Marvin’s Best Weekly Reads June 5th, 2022
“Not in doing what you like, but in liking what you do is the secret of happiness.” —J.M. Barrie
Word to the wise. Capital controls coming.
"The reality is that the past decades have been the golden years of the free flow of capital. Before that, most countries had capital controls in place. They were the norm.
In an era of de-globalization, would it be surprising to see governments trying to ensure capital does not leave their borders, especially as countries struggle with high debt levels, shortages of various sorts, and surging tax rates?"
https://mailchi.mp/bf4edf19e48c/get-ready-for-capital-controls
2. "For some bizarre reason, we are made to have unshakable confidence in today’s central bankers. No one questions their wisdom and infallibility, and it’s inconceivable that they would ever make the wrong call.
This is ludicrous. People make mistakes. Even Isaac Newton. Even modern central bankers."
3. This is a valuable discussion. Lots of historical data and stories backing up the fact that we are entering a period of deglobalization and its impact on reducing inequality and effects on the US dollar system.
"Revenge of the Old Economy & How to Invest in the Commodity Supercycle"
https://www.youtube.com/watch?v=K0FS0hI6KYU
4. "No matter how the Russian campaign unfolds from here, the “special operation” has devolved into a costly mess. Russian forces are stalled, their losses are mounting, and the economic screws are tightening. Adam Smith wisely noted that there is a great deal of ruin in a nation, so Russia will likely weather the storm of sanctions, but as the war drags on, the economic crisis will deepen and the pressure on the Putin regime will mount.
At this point, a negotiated settlement seems to be the only sensible option, but wounded authoritarians are prone to double down when facing failure. The forlorn but evidently palpablehope that Putin will cut his losses and slunk back across the border seems detached from the reality of the existential crisis facing the Russian leadership. What incentive does Putin have to deescalate? Propriety, decency, and a regard for human life? Such considerations rarely enter the minds of revanchist despots.
American leaders, military officers, strategists, and commentators have been euphoric watching the vaunted Russian war machine sink up to the axle in Ukrainian mud, but it was not that long ago that the United States was embroiled in a costly quagmire of its own. Our schadenfreude should be tempered by the realization that this has happened to us in the past and can happen again unless we correct our military math.
As we peer into the mists and squalls of the unknown future, we would be wise to heed the words of Winston Churchill. “Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realize that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events.”
https://mwi.usma.edu/putins-bad-math-the-root-of-russian-miscalculation-in-ukraine
5. All the things you learn. Global Capitalism is complicated.
"Some say Putin will remain in power for years to come. I don’t believe that’s possible because of how global certificate and insurance agencies work.
The oligarch super-yachts which are being seized make for splashy news articles, but they are the tip of the iceberg.
Even if they aren’t seized, they are losing their certifications of sea-worthiness and insurance. That means they are unable to enter almost any desirable port in the world. No one buys a yacht to keep it moored in Vladivostok, Russia."
https://medium.com/@maxrottersman/putins-achilles-heel-lowly-maintenance-contracts-5cad1c8fcd3a
6. Good episode this week on NIA. The Tech & Crypto sell off.
https://www.youtube.com/watch?v=mKCWPe91mrw
7. This is a tough business model to execute if you know what you are doing. Doubly tough if you are partying on the side.
"Last fall, discussions led by the founders about raising up to $1 billion in new funding fizzled after some investors balked at Gopuff’s cash burn, according to two people familiar with the efforts. Since then, they’ve overseen two rounds of layoffs totaling hundreds of workers. Earlier this year, Gopuff instituted a temporary hiring freeze for employees and also shuttered a fledgling pharmacy delivery business, say people familiar with those efforts. And they’ve lost several executives recruited from tech companies like Facebook and Airbnb to modernize their e-commerce software and build a new advertising business.
That upheaval has raised questions among some employees about the leadership abilities of co-CEOs Yakir Gola and Rafael Ilishayev.
Underlying the aggressive expansion was the founders’ grand vision for Gopuff’s future. At employee all-hands meetings last year, Ilishayev extolled the company’s fast growth and said he wanted Gopuff to become a $1 trillion business, according to a person present at the meetings. By early this year, the company’s workforce had grown to over 15,000.
Gola and Ilishayev oversaw this rapid growth from side-by-side houses they had bought in Miami where they exhibited a lavish lifestyle. For in-person meetings hosted at the homes, employees often passed through rows of luxury sports cars lining the homes, according to people familiar with the matter. The founders also co-purchased a private jet during the pandemic, a separate person said. And Ilishayev posted photos on his private Instagram account, which some employees had followed, of him smoking hookahs with friends or the founders partying at nightclubs, according to a person who saw his account.
Meanwhile, some of Gopuff’s expansion plans were stumbling. Last April, it ended its ship-to-home service, which had sold products to consumers outside its normal delivery zones, a company spokesperson confirmed."
https://www.theinformation.com/articles/gopuff-founders-ambitions-falter-as-startup-bleeds-cash
8. "Beginners Breakdown: 1) do you think supply of money is going up or down 5-10 years across the globe; 2) do you think more or less people will use tech/crypto anything you own; 3) do you think inflation will be above or below the debt rate you have and 4) if you’re trusting a third party with crypto - you’re better off just buying stocks instead with volatility to crypto instead."
https://bowtiedbull.substack.com/p/crypto-basics-on-the-last-5-days
9. True heroes here.
"The war in Ukraine has attracted U.S. military veterans and Western legionnaires like no foreign battlefield in recent memory. But what motivates midcareer professionals – often now married, with children, and with their former military lives receding into memory – to drop everything and step into the trenches of another nation’s fight?
Some are impressed by Ukrainian pluck and resolve, by surviving 11 weeks of the Russian onslaught, when analysts predicted they would be routed in three days. Others see a historic battle between good and evil, with a high-stakes clarity between right and wrong not seen for decades."
10. "As the Ukrainians accumulate more battlefield successes, they will raise their sights. The Russian army, having suffered tens of thousands of casualties and lost much of its frontline equipment, is making what might be its final, convulsive efforts at destroying Ukrainian forces in the south and east of that country.
Like their previous efforts, these too will probably fail, and the possibility will open up of Russian routs along their 300-mile-long front line. A stalemate is also conceivable, and would create one set of plausible objectives for each side; a collapse of the Russian military is somewhat more so, and would create very different objectives.
Every war must end, and this one will as well. One set of follow-on objectives for the West is clear: helping Ukraine rebuild and put itself in a condition to defeat further Russian aggression. Similarly, it is both necessary and likely that NATO will emerge from this conflict larger, more united, and more powerful than before.
But all of this leaves the problem of Russia. It will not be reconstructed from without, as Germany and Japan were after World War II. If it is convulsed from within, it is less likely to be dominated by liberals (many of whom have fled the country) than by disgruntled nationalists.
Putin may go, but his replacements are likely to come from similar backgrounds in the secret police or, possibly, the military. And it will not be able to rejoin the international community as it was."
https://www.theatlantic.com/ideas/archive/2022/05/ukraine-russia-goals-win-war/629815
11. This is smart. As a road warrior I have a hard time sticking with a martial art. Brazilian Jiu Jitsu seems to be more prevalent than Boxing or Muay Thai.
"With jiu-jitsu, it just seemed like everyone was doing it and it seemed like every city in the world had it. I travel a lot for work so I thought it would be good because wherever I go for work, I could drop by someplace and get a workout.
When you’re doing Jiu-Jitsu, you really have to stay in the moment. You have to be present because someone is trying to kill you, literally. So, it’s very hard to think about the past or worry about the future when someone is trying to strangle you to death. It forces you to live in the moment in a really meditative way. The more you do it and the more you reach that meditative zone, you realize it’s such an easy way to live in the present.
The other side of it is that I think humans get dopamine from learning new things. With jiu-jitsu, there’s always something new to learn from it because the techniques are almost endless. That means you can keep adding to it and because of that, there’s so much to learn. You get dopamine every time you learn a new technique, or you see something new that looks kind of cool and it makes you want to try it."
https://www.gq.com/story/real-life-diet-ronny-chieng
12. "A recession has not begun yet, but the Fed is tightening, and risk assets are reacting. If a recession arrives, many of the consensus trades will reverse and investors should start to anticipate that scenario by diversifying exposure into some of the recent losers and taking profits on the recent winners."
https://www.thelykeion.com/time-to-be-contrarian
13. "We are ardent supporters of nuclear energy and, for that reason alone, are happy to see serious work being done to develop the thorium fuel cycle for energy purposes. We also understand the need to generate hype, err, media optimism for long-term projects to get government support. We sympathize with the attractiveness of moving a ball forward.
However, and this is a BIG however, much like coking coal, the real impediment for nuclear energy is a branding one. Work to develop thorium-based nuclear, irrespective of the outcome, is still just the thunder. The lightning comes when the problem of public perception can be solved and only then, as Twain so rightly points out, does the real work get done."
https://doomberg.substack.com/p/nuclear-thunder
14. If you are a new emerging VC fund manager this is worth watching.
https://www.youtube.com/watch?v=oEqKeiAZZBc
15. An incredible eye opening discussion on the macroeconomic situation in the world.
Highly recommend if you want to understand what’s happening. Love the guys at Santiago Capital.
https://www.youtube.com/watch?app=desktop&v=IahtVXrZzsY
16. All founders need to watch this.
2022 is gonna be rough so you will need a new operating methodology here.
https://www.youtube.com/watch?v=vBkzm4a7iY4
17. Even a rank amateur like me notices that this CQB is really weird.
https://www.youtube.com/watch?v=XvFOpzBOtGA
18. I love See's Candies, they are delicious!
"With ~$500m in annual revenue, See’s Candy represents less than 0.1% of Berkshire Hathaway’s holdings. Yet, Buffett has called the 100-year-old chocolate chain his “prototype of a dream business.”
He frequently brings up the company in interviews and even keeps a box of the candymaker’s peanut brittle on hand at annual shareholder meetings.
In an era that prizes flashy, fast-paced investments, the story of See’s reminds us that a company’s true value can’t always be quantified on a balance sheet."
https://thehustle.co/how-a-small-candy-company-became-warren-buffetts-dream-investment
19. "What is the difference between a guy who says I want to, and guy who says I do?
The difference is fast action.
The difference is that the guy who does things makes a quick plan and starts executing it, and fixing things up as he goes along.
On the other hand, the guy who says “I want to” all the damn time is still waiting for the perfect day, the perfect opportunity, the perfect set of circumstances to start.
Look, if you don’t want to do something – just say you don’t want to do it. Why are you trying to fool yourself?"
https://lifemathmoney.com/move-fast-perfection-is-for-losers
20. "Tech massively over-earned in 2021 – generating growth and profits at a temporarily high rate – driven by substitute demand from the pre-COVID economy. Companies with accelerated temporary growth got credit for a permanent acceleration.
But investors recently realized that underwriting growth permanence from COVID acceleration was wrong. The ensuing correction was harsh, but note that many high-growth companies are trading very close to their pre-COVID prices.
Not everything will revert to the mean. Movie theaters may never reach 2019 levels, Zoom is here to stay, and even I have been surprised by the durability of remote work. And mean-reversion does not spread at the same rate for every phenomenon: inflation will persist far longer than home fitness sales.
But many pandemic-era trends will slowly revert to their pre-2020 trendline – inflated valuations, easy money, exponential tech demand, meme investing.
Mean-reversion and inflation will be lingering symptoms of the virus for years to come."
https://luttig.substack.com/p/mean-reversion
21. "I’ve been scanning financial newspapers over the past few weeks and noticed that despite the hefty stock market declines there are no articles suggesting that retail investors should sell or consumers should pull back on their consumption.
Now why is that? Well, if retail investors would sell and consumers would pull back on a broad scale we’d most certainly already be in a deep recession. Thus everyone – central banks, corporations, media, and pundits – are all choosing their words extra carefully these days to avoid panic or what you might call a run on the economy.
But I’m an independent writer and I see clear signs that we are heading into a recession. And since the average consumer or retail investor usually is the last to know I thought I could share a few ideas within the context of fewer better things."
https://fewerbetterthings.substack.com/p/tips-for-the-looming-recession
22. Yikes. She is probably right in the long run but the question is whether ARK can survive the next year or two.
"I have been critical of ARK Invest, and their flagship ARKK “Innovation” ETF since the inception of this blog, noting last November - before inflation became an issue, before the war in Ukraine and before the market decided to take a king-sized shit - that Wood’s success seemed superficial and based on temporary trade-winds that were bound to change direction.
Since November 2021, ARK’s “Innovation” ETF has put in a performance for the ages, plunging -58.1% compared to its benchmark, the NASDAQ QQQ ETF, which has fallen only -14.93% in the same period of time."
https://quoththeraven.substack.com/p/cathie-wood-and-the-definition-of
23. "Amateurs talk tactics; professionals talk logistics. Once Russia pushed their units fast — we saw units just driving through towns, trying to get where they were going — they extended their operational reach. That is an operational risk. Such a move is not unheard of, but the Russians couldn't hold the lines to support everything they were pushing in at once. Those logistical lines are the lifeline. Once again, what wins wars, or loses them, are questions of logistics.
But the training and preparation of the conscripts was poor, and the Russian military lacks professional enlisted soldiers. They were trying to fight like a modern Western military with a Soviet-style force that even wasn't as strong as it was during the USSR. They failed, and have now been exposed as suffering from years of graft, decay and belief in a method of warfare that does not fit the strengths of their military."
24. Steve Aoki is a great example of the future of entrepreneurship. "Multi product" Portfolio entrepreneurship.
https://www.youtube.com/watch?v=h4FZvwyUqto
25. This is always a fun discussion. Nomad Capitalist & the Rebel Capitalist.
https://www.youtube.com/watch?v=5wpS8TwOFmo
26. Discussion on Bitcoin and the Sovereign Individual & the rise of Decentralized world. Worth listening to whether you agree or not.
https://www.youtube.com/watch?v=jCA2IUFtpd8&t=221s
27. Super interesting discussion on the US dollar dominance and whether it will continue or not.
https://www.youtube.com/watch?v=3EWFyCOOQCU
28. Always a good show: entertaining and educational. All in Podcast.
https://www.youtube.com/watch?v=8DQ87UHAGTk&t=1378s
29. Good!
"The Russian military has also lost thousands of weapons, and in the last few weeks has scaled back from a three-pronged attack on Ukraine to a narrower effort to take the whole of the Donbas—and retain the parts it captured in 2014. The losses could make it difficult to wage war anywhere else in the short term, defense experts and officials said.
“Russia has taken heavy losses in this campaign, which will reduce its ability to engage in conflict over the next few years,”
https://www.defenseone.com/threats/2022/05/has-ukraine-broken-russian-military/367480