There’s a concept in economics called Knightian Uncertainty which oversimplifies to the idea that there are limits to what can be quantifiably known about the future. A “fundamental degree of ignorance, a limit to knowledge, and an essential unpredictability of future events.”
It’s true that many things can be reliably predicted and determined, but it’s also true that many more things cannot. It’s difficult to tell which is which as the world is inherently opaque. The best decision-makers know this and choose to operate under the rules of probability and statistics rather than the deterministic reasoning of first order cause-and-effect.
Former pro poker player Annie Duke warns in her book Thinking in Bets that “trouble follows when we treat life decisions as if they were chess decisions.” Life is not like chess. It’s much more like poker.
“The decisions we make in our lives—in business, saving and spending, health and lifestyle choices, raising our children, and relationships—easily fit von Neumann's definition of "real games." They involve uncertainty, risk, and occasional deception, prominent elements in poker.” —Annie Duke
The events of the week in Washington D.C. and the ongoing meteoric rise of Bitcoin got me thinking about something David Deutsch wrote about optimism in his phenomenal book The Beginning of Infinity. He makes the case that problems are soluble, and our immediate problems are simply the result of insufficient knowledge. A new idea by definition cannot possibly be known in advance, so we can’t let the assumption that it will never exist condition our planning.
“Progress cannot take place at all unless someone is open to, and prepares for, those inconceivable possibilities.” —David Deutsch
Technology is the business of possibility, and operates under the core principle of optimism: the understanding that problems are soluble and simply require more knowledge in order to be solved.
All the FUD (Fear, Uncertainty, & Doubt) around recent events is caused by dismissing the possibility that problems can be solved. Not only that, problems actually incentivize problem-solving. That’s the real underlying premise of a capitalist system, however flawed it is: to harness human nature and reward the invention of solutions. How can we possibly be sure that our democracy isn’t forever ruined? How could we have known that Bitcoin wasn’t just a nerd project for buying drugs and pizza?
“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.” —Marcus Aurelius
Breaking 🌊
Twitter permanently banned the account of the sitting president for inciting riots at and inside the Capitol in the same week they acquired social podcasting app Breaker in an effort to build out their “Spaces” product. So What?: The Breaker acquisition was done in part to “improve the health of the public conversation,” but Trump’s suspension raised serious questions from both sides. Debates ensued around the amount of power wielded by social network businessesand their ability to shape & censor public discourse in what are effectively our modern-day “town squares.”
The NYSE reversed their decision and will proceed with plans to delist 3 Chinese telecom companies: China Mobile, China Telecom, and China Unicom. So what? Sen. Marco Rubio stated that this represents a bipartisan resistance to “China’s exploitation of U.S. capital markets,” leaving everyone wondering when Alibaba (whose CEO Jack Ma went missing for over 2 months) is on the chopping block next. It highlights the reason many US investors are reluctant to trade in Chinese securities: their government enforces compliance at all costs.
He bought the oldest brand in video games out of bankruptcy (including its $34 million in debt) back in 2013 for $1.2 million and now is running it at a healthy profit with a full team of just 28 employees!
“For the year ended March 31, 2020, Atari reported a profit of $2.4 million on revenue of $29.4 million. Much of that revival comes from the success of the Rollercoaster Tycoon brand on multiple game platforms. That license will expire in a couple of years, but Atari has made the most of it in generating revenues that have helped the company with its comeback.
Now the New York company is working with a variety of partners who can leverage the Atari brand, including hotel companies and blockchain-based fashion companies that are issuing Atari-branded virtual clothing.
Insights 🔦
It appears US consumers' reaction to not being able to go to restaurants was… buy a nicer car. [Source] This illuminates a well-known aspect of American society: spending will fill its predetermined budget allowance no matter what.
“The biggest most important part of investing is minimizing risk. If you’re focusing only on the returns, the risk will always come back to bite you.” —Christopher Seifel of Seifel Capital
Here’s An Idea 💡
Actually… 3 of them! Courtland Allen, Y-Combinator alum & creator of the tremendous Indie Hackers community, was a recent guest on the Run With It podcast and gave away 3 solid ideas for anyone looking to start making money online in 2021:
It’s a fancy name for a killer metric created for analyzing bitcoin but is a useful concept regardless. It’s simply the ratio between the difference of market cap - realized cap, and the standard deviation of market cap. It’s used for seeing when it’s overvalued and likely due for a pullback/correction. Based on the chart below, and if history is any indication: bitcoin still has a ways to go. 👇
“These three pillars — the spatial interface, integrated apps, and persistent rooms — form a cohesive whole. Apps live in the space, and persist. And together, we think they can make remote work better than being in the office.”
“Our NPS stands at 67, and we receive messages like those below on a daily basis:”
“If somebody offered you 2:1 odds that the sun would come up tomorrow you should make that a much larger bet than if someone offered you 1000:1 that it would rain tomorrow”
Video: Lyn Alden's Macro Masterclass (w/ Raoul Pal) [1 hr]. Lyn Alden is a brilliant macro analyst and investment strategist (also an engineer who popped onto my radar last year, and her writing + podcasts appearance have been super influential in shaping how I see the world. If you’d like a free crash course, this is it.
Wealthfront. ~25% of my portfolio is in Wealthfront, which since 2016 has netted me a time-weighted return of ~53% (~50% money-weighted) at the time of this writing, all while harvesting tax losses like the pros do.
