines across the board in AI names. We operate by a relatively simple formula. When you see an extreme spike in price, however bullish the outlook may be, there is almost always a crash that comes after. It takes time to develop but all the signs were there. The massive spike from April to June, the SpaceX IPO, the Situational Awareness blowup, the Anthropic S1 and indeed the recent glibness of the tech commentariat - the Gavin Bakers, Brad Gerstners et al. These are all highly skilled investors and entrepreneurs who became influencers. We respect them greatly but in recent months as the price action went against them, they resorted to patronising posts on X about how the market doesn't understand what is happening on the ground. One thing we have learnt the hard way over many years in markets is that if the market is going against you, YOU are wrong.
 
There are so many unfolding variables after the so-called Blue Wave that it is difficult to have high conviction on anything. The AI names have been destroyed, and the prospects are bleaker than they were. The price structure of the share prices has broken, and it is rare to see a fast short-term recovery but that doesn't mean they cannot have a vicious bounce. The rotation trade we discussed here in recent weeks has rallied hard, but do you really want to own mediocre growth businesses at these higher valuations now over the mid-term? We are waiting patiently for the next market clues of where it wants to go. For now, we will go to the beach and collect our thoughts. The year is winding down and without major signs the market is going to do anything special, there is no need to force the trades. We are listening and watching and when the market is ready, we will act.


What we're watching and listening to.

Last week I linked to a short video from Dwarkesh about Robert Caro's works on Lyndon Johnson and Robert Moses. This week he released his interview with Caro himself. I really enjoyed this. Caro is old school. His thick New York accent is fantastic to listen to. His nuggets about his career and those he writes about are priceless. And his respect for Dwarkesh is clear as many times he compliments him on asking great questions as he inhales deeply and thinks carefully about each answer. This is world class stuff.
 
Another interesting chap is Dan Schueftan, Head of the International Graduate Program in National Security at the University of Haifa and director of the university's National Security Studies Center. He was once an advisor to Israel's National Security Council. Schueftan is 83 and has lots of wisdom to share. He is very direct and clear about what Israel has done right and wrong and what its strategy should be. He believes strength is key to survival in the Middle East and the prospects for Israel are strong. He worries about the diaspora as a place for Jews to flourish. There is much more in here and it is a very good watch.
 
John Hempton is an Aussie short seller with an accomplished history. Here he appears on the excellent Joe Walker podcast to talk about compute, AI etc. This is an exceptional interview in which he clearly elocutes with great nuance what is going on. It was very timely this week given the developments on the market. He compares the commodification of intelligence with the solar panel industry of all things, but it makes so much sense the way he frames it. He is funnily enough bullish on Anthropic. This is a much watch to understand the very complex AI variables at present. DC

This video was making the rounds on Twitter this week – haven’t seen it before but it’s a TEDx talk by a comedian called Will Stephen called “How to sound smart in your TEDx talk”. In all fairness, he starts off by declaring that he has absolutely nothing to say or teach. But he goes on talking about saying nothing for 5 entire minutes. On one hand, it’s absolutely brilliant. On the other, it actually also exposes how some catchy snippets, tonality and style, so typical of TED talks, can easily provide a veneer of brilliance over something – or nothing at all. EL