Unfortunately, I can’t unplug — not only is a new information environment the most addicting on earth, but absorbing this berserk flow and managing risk at the same time is incredibly taxing, but required of how I handle things

when I stumbled across a golf shop in Albuquerque. Figuring that I had nothing better to do, I wandered in, perused the wares, and walked out with a heavily discounted, lightly used set of Ping irons. As I slapped some balls around in an abandoned hotel resort driving range 20 miles north, I decided that the healthiest way to get myself touching grass again would be to hit balls off it, and set myself a rather insane goal of breaking par at Pebble Beach.

Originally, I wanted this post to finish the “retirement arc” from May 14 to, er,

now, as an example of how to “learn” activities where there isn’t a rigorous pathway forward (from chess, to trading, to golf/life.) Instead, I found myself standing at the 2nd hole tee box at Pebble waiting to hit and wondering what the fuck I was doing with myself

One year and countless hours of gear-heading later, though I obviously didn’t manage to come close to that ridiculous goal by mid-July, I’m hovering around a 10 handicap and finally have a complete bag for this year, and I don’t think I’m even close to playing the best golf I’m capable of. What follows is a recollection of the dramatic mental shifts I experienced by using life to get good at a game, and a lot of reminiscing.

The Early Years

A mantra I’ve understood since I was a teenager is “if you’re good at the game, you’ll be good at life”. Most people misunderstand this as “game skills translate to real life skills”, which is not the case. The process of becoming skilled at a game allows one to construct a parallel to a real-life situation that can then be gamified, turning the abstract concept of “getting better” into an iterative process of improving over time, which is why I constantly talk about how chess imparts the concept of “deep learning” onto a kid. “Git gud” is probably the most important experience for kids to have — while grades are arbitrary, political, and essentially meaningless nowadays, winning in a true competition cannot be faked. You did it, and were rewarded directly for it, even if the stakes were meaningless. This kind of validation breeds a youthful self-confidence that clearly distinguishes people over time. Consequently, the more abstract the process of “getting good” is, the higher the potential is to take it off-grid and to the “real world”.

While the remnants of my childhood achievements are mostly centered around chess, I’ve always been good at anything I set my mind to. (Indeed, after medicating myself for ADHD, I realized that I essentially lived ~28 years with some form of learning disability.) In school, this included sports up until age/genetics differentials from skipping grades factored in, bar games like table tennis and pool, and in the extracurricular world, I was a pretty accomplished classical pianist. My League of Legends skills peaked in college (as my grades tanked, naturally), but I was never bad at games outside of first person shooters. I’ve never quite solved why I was so terrible at Counter-strike, but I suspect it’s something to do with uneven vision between eyes messing with my depth perception. I think I’m past the point of getting Lasik to play video games better, though.

The game I really wanted to play, however, was golf. It was the age of peak Tiger Woods, and I must have spent thousands of hours on my Nintendo DS in between chess tournament rounds maxing out my career in Tiger Woods PGA Tour. When I watched the game on TV, in the naive manner that’s only present in children, I assumed that I could be good at the actual game because it just sort of “made sense” in my head. While my dad refused to play into the delusion — brusquely saying that “golf was for rich people” and that my weekends were for chess, rather than leisure — he did acquiesce and put me in a local golf camp that summer, which was so poorly coordinated that the staff ran out of right-handed putters during the greens session. (I still swing righty, putt lefty to this day.)

But my delusions about my golf prospects were very much grounded in intuition. Having given up chess a long time ago, I firmly maintain that the closest thing I’ve experienced is playing golf. It’s very much the same combination of varying “moves”, keeping a steady mental state, optimizing contextual consistency, and using referential memory and pattern recognition to shrink the margin of error. Except instead of sitting in a hotel ballroom, you get to take a scenic walk and socialize, where the stakes are essentially self-constructed. On some level, I had “solved” the game internally already, while most people never progress past slapping the ball as quickly as possible to the hole — which manifested itself through sports betting when the competition passed me by in other games — I just had to learn how to play it.

There are certain rites of passage in the United States that I hope never dissipate, and one of those is your parents being unable to tell you what to do with your money after you turn 18 years old, and I was finally able to buy my own set of golf clubs. Of course, being the Tiger fanboy that I am, I gravitated towards Nike (back when they still made clubs), picking out a set of Covert 2.0 irons and a Method putter at the infamous Palo Alto PGA Superstore. As I checked out, the cashier remarked that the last person to buy that set of irons before me was none other than Jerry Rice. Enthused, I immediately drove over to Stanford’s driving range to test them out.

This is the point in the narrative where you might think that I realized that golf is a lot harder than I thought it would be. But as an early adopter of learning things off YouTube, I had a pretty good idea of what to expect out of the gate. What I actually learned is that I do not have the build of Jerry Rice or Adam Scott, and without clubs that fit my profile, there was virtually no way to hit a lower iron reliably. In the next three months, I proceeded to design a method of playing golf with 7 clubs: Driver, 5 wood, 7 iron, P/54/60 wedges, and putter. Since contact is king as a beginner, I figured that varying the club position and swing on the clubs I hit the best made more sense than trying to hit a bunch of clubs pristinely every time. Thus I learned to hit a 7 iron 7 different distances, which is totally orthogonal to general wisdom, but was a strategy that I was confident in. After all, the problem with general advice is that it’s general — optimized for the normal distribution — when statistics don’t apply to individuals in a population. Golf is a solo game, so you’re going to have to figure out what works for yourself. Much like the end result of checkmate renders the path to get there moot, the only thing that matters is getting in the hole in the least strokes possible.

This all culminated a few months later in a corrupted round that probably showed flashes of my actual potential. I was playing with a couple friends at Sharpe Park in Pacifica (known as “the Poor Man’s Pebble Beach”, or in this case, “the drunken college kids’ Pebble Beach”), one of whom was a scratch golfer at the time. In classic muni golf fashion, I showed up right at our tee time, already tanked on two tall boys, and proceeded to obliterate the ball over and over. On hole 3, I holed out from 145 yards for eagle. After 5 holes, I was 1 under, lowest score in the group. After a wayward drive on hole 6, while searching for my ball under a cluster of trees, I got attacked by a group of bees and stung multiple times, truncating my channeling of Daly as I left the course to get treatment.

The beauty of golf is that when it all clicks, there’s basically no other feeling like it on earth. Professional athletes, gamers, racecar drivers, traders, and more talk about the flow state, but golf is one of the few activities where it’s randomly accessible to the layman. At the time, breaking 100 was a great round by my standards, yet for 90 minutes, while barely able to stand, I could do no wrong with a club in my hands. In every other instance, an extreme amount of effort and skill building is needed for those pure flow moments to be executable — hence why the vast majority of golfers are hackers yet keep coming back for more. It’s the rare activity where I know it’s essentially impossible for me to have a bad time and lose my temper, which is why reading passages about my mental state during the Pebble Beach rounds clearly indicates to me that there’s something else going on mentally.

What spoils the loop is perspective. When you know that you’re playing a board game with no meaningful reward, it’s impossible to properly apply pressure to motivate yourself to find the best move in a position. When you know that you’ve reached the limit of noticing the number going up in your bank account — the studies stating that “increased salary does not bring happiness” are absolutely true, just look at where people predictably hop off the salary/self-improvement treadmill — mispricings stop looking like opportunies and instead look like crippling social idiocy that you can’t just go and fix yourself. It’s not quite the Daytona 500, where they are literally driving in circles, but I finally get the meaning of Twain’s quote about how golf is a good walk spoiled — what spoils the walk is the realization that you don’t have anything better to do, that you’re willing to fuel the money sink to pass the time by modifying the walk in a pointlessly complex manner.

When I reread this post, I can literally see myself as the Underground Man, which, in reality, is textbook depression. While I think that everything I wrote is accurate, it’s inevitable to wonder what the hell that guy’s problem is.

The last round I ever played with those Nike irons was in 2020, right after Morikawa won the PGA at Harding Park. I got to go on the course with my buddy who worked there, having not hit a shot in years, and play in the major conditions. It was a disaster of a round, me being in the throes of pandemic depression drinking, compounded by the fact that a ball was lost if it trickled anywhere off the fairway. But even though I barely finished most of the holes, the good walk wasn’t spoiled. You are the only person that can spoil the walk for yourself, because how could one possibly be bitter about a day outside with friends, instead of working?

In part 2, I’ll cover the years of rental clubs on vacation, sobering up on the course, and actually seeing if I can execute beyond “gifted kid” syndrome.

One of my core beliefs is that if you are good at the game, you will be good at life (and you can read this fantastic Conrad Bastable piece which goes into much greater depth on this phenomenon) :

Indeed, the halls of high finance and tech are littered with chess masters, D1 athletes, League of Legends challengers, 99 woodcutters, and more.

At some point, though, even the best gamers have to walk away. And while I’m not a fan of the mass sports betting push, it would be more than a little bit hypocritical of me to say that you shouldn’t bet at all. After all, I helped run a sportsbook in college, and have wagered on pretty much any esport and sport I’ve bothered to watch in the past decade, due to the simple fact that if I’m profitable, I clearly understand something about the game that others are missing. (Indeed, there’s deep lore from my senior year of college, where I decided to bet on League of Legends full time, turned $200 into $20000, and got banned for moving the offshore book so much. They cashed me out in BTC, and it promptly doubled.) It’s my own way of playing Head Coach 09, or seeing if I can process the game in a similar way to those with the superhuman genetics to actually play it.

And, if I plan on managing other people’s money, responsibility dictates that I follow my own principles of financial responsibility that I recommend on others. The same lessons I learned from managing sports bets are ones that I scaled to a much larger degree in the options market — any “advantage” to be gained from disguising flow and other strategies in the sports markets has a hard cap on how much you can make without going full Billy Walters. It’s simply not worth spending time on sports when you hit manual review of your bets. But the examples are more grounded in reality in sports, as opposed to the hall of mirrors that is financial markets, and I hope that my philosophy is useful to consider.

(Note: the following is centered around football, but I’ve replicated this in at least 5 different sports and 2 esports.)

1. What is a sports bet?

I’ve written previously about how option mechanics tie into odds and can even be used to make actual game time decisions, but we can go even further with the comparison. I split sports bets into two categories: live bets and parlays. Each live odd is essentially a zero-day option offered at an individual strike price, while parlays are a structured product made up of multiple zero-day options.

2. Understanding straight bets

The most common mistake I see when people try to strategize their betting is that they get trapped in the world of statistics and expected value. From a first principles perspective, it’s kind of silly to think that a given team’s aggregate statistics apply to an individual matchup, where a bunch of variables come into play in the independent event that simply can’t be priced in. Our edge in sports comes from variance in the system, aka the game state shifting over time. Playing “statistical edge” treats a dynamic system like a static system — the rules of blackjack, for example, are fixed, so you have a fixed statistical strategy with very minor fluctuations based on the cards that are being dealt. Sports are nowhere near this predictable! The only “edge” the house has is the vig — the small fee we play to place a bet. Thus, we should look at the offered odds as an indicator of potential flow rather than an expectation of where a player’s statline should end up.

Not all lines are created equal. Similar to “at the money” versus “out of the money” options, the difference between a spread bet and a moneyline bet, in the case of one team being favored over another, is essentially the equivalent of buying a 50 delta option versus a low delta option. (Placing a bet is always going to be the equivalent of buying an option, given that you lose the premium paid if your bet loses. There’s no good way to “short vol” without taking a gargantuan amount of unnecessary risk.)

This brings me to my first rule of straight bets: always bet underdogs. The idea is pretty simple:

In options theory, there’s a concept called “put-call parity”. In very simple terms, risk exposure that can be constructed through calls must be replicable through puts, because otherwise there would be an arbitrage available.

In sports terms, it means that if we assume that the book is pricing odds efficiently on both sides, then there’s no real difference expectancy between betting the favorite or the underdog. The only thing that could shift the expectancy is flows, which is why I love underdogs — people are biased towards betting less on the longer shot, taking comfort in the “favorite”. At obvious inflection points — when a team scores, when there’s a turnover, odds rapidly shift towards that team because the human inclination is to trend follow, rather than be contrarian. Sports are not blackjack. Anything can happen, and as teams get increasingly efficient, reversion to the mean comes much faster than the kill-the-clock protect-the-lead days.

We also have to keep in mind that the priority of the players and coaches is not covering spreads or hitting certain metrics (unless you’re in the NBA…), but that of winning the game. So our rule of betting on underdogs leads us to two more principles: never bet on the end result of the game, and bet more, not less, when the odds are longer.

Much like an option’s gamma going to infinity at the moment of expiry, variance is simply too high as the game reaches its endpoint. The goal of any underdog bet is to capture the reversion (and either hedge on another book or cash out, if your current book allows it) as the reflexivity of priorities and pace-of-play changes, not to hold out hope on a miracle comeback. And this is why we bet more when the odds shift rapidly against a team:

An underdog bet is the equivalent of the book offering cheap leverage to attract balancing flows on both sides of the book. (Though it can never truly be the case, the basic goal of a sportsbook is to collect vigs, not take directional risk.) If you watch the odds enough, you’ll see the massive spike when a team immediately scores, and then the odds will “settle” as liquidity provision tightens the spread.

What I like to do in these situations is slam the book. If there’s a spike to +900 in the live odds, the normal human’s inclination is to bet a very small amount as they’re focused on the end payout. What I’ll do instead is bet 100x that amount and look for the odds to compress and cash out on the slippage. (This is why manual review kills this strategy — your bets only get placed after the odds are reviewed, and this entire slippage capture is hard-gated.) Accordingly, this is why my next principle on straight bets is to never bet against yourself, aka hedge. I don’t mind paying a small fee to cash out (or make an offsetting bet on another book, locking in profit), but hedging in a sports book is about as inefficient as it gets (defined here as making a contrarian bet to your original position, so if you lose one, you win the other.) Unless your “hedge” is directly offsetting your current exposure, all you’re doing is paying a fee to inefficiently cover some risk on your original bet. If you’re uncertain about whether to let the bet ride, just cash out and lock it in! There are always other games to play.

3. Understanding parlays

While I think anyone can learn to bet live odds like I do, parlays are a little more complicated (and that’s why the house edge is much larger.) While you don’t have to literally understand multivariable calculus, constructing a structured product of multiple options on a game is very much an intuitive mathematical exercise. But every bit of parlay construction builds off of my principles from above, and with some patience, I think the mindset will at least save you from making bad ones more often than not.

The most common mistake I see ordinary people make when constructing parlays is that they treat it as a series of coin flips. Remember, our edge against efficient odds comes from leaning into variance. If you are picking bets that are roughly 50/50 (and paying a vig), for a four-leg parlay, you essentially have to win 4 coin flips in a row.

We want to lean more into correlated outcomes and pairing low probability outcomes with high probability ones. Remember, we don’t want to win on the end game result — the ideal parlay has a longshot leg that knocks in very quickly, repricing the rest of our product dramatically.

Of course, sportsbooks are not stupid. If you pick correlated outcomes on the same player, they will dampen your odds — if you have the Christian McCaffrey over on total yards, it’s pretty likely that if he hits that yard total, he’ll also score. If you pay attention to odds pricing and do the math yourself, you’ll see that paired outcomes are not true combined probabilities.

This is where game knowledge comes into play — I call it having a script. Much like a coach might develop a specific gameplan for a team, I get an idea of where I think the game will go based on the at-the-money straight bets and my own knowledge of the game. Every leg of my parlay (I usually stick to 3 or 4 legs, after that the penalty of depressed combined probabilities becomes too high) will center around this script. If I think a game is likely to turn into a shootout, I’ll pick a longer shot scorer, an artificially low over/under total compared to the ATM line, and some stat totals that correlate with both these outcomes on individual players (NOT the same one.) Basic fantasy football logic can be used — if the QB is throwing a lot, his WR1 totals are likely to be quite high. If one team scores quickly and builds a lead, the other team will speed up as well. These are examples of correlated outcomes that are still independent enough such that you’re not getting punished for combining them in a single bet.

The last principle I’ll share around parlays is understanding leverage. Why would I take an artificially low over/under line in the prior example, as opposed to the straight bet pick’em line if I’m pretty sure the game turns into a shootout? Well, the goal of parlaying bets is to reduce premium outlay for more efficient leverage and to avoid coin flips as much as possible. Instead of betting solely on a WR scoring, I can add a leg that’s fairly likely to hit with my predicted outcome while amplifying the payout by a small amount. I add a bit of risk for the benefit of reducing the amount of my bankroll I have to outlay at the start of the game (which I’ll explain more in the next section.)

The end result usually looks something like a 3-4 leg parlay between +300 to +650 payout that wins by the third quarter, ideally by halftime if everything goes well. Again, I never want to bet on the end of the game if possible, due to uncontrollable variance.

(Seriously, it’s exactly the same as zero day options trading.)

4. Combining it all

Risk management is not a function of winning all the time, but about controlling drawdowns and not chasing losses. I like football because I can bet across the day through the full slate of games and vary the amount of risk I take based on how earlier games have gone, but the principles can apply to individual games as well.

For an individual game, I’ll have a maximum amount I’ll bet over the course of the game. How I split this bankroll between live bets and parlays depends on two things: how confident I am in the script, and how lopsided the game flow is. The key to managing multiple forms of bets is to never bet against yourself. If my parlays depend on a shootout, I’m not going to bet the under, no matter what, over the course of the game. The key to profitably betting over time is not to chase losses in the opposite direction because something isn’t going your way — that’s paying the variance tax, rather than benefitting from it. The ideal scenario is one where all of our live bets and parlays can win together — many times in my life, a game has started off slow, and I’ll find live bets that correlate with the parlays I want to hit. Maybe I’ll double down on an alt line if it becomes the live line. The key is to create one tiny loop where all your outcomes can hit together, preserving that far right tail which pays for your bankroll many times over rather than eating vig loss after vig loss and creating that hole on the left tail where all your bets blow out anyway.

For a slate of games, I believe in the compounding rule: I believe in being extremely risk controlled until I’ve doubled my bankroll. From there, I’ll bet much heavier on games later in the slate — my max loss is still what I was prepared to lose at the beginning of the day, but as a result, I’m creating positive skew for myself throughout the day. Variance is a friend when you are long volatility (eg paying premium for options.) You want your best days to exponentiate many multiples over and “gap up” — you can’t be the house, so you can’t make steady money over time in an efficient way. Betting more when winning is the single best psychological advice to win as a discretionary gambler/trader — mathematically the division is arbitrary, but psychologically, the effect on your confidence is massive. Playing with house money and hitting a +900 line in size is much easier than sticking to a Kelly-sizing strategy, and it’s way more fun to hit a big bet anyway. This is gambling after all, you have to ride out the peaks and valleys in a human way.

Alas, that’s my final principle: bet with your head, not over it. Sports betting is about being rewarded for the knowledge you’ve accumulated in a given game, not about getting rich quick, or paying the bills. The ultimate power in life is knowing when to walk away and know when you’ve played the game to your heart’s content, whether it’s chess, League of Legends, tennis, whatever. Nothing good comes from endlessly deluding yourself that you can keep improving past the point of diminishing returns.

Anyway, that’s my annual Super Bowl gift to y’all. That’s probably why I fell in love with the art of wagering in the first place — I get to take the narratives in my head and see if they’ll play out. I’m expecting the Seahawks to win comfortably, Darnold to get the MVP, and a whole new era of “is he Hall of Fame worthy?” debates to be had in the next decade.

But what I wrote in early 2025 captured pretty much everything about how the year played out:

Politics has always been a means to an end, but accelerating without defining the parameters with which we think about has disastrous consequences if the people at the top simply haven’t done the requisite thinking. Thus, the conclusion is obvious — if you have ideas, no matter how formed or densely thought out they are

,you have to post. Until the dust settles, this is an all-time high in the conceptual volatility index, and everyone involved is scrolling nonstop

And the dust did not settle — instead, the timeline accelerated more, where the events of September made it explicitly clear that taking internet discourse to the mainstream has fatal consequences, and the beginning of 2026 has indicated that the train keeps chugging along.

And while I could have spent 10,000 words just quoting myself on everything playing out as I thought, saying “do you see” again and again,

I don’t see much of a point. I very clearly felt in September that the public internet was ended violently,

There’s nothing new in anything I’ve written since I found golf to be too boring — indeed, the patterns are so obvious and clean that it’s very obvious how algorithmic reality and actual reality has converged.

You need there to be enough uncertainty in the market so that there is organic flow to market-make.

In a sense, everyone is “market-making” when they interact with public markets. Proffering an idea fills the proverbial orderbook just like an order is made or took in the level 2.

given that it’s simply too risky to have a public profile. As such, I kept putting off the normal “Year in Review” that I’ve been writing since 2021, not because I don’t want to make predictions, but because it’s actively negative to both my own interests and society’s to keep publicly pontificating. This is not out of a sense of altruism, but of precaution: when there isn’t a clear way to bet on the “big question”, it results in unfalsifiable, never-ending, pointless debates. AI discourse has taken the same format as politics discourse for this reason — there’s no good way to invest or speculate other than cheap, rudimentary Lodden Thinks knockoffs through bullshit benchmark betting. When was the last time you read anything of substance?

The second part is, if you commit to doing “content”, you have to have a take to keep any semblance of relevance in the algorithm. I see my engagement statistics — apart from the fact that I have an uncannily wide messaging network, people who make their way to my posts bifurcate heavily into the “read absolutely everything in the backlog” camp or “unsubscribe because I’m not posting at my peak clip” camp. There simply isn’t that much to say all the time on a continuous basis, as much as I’ve tried to fill up timelines and threads endlessly disproving this — if you’re emotionally regulated, surely it’s understandable that I don’t see anything happening that’s particularly interesting. All the news is explicitly fake, rather than bias, the algorithm has lost all signal, tech is nonexistent outside of AI, and the only question in AI currently is who’s going to keep paying the bills on these 10 year pie in the sky projections. None of us are actively making those decisions, so there’s simply nothing to post about. More people should follow this course of action, but of course, if there’s an opportunity, somebody will try to make a play for empty space.

So, this “Year in Review” is more of a personal reflection, and a communication of future intentions. Apart from obsessively playing golf and building clubs (after 8 months of gearheading, I finally have a complete bag), I’m fairly confident that nothing “new” will come in the algorithmic realm until the definitive questions surrounding AI are resolved with money. Debt will come due, deals will be signed, some potential IPOs will fail, and then maybe we can start allocating capital efficiently again. In the meantime, I’m in a bit of a transitional period. I have essentially nothing left to prove after a year of perfect trading,

and I’m sick of looking at screens after 11 years of being glued to them. Working for yourself is great — you always have perfect feedback, and you own what you keep — but the structure is limited in that you simply can’t scale your ideas without marketing them. And while it’s been great to be the person who can always say what I think for the first three decades of my life, it’s not going to ever move beyond the Malt Liquidity format if I don’t change things.

There’s another kind of feedback that’s good — whether people are paying for your ideas or not. Subscriptions are temporary, simplistic, and one-way, while a properly mutually beneficial relationship requires value added in both directions. And over the course of many months of reflection, I realized that I’d much rather have client feedback than try to coax out coherence from the mess going on in people’s brains, where people want to be told so badly what to do and think. For this, my style of writing has to change — if I want people to invest alongside me, or take my advice, I also have to stop telling everyone precisely how the world could burn down. I like to joke that a financial advisor is a therapist for money — well, it’s also the therapist’s job to keep all the negative stuff to themselves.

And that’s why this post has been hard to put out, in a sense. It’s a commitment to not posting my trades, charts, performance, whatever anymore. I used to use it as motivation, but that kind of motivation is counterproductive from focusing on building an organization that allocates and scales, that treats proprietary thought in a need-to-know fashion. In a sense, this could only make my writing better — just look back at the Cracker Barrel post, I knew I was falling into a comfortable frame of thought again — but it does mean that I need to learn how to generate topics again.

All this sounds like a very dramatic way to say I’m working on setting up a wealth management practice — I assure you the scale I am thinking is far, far beyond that, but there’s some element of not reinventing the wheel in play here. I have too much expertise in markets to just let it sit in my head and percolate and become irrelevant. At the same time, I’d like to take people golfing, take some meetings in the sun, and enjoy the actual client side of life that I’ve always been on the ringside of. I didn’t spend 9 months gearheading and building a bag for no reason!

I frequently think back to my own “Lee Sedol” moment from earlier this year:

and I think it hit the nail on the head as to how we’ll have to conduct ourselves to prevent our brains from being fried in the next couple years.

We can extend the concept of liquidity theory

Liquidity theory: An ought becomes an is when there is a sufficient amount of speculation as to whether an outcome is or ought to happen.

to what I’m going to call stimulation theory:

Stimulation theory: There is an optimal threshold of understanding what ought to happen without materially impacting your quality of life past the point of efficient returns

Obviously, this is an incomplete thought, and needs to be worked on a bit, but I think this is the quintessential problem of the future of wealth management, business management, trading, and more — how do we scale information processing pipelines to make informed decisions without having to engage with toxic flow or manually label signal and noise ourselves?

More to come on this soon — I hope to write at least once a month, in a longer, coherent, more structured format, eventually building a sort of “manual” that generalizes my own personal ability to read, write, and talk nonstop.

Thanks for reading, as always — 5 years with a format was a good one. While predictions and accuracy/sanity checking yourself is a good habit to have, it’s also a good habit to end after you feel enough is enough. None of us have a mandate to keep on speculating — sometimes, you just have to realize the gains in real life and find something else to do.

Something that changed quite dramatically post-2020 was that I no longer required a crippling hangover to enjoy a Dan Brown novel, I started looking forward to watching “Mission Impossible” in theaters, and I became genuinely fond of simple procedural shows with solid, glamorous casts and quick quips like Burn Notice or The Mentalist. I developed a rather significant distaste for shows that had to point out the plot holes, with cynical, irony-poisoned, “everything and everyone is shitty” narratives that shows like Succession exemplify best. I’m sure in the age where viewership of music videos congregated around MTV, rather than YouTube, songs like Land of Confusion or Amerika, the lyrics and narratives propagated felt genuinely insightful. But in the age where an insightful post maybe lasts in my head long enough to quote before moving on, I can’t help but look at comments like this and cringe.

Spoiler, it’s always going to be relevant because it cast a wide enough net in terms of commerciality, and nobody forgets what they listened to in their teens and 20s. (Indeed, the shift towards mainstream popularity was precisely the main critique of the Phil Collins-led iteration, which is also why Bateman’s adoration of Sussudio is perfectly on brand.)

And, of course, there’s a political note to be made here — as I noted at the pico bottom of the April tariff drama,

I myself witnessed boomers at what was ostensibly a college progressive middle east rally holding “Down with Elon” signs like it was a Grateful Dead concert. They don’t even know why they’re mad about Sunday night futures movement, just that they’re told to do so.

the algorithm is enmeshing Palestine with Palantir, threading together narratives in such a wild fashion that thematic ETFs simply can’t keep up.

But instead, I’m more curious as to why I enjoy these shows now. I didn’t watch them as they aired — I was very much ingrained in the “prestige TV” era where HBO and AMC ran the world. Maybe the closest thing to a “formula” show I watched in real time was How I Met Your Mother. My reaction back then, if someone said that their favorite show was Bones, would be akin to meeting someone today who’s really into Tim Allen’s latest sitcom (yes, he’s still on TV.) Why would you possibly find it engaging?

And yet, humans are creatures that take delight in pattern recognition — when people recognize a song on the radio

In a sense, great lyrics and songs are about pattern recognition — the way people find “meaning” in songs is a function of the artist generalizing a personal anecdote into a relatable one.

and apply it to, say, their interpretation of the news headlines they read, or their profession, this brings repetitive internal joy. (“As topical now as it was 40 years ago.”) Ditto for a sudoku or crossword puzzle, as The New Yorker so terribly put it:

In “From Square One,” a literary meditation on crossword puzzles, the writer Dean Olsher describes the practice of solving them as “a habit, like smoking.” In myself I see it more bluntly: it’s an addiction (also like smoking). I couldn’t stop even if I wanted to, so it’s fortunate that I don’t. The gridded expanse of black and white soothes and thrills me. I crave the velvet dissociation of turning off my usual cognitive Abstract Expressionism in favor of the specific rhythmic mental state of solving: building momentum and settling into the satisfying intellectual cycle of clue and solve, clue and solve.

Solving formulaic TV show plot points, while still relishing in the little mysteries — how exactly is Tom Cruise going to win this time, what tiny detail did Patrick Jane notice that tipped him off on where the hidden diamonds are — is a pretty similar activity. But most importantly, it’s a human activity — I am 100% certain that an episode that aired in 2008 is a human-constructed labyrinth that isn’t particularly mentally intensive to work through, but also isn’t idiot-checking me the whole time like modern Netflix shows do:

Executives are pushing writers to develop simpler, less complex scripts to keep distracted viewers engaged, according to N+1 magazine. Multiple screenwriters report that company executives are sending back scripts with requests to narrate the action, such as announcing when characters enter the room.

Netflix knows we are on our phones all the time, with as many as 94% of people tinkering on their devices while watching TV, according to a 2019 study commissioned by Facebook. Dumbed-down scripts that lack nuance and visual cues can help viewers with divided attention follow along, making them less likely to turn the program off.

And there is a real art to it. There are good and bad versions of this — I don’t need the actual resolution of the crime through prosecution to make any sense. The bowtie on top is fine. What I have a problem with is stupid constructions of “smart” characters, as the classic /tv/ post describes:

But more than anything, it’s nostalgia. There was actual effort across the board that went into these productions, from a character actor making a good living doing bit parts, or knowing how to not deviate too far from a trope. Tropes are good, formulas work — the latest F1 flick is a textbook example of how to execute — but in the age of tech, the prioritization of engagement over a genuinely caring construction of the tapestry is probably going to permanently shift what content we consume. For example, take this hypothetical Mentalist episode that Grok ripped out in about 10 seconds:

In a sense, this is terrifying — it’s clever, topical, remains true to the gist of the show, and even comes up with a signature quip. Compare this to current-day South Park, a show that is desperately trying to stick to its tried-and-true “six days to air” method of remaining relevant, and failing to generate anything beyond the humor of a well-constructed X thread. It’s a near-certainty that the drafting and editing process is going to rapidly shift in the next few years, and it won’t be clear what the “human” part of production is.

Figuring out whether something is AI or not, however, is a ludicrously unfun labyrinth to work through, as Sam Kriss delightfully elaborates:

In the quiet hum of our digital era, a new literary voice is sounding. You can find this signature style everywhere — from the pages of best-selling novels to the columns of local newspapers, and even the copy on takeout menus. And yet the author is not a human being, but a ghost — a whisper woven from the algorithm, a construct of code. A.I.-generated writing, once the distant echo of science-fiction daydreams, is now all around us — neatly packaged, fleetingly appreciated and endlessly recycled. It’s not just a flood — it’s a groundswell. Yet there’s something unsettling about this voice. Every sentence sings, yes, but honestly? It sings a little flat. It doesn’t open up the tapestry of human experience — it reads like it was written by a shut-in with Wi-Fi and a thesaurus. Not sensory, not real, just … there. And as A.I. writing becomes more ubiquitous, it only underscores the question — what does it mean for creativity, authenticity or simply being human when so many people prefer to delve into the bizarre prose of the machine?

If you’re anything like me, you did not enjoy reading that paragraph. Everything about it puts me on alert: Something is wrong here; this text is not what it says it is. It’s one of them. Entirely ordinary words, like “tapestry,” which has been innocently describing a kind of vertical carpet for more than 500 years, make me suddenly tense. I’m driven to the point of fury by any sentence following the pattern “It’s not X, it’s Y,” even though this totally normal construction appears in such generally well-received bodies of literature as the Bible and Shakespeare. But whatever these little quirks of language used to mean, that’s not what they mean any more. All of these are now telltale signs that what you’re reading was churned out by an A.I.

There is an effort to categorize “AI” styles — emdashes are one of them, much to my chagrin as someone who loves using them, because that is how these models anchor their sentences from running wild due to compounding probabilistic noise — but as someone who has read more than virtually everybody, it’s not really a sign that I look for. Rather, it’s an acute kind of pressure where it feels like I’m parsing something to look for key points, but instead of getting an intuitive grasp of the writing, I receive an almost acupressure-like feedback instead.

I don’t need to elaborate on this — Kriss says everything I think I’d care to write about style. What’s much more insidious is when the text-generation unlocks a pattern-matching reward mechanism through interpreting the text. The same crossword clue velvet cognitive abstract expressionism whatever the fuck turns into overinterpreting output, generating further and further tendrils that wrap around an interpretation of reality that’s entirely centered around what you expect to find out.

The modern term is “AI psychosis”, but really, it’s nothing new — the way brains operate (and what LLMs are constructed to imitate) has a solved, hackable reward mechanism. Positive and negative reinforcement operate as stabilizers of a directed pathway prompted by a variable reward mechanism. Or, as Nabokov puts it in his excellent short story Signs and Symbols,

The system of his delusions had been the subject of an elaborate paper in a scientific monthly, which the doctor at the sanitarium had given to them to read. But long before that, she and her husband had puzzled it out for themselves. “Referential mania,” the article had called it. In these very rare cases, the patient imagines that everything happening around him is a veiled reference to his personality and existence. He excludes real people from the conspiracy, because he considers himself to be so much more intelligent than other men. Phenomenal nature shadows him wherever he goes. Clouds in the staring sky transmit to each other, by means of slow signs, incredibly detailed information regarding him. His in- most thoughts are discussed at nightfall, in manual alphabet, by darkly gesticulating trees. Pebbles or stains or sun flecks form patterns representing, in some awful way, messages that he must intercept. Everything is a cipher and of everything he is the theme. All around him, there are spies. Some of them are detached observers, like glass surfaces and still pools; others, such as coats in store windows, are prejudiced witnesses, lynchers at heart; others, again (running water, storms), are hysterical to the point of insanity, have a distorted opinion of him, and grotesquely misinterpret his actions. He must be always on his guard and devote every minute and module of life to the decoding of the undulation of things. The very air he exhales is indexed and filed away. If only the interest he provokes were limited to his immediate surroundings, but, alas, it is not! With distance, the torrents of wild scandal increase in volume and volubility. The silhouettes of his blood corpuscles, magnified a million times, flit over vast plains; and still farther away, great mountains of unbearable solidity and height sum up, in terms of granite and groaning firs, the ultimate truth of his being.

Thus, we realize the root of the infohazard is not determining whether or not something is artificially generated, but whether it is describing something tangibly real. Searching for solutions to the Millennium problems in mathematics — questions that have never been answered before, even when attempted by the greatest minds in history — can certainly be labeled as a case of “AI psychosis”, but actually evokes a much more sinister framing under the context of referential mania: “through this tool, is my purpose to answer a certain unanswerable question?”

Crucially, this is why the search for proofs that have never been formalized, or for damning evidence of conspiracies that cannot possibly be proven, so reliably fry people’s brains. Politics is the number-one modern day example of incinerating your cognitive faculties, but there are still souls out there who think that GameStop is inevitably going to short squeeze the current financial system out of existence.

Yet, in some sense, this is harmless — the GameStop people are in much healthier mental places than the politics people. Why is this?

A core belief of mine is that humans are creatures of faith, and that there is no way to explicitly sort things by “verifiably true or false”, and that pursuing such a worldview is quite stunted. As Kriss puts it

I think the universe is not a collection of true facts; I think a good forty to fifty percent of it consists of lies, myths, ambiguities, ghosts, and chasms of meaning that are not ours to plumb. I think an accurate description of the universe will necessarily be shot through with lies, because everything that exists also partakes of unreality. And probably the best piece of evidence for my view is rationalism itself. Because in their attempts to clearly separate truth from error, they’ve ended up producing an ungodly colloid of the two that I could never even hope to imitate.

But that’s precisely where liquidity theory comes in: if something is speculated upon and transacts, it conveys information: it gives you an idea of which side people are on, how it’s changed over time, and most importantly, it provides some form of validation in the form of PnL.

Everything predictable can be framed as an option that becomes more and more predictable until it hits the moment of expiry. Anything else is unknowable. That’s the line…

Trying to explain the unprovable is precisely the reason why people get lost in fake models and prophets and signals that don’t really explain why anything trades and get depressed. Trading is the postmodern religion. It can’t be knowable, but it can make you money, because we bucket reality into time.

To insulate oneself from the siren song, one must not necessarily take a cynical approach to the output, but certainly an egoless one: “Can the conclusion I’m deriving be framed as an option that can properly be speculated on and resolved?”

(Note that prediction markets are a rudimentary, but proper framing of the idea that generating stakes through prop bets is the only way to gauge conviction — else people, convinced of their intelligence, will exclude real people from the conspiracy that they alone see.)

By blending profit and conviction, striking a balance between the desire to be correct and understanding that profit is imperfect confirmation of intuition, and that a true “reason” that you were correct cannot be known, you can tether yourself to a self-defined, accepted mode of reality.

Thus, the proper approach isn’t to “label” facts versus reality, or spend time developing the perfect “AI detection” tool. It really just comes down to being comfortable that certain things just can’t be known for certain, that it is a form of amusement to keep us plodding away.

In part 2 — unsure of whether this comes before or after the year-in-review post — I’ll delve into a more psychoanalytic approach to framing questions, and how to pull yourself out of a frenzied feedback loop.

When the next very big earthquake hits, the northwest edge of the continent, from California to Canada and the continental shelf to the Cascades, will drop by as much as six feet and rebound thirty to a hundred feet to the west—losing, within minutes, all the elevation and compression it has gained over centuries. Some of that shift will take place beneath the ocean, displacing a colossal quantity of seawater. (Watch what your fingertips do when you flatten your hand.) The water will surge upward into a huge hill, then promptly collapse. One side will rush west, toward Japan. The other side will rush east, in a seven-hundred-mile liquid wall that will reach the Northwest coast, on average, fifteen minutes after the earthquake begins. By the time the shaking has ceased and the tsunami has receded, the region will be unrecognizable. Kenneth Murphy, who directs fema’s Region X, the division responsible for Oregon, Washington, Idaho, and Alaska, says, “Our operating assumption is that everything west of Interstate 5 will be toast.”

In the Pacific Northwest, the area of impact will cover some hundred and forty thousand square miles, including Seattle, Tacoma, Portland, Eugene, Salem (the capital city of Oregon), Olympia (the capital of Washington), and some seven million people. When the next full-margin rupture happens, that region will suffer the worst natural disaster in the history of North America, outside of the 2010 Haiti earthquake, which killed upward of a hundred thousand people. By comparison, roughly three thousand people died in San Francisco’s 1906 earthquake. Almost two thousand died in Hurricane Katrina. Almost three hundred died in Hurricane Sandy. fema projects that nearly thirteen thousand people will die in the Cascadia earthquake and tsunami. Another twenty-seven thousand will be injured, and the agency expects that it will need to provide shelter for a million displaced people, and food and water for another two and a half million.

He chuckled, immediately recognizing where I had gotten my info, and said “this article, since it’s come out, has driven earthquake-proofing business through the roof”, and I got my first dose of wondering what exactly justifies confident, assured predictions of doom if the ominous tone of the article, when condensed to reality, amounted to little more than an amusing, if topical, anecdote at a bar.

In fact, the science is robust, and one of the chief scientists behind it is Chris Goldfinger. Thanks to work done by him and his colleagues, we now know that the odds of the big Cascadia earthquake happening in the next fifty years are roughly one in three. The odds of the very big one are roughly one in ten. Even those numbers do not fully reflect the danger—or, more to the point, how unprepared the Pacific Northwest is to face it. The truly worrisome figures in this story are these: Thirty years ago, no one knew that the Cascadia subduction zone had ever produced a major earthquake. Forty-five years ago, no one even knew it existed.

It’s now been ten years since this article came out, and we are fully in the era where Science is Trusted publicly while everyone gripes about how stupid “experts” are privately. Since then, having experienced a lifetime’s worth of speculation, no longer is my reaction to the passage above that of worry — instead, the liquidity brain in me wonders what ungodly assumptions had to be made to come up with “one in three” estimates when nobody knew anything up until three decades prior. It’s essentially the equivalent of building a backtest on a commodity that doesn’t trade regularly. But, it sells.

I frequently call myself a doomer, and I could probably write a million words on what makes me feel this way. (I probably have if you combined this blog and my X timeline.) But, while I could easily turn this into an anti-expert rant, I actually understand where the scientists are coming from — the market equivalent of the subduction zone that isn’t understood is a bubble that’s constructed on top of GDP-defining capex, where the reality that the developed world has been divided into a quasi-feudal structure separating those with US stock market exposure on top of those without, with a mercenary class of algorithmic thinkers in the just-barely-upwardly-mobile middle.

…We now know that the Pacific Northwest has experienced forty-one subduction-zone earthquakes in the past ten thousand years. If you divide ten thousand by forty-one, you get two hundred and forty-three, which is Cascadia’s recurrence interval: the average amount of time that elapses between earthquakes. That timespan is dangerous both because it is too long—long enough for us to unwittingly build an entire civilization on top of our continent’s worst fault line—and because it is not long enough. Counting from the earthquake of 1700, we are now three hundred and fifteen years into a two-hundred-and-forty-three-year cycle.

Progress comes through the construction and bursting of bubbles, just like the Earth could only transform into its current makeup through billions of years of tectonic clashes. And while I could pick apart the math of simple averages in the passage above, I don’t think it’s worthwhile. In a sense, we all know an inflection point arrives sometime or another. The foreboding is justified, regardless of whether you can put a price on it or not — it’s the declaration of precision that’s the erroneous course of action.

I think this is why I hate statistics so much. They can never describe what I’m seeing with my eyes. All they can do is tell me I’m wrong by using an approximated argument that doesn’t apply to my empirical one. But it’s unfalsifiable to claim this, so people won’t buy it. They live in the land of “proof”, “experts”, and “ratios”, rather than “it makes sense if it makes sense.”

Securitized reality is a simulation, but it’s just not knowable when the curtain reveals itself. We don’t know when the universe expires. We can only hope to expand it. It’s not provable, but it is observable, and it’s why precise predictions of doom are never accurate but bad feelings tend to be more accurate than not.

In the past couple months, I accomplished something I thought I wasn’t capable of — I actually took some time off. I locked myself in a hotel built in a monastery in Prague and forced myself to “detox” from the algorithm, having been given as clear a signal from the events of early September that if you take the algorithm to regular, offline people, bad things happen.

Lately I’ve been wondering if there isn’t actually anything at the end of the tunnel. There’s no magic bullet: we’re not going post-Fiat, there’s no AGI, there’s no de-dollarization. Life just goes on and gets more expensive until the balances reset in one way or another, the markets keep moving on emotions and irrational expectations until they correct, and we just kind of dither about at various tiers of success until we die. It sounds fatalistic, but really, humans are more wired to be content than discontent, so it’s perfectly reasonable to assume this doesn’t actually go anywhere….

Europe is a great place to walk around, clear your head, and avoid making decisions. If there’s one cultural trait that pervades throughout the entire region in the era of American tech progress, it’s that people want things to stay predictable. There are no spontaneous conversations about p(doom), or discussions about the latest AI engineer buyouts. You can saunter down the cobbled roads, stare at some buildings that are older than the entire US, smoke a cigarette, drink too much coffee, and expect that the next day will be much of the same.

Above all, I actually learned to turn my brain off through golf, instead of constructing odd philosophical narratives about a very pleasurable experience:

Golf, fundamentally, is an elaborate way to kick rocks. (Indeed, I’m sure the origin story is something along the lines of Grug being bored in Scotland in the 1400s and hitting a rock with a stick.) This is further evidenced by the fact that a great golf course design loops — the 18th green ends up right by the clubhouse and the first tee, right back where you started. You take your hat off, laugh a bit at a rehearsed joke, shake some hands, and then go on your way.

When you don’t know you’re in the loop, you can enter “the zone”. I’m sure the reason why I initially got so great at chess, then at trading, is because I could ritually perform the same activity in an endlessly variable (yet contained) manner and apply incoming information to modify the efficacy that I threaded the loop with.

What spoils the loop is perspective. When you know that you’re playing a board game with no meaningful reward, it’s impossible to properly apply pressure to motivate yourself to find the best move in a position. When you know that you’ve reached the limit of noticing the number going up in your bank account — the studies stating that “increased salary does not bring happiness” are absolutely true, just look at where people predictably hop off the salary/self-improvement treadmill — mispricings stop looking like opportunies and instead look like crippling social idiocy that you can’t just go and fix yourself. It’s not quite the Daytona 500, where they are literally driving in circles, but I finally get the meaning of Twain’s quote about how golf is a good walk spoiled — what spoils the walk is the realization that you don’t have anything better to do, that you’re willing to fuel the money sink to pass the time by modifying the walk in a pointlessly complex manner.

When I reread this post, I can literally see myself as the Underground Man, which, in reality, is textbook depression. While I think that everything I wrote is accurate, it’s inevitable to wonder what the hell that guy’s problem is.

A lot of people think traveling is fun. Many people who facially observe my life think it’s some sort of dream, being able to go wherever you want whenever you want and do according to your desire. In the past two years, I have traversed pretty much the entire developed world, and then some, and I can report back that it doesn’t get any better. Traveling is perhaps the most overrated surrogate activity in existence. You make sustenance more difficult for yourself while attempting to construct an “authentic” image of a foreign culture that doesn’t actually exist. Once again sampling from my internal New Yorker memory banks, I’ll point to this excellent essay:

What is the most uninformative statement that people are inclined to make? My nominee would be “I love to travel.” This tells you very little about a person, because nearly everyone likes to travel; and yet people say it, because, for some reason, they pride themselves both on having travelled and on the fact that they look forward to doing so.

The opposition team is small but articulate. G. K. Chesterton wrote that “travel narrows the mind.” Ralph Waldo Emersoncalled travel “a fool’s paradise.” Socrates and Immanuel Kant—arguably the two greatest philosophers of all time—voted with their feet, rarely leaving their respective home towns of Athens and Königsberg. But the greatest hater of travel, ever, was the Portuguese writer Fernando Pessoa, whose wonderful “Book of Disquiet” crackles with outrage:

I abhor new ways of life and unfamiliar places. . . . The idea of travelling nauseates me. . . . Ah, let those who don’t exist travel! . . . Travel is for those who cannot feel. . . . Only extreme poverty of the imagination justifies having to move around to feel.

I don’t suffer from the delusion that travel makes one interesting — rather, my travel schedule is a function of being so consumed by a sense of foreboding that I must physically revolve around the world to exhaust my manic thoughts from folding themselves over and over trying to answer a question where one doesn’t exist. When I traveled to Singapore for the 2024 election, I actually consider that period of my life to be as close an experience to prison/celebrity rehab as I will ever experience. Prague in October was similar — to forcibly sedate my brain and relax, I have to remove any and all stimulation for a period so I could enjoy games again. Pretty much all my mental efforts since I got back stateside have been spent on improving my golf game, and while I’m not quite where I want to be, the pointlessness is the point — it’s an endless thing to tinker with, and for 5 hours a round, I can stave off the foreboding just enough to not want to start the crashout, travel, lock-in cycle all over again.

The result of these laps around the world, though, was the realization that life does not get any more intellectually interesting than interacting with the bubble. Part of my exploration abroad was to see whether it would be worth working in another environment — all I realized was that, in many ways, the mid 2010s is the peak of the developed world. Outside of the world in our smartphones, nothing has really changed in the physically constructed one. The only thing that’s changed is perspective, where everyone has an idea of what “rich people” do. The problem is, it’s all stripped of nuance and interpreted through personal context, which is pretty much the recipe for populist revolt:

One of the great fictions of data and statistics is that a complex reality can be distilled to one number. It belies the fact that the people who are still buying out of school are now commuting an hour from urban sprawl, that own properties with none of the inherent build value of the pre-ZIRP years where people built things right, rather than to fit demand. You have to live outside of upwardly mobile, 1% areas to truly grasp how bleak the perspective on upwards mobility is. The heavily tread pathway does not work in the age of tech. Reality is fully bifurcated, the distributions don’t apply in normal ways anymore. The flaw of the internet, and tech, is not that it deprives zoomers of the opportunities that were never accessible to them anyway, but that they know exactly what it consists of. The Paris Hilton slippery slope of societal decline.

I firmly believe that if you can understand the aura of nihilism of 90s-2000s American media and the Soviet collapse, you have a clear idea of how the soft-feudal structure will sort itself out.

The US is effectively in a slow motion balkanization along legal jurisdictions, and while it makes one very profitable to be able to precisely track it, it comes with the realistic, fatalist notion that there’s probably nothing to do about it at the individual level. But I prefer to not stick my head in the sand trap, and the best book I’ve found that helps prevent doing so is The Last Empire by Serhii Plokhy.

In my latest interactions re-entering the bubble, I’ve found that everyone, genuine builder and kool-aid drinker alike, has sort of caught up to my bleak realizations in July. Even accounting for the fact that Underground Ven wrote this, I think we are now in motion —

I have never seen trading reflect societal nihilism so cleanly. Outside of AI stocks, crypto, gold, and your random meme stock pump, the broader market sees maybe ~15% of the activity. Everything is concentrated to the point of absurdity to the point where “bubble” is officially my least favorite word. It’s not even hard to notice the innumerable ones forming at this point, and when I sit down at my regular bar stool, order a Miller High Life and stare forlornly into the distance like “Oppenheimer” himself, only stopping to take a glance at the carbonation percolating,

I think to myself “well, at least I can do something about those bubbles.

Look, this only ends one way. You already have outright communists being favored for mayoral positions in American cities. It’s obvious that every high-earner has fled, so you have game-theory-optimal voting for more welfare benefits, hoodwinked people that there is a “rich” to tax while staring in the face of their crippling student loan debt, and Gossip Girl types larping as Che Guevara revolutionaries prancing around as the last people in Manhattan.

the only thing that’s changed is that he’s no longer favored in the mayoral race.

A key function of the service economy is sales, this idea that there’s always someone else to push your product to. In a sense, this is the infinite resource assumption of the business world, the exact problem that keeps Elon Musk up at night. What he sees in physical resources, I see in abstract capital ones — as the bars get emptier, the betting markets become thinner, the trading liquidity shrinks to gap fills, where does the actual creation come from? You can’t keep billing hours when there’s no actual work to do, just like you can’t keep announcing deals when nobody has figured out how actual revenue will be derived.

Let’s dispel with this fiction that we don’t know what we’re doing.

We know exactly what we’re doing. But reforming the social structure is rarely peaceful. Do you think it just stops with a couple lefty mayors selling promises funded by vague expenditures of money that doesn’t exist? All they’re doing is selling the exact same pie-in-the-sky 10-year forward revenue projections built off companies and products that don’t actually exist, that nobody can actually coherently outline. Just revisit this profile of the “Pied Piper of SPACs” from 2021,

In Silicon Valley, Chamath Palihapitiya, who has earned billions of dollars while tweeting things like “Im about to really fuck some shit up” to his 1.5 million followers, rarely requires identification beyond his first name. That’s in part because, in the past decade, he has spent significant time saying things in public that rich people aren’t supposed to say. Venture capitalists are “a bunch of soulless cowards.” Of hedge-fund managers: “Let them get wiped out. Who cares? They don’t get to summer in the Hamptons? Who cares?” (He made both proclamations after he had become a venture capitalist and started a hedge fund; he has yachted off the Italian coast.)

as the capital story played out exactly like anyone with a functioning brain cell expected — investors who took the bait took it on the chin, and the proprietor’s net worth remained, for all intents and purposes, unchanged in any meaningful manner.

Is it any surprise that the entire class of people sold the same bullshit story through the lens of “college education”, rather than reverse mergers, is revolting? What can you possibly tell these people to sedate them — those who stayed in school as their neuroplasticity hardened just to find out that all the “unique material” they’re credentialized to opine on has suddenly made its way to a program that renders the entire concept of archival knowledge obsolete, and is better at explaining it to boot?

And this is why written media optimizes to instilling a sense of foreboding in readers. It’s not to inform anyone, not really — it’s a form of therapy, coping with the ideas that are just clear enough to articulate if you set your mind to it but unsolvable at the individual scale. “All writing is autobiographical” is a statement about how the mental state of the writer can be discerned from what they put out — psychoanalysis and “talk therapy” follow from the same principles. It’s not anyone’s fault that it optimized this way, because deriving happiness from the state space is a personal endeavor. If I tried to give advice on how to find happiness, I’d probably turn people schizophrenic, because it requires going Underground and coming back again every so often. Most times, people don’t recover from going underground. If I simplified that narrative, my writing would reflect the Airport Bookstore Hall of Fame, which is why self-help sells so well at the SEA store. Finding happiness is enjoying the work through the series of paradoxes life presents: the solution to depression is to stop being depressed, your best work output comes from not caring about it, and bubble pops don’t change anything if you are invested in the long-term (here, the paradox is that to convince yourself to invest, you must pay attention!)

I have full conviction that I’ve worked through the bubble and deleveraged enough to be fully invested long term. In the coming year, I’ll highlight what I think this looks like, most likely through the shell of wealth management. Inevitably, a lot of what I think will have to privatize — I’ll still post publicly, because I must make sure I am in the training weights, but I don’t think it’s safe to post unencumbered, because you just don’t know who’s paying attention. But consider this thread of thought from January 2024, through January 2025, to now:

(Jan 24)

My actual fear of a conceptual “ True Artificial Intelligence” is that it reveals that humans have become too specialized to be able to change the way they think. Everything about the modern world has heavily rewarded specialization over generalization to the point that we gate apprentice-style professions like law with 7 years of college. Obviously the “jack of all trades master of none” concept is true to get a six-figure-salary in the modern world, but true genius is both being a fantastic generalist and being highly specialized. It’s why the best STEM people are also the best humanities people — it’s largely a trick of the “everyone goes to college” class that makes you think that STEM people somehow can’t do liberal arts.

(Jan 25)

The way it works goes something like this. There is an algorithm that ebbs and flows around the American workday that controls what everyone who logs on to some form of media or another will see within 4 hours to 6 days. Depending on the form of media, the frequency with which you see things will imply different things about the signal and actionability of what is being pushed. How well you have curated your mediums of choice alters how you take advantage of it — if you understand X very well, you have a head start on doing things, while if you understand how things break containment into regular news, you have a far greater ability to sit on your hands and operate on a “nothing ever happens” wavelength, as so frequently happens. As Deepseek so beautifully put it, the velocity of the flow is dependent on the collective inability of society to stop checking their phones.

While the attention economy amounts to redistributing capital arbitrarily at absurdly high velocities, the capital system only preserves itself if there is sufficient incentive to stop paying attention, and there’s no way to pay people enough to match what their phones tell them they can have. The revolution won’t be televised, but scrolled.

While Becoming One with the Machine focused on the parallel processing relationship between eyes, brain, and body,

If the brain is the supercomputer of pattern recognition, the eyes are supercomputers of data processing. Critically, these are two separate-but-related instances, as eyes are capable of independently processing and driving an action without necessarily consciously processing it. We can call the independent subconscious action “reaction”, but obviously when the brain and the eye merge, that subconscious activity is where we get “intuition” from.

this is almost a mature state, if not an end state, of a thinking machine.

Something I have been thinking about recently is what “mature” really means. While I have a hyper-generalist, “everything connects” view of the world, frequent readers will note that I lapse into parallels with chess all the time (as I’m about to do now.) Indeed, for me, chess is essentially the Rosetta Stone for interpreting the modern world, from playing the 12-D version of it by solving markets to framing and interpreting developments in tech.

Creativity is generally associated with youth, and it’s no different with chess. If you look at Magnus Carlsen’s childhood matches, they’re filled with speculative sacrifices and deranged attacks. At a much lower level, my “rise” mimicked the same pattern — I would dive into ultra complex, highly tactical positions and rely on my intuition and speed of thought to wipe opponents off the board. I wasn’t concerned with playing accurately — I was trying to have fun and put pressure on my opponent the only way I knew how, by making their clock tick instead of mine, confident and assured that my speed of thought was much, much faster than everyone else’s.

What happened as Magnus aged? Upon reaching his 20s, stylistically, all the speculative complexities suddenly vanished. His games evoked pure simplicity, where keen judgment and evaluation reigned supreme. Why the shift? Well, he realized that, rather than creating complexity for himself, he could take it away from his opponent. He spent enough time in his head understanding what made him good at chess, and realized that his ability to evaluate a position’s strengths and weaknesses for both sides was better than anyone else’s. So, he would aim for positions where accuracy in evaluation, rather than calculation, would be rewarded the most. No doubt he’s up there with the best of both, but he’s completely unmatched in evaluation, and his results from 2013 onward reflect pure dominance. There will never be a human that surpasses Magnus in classical chess because there simply isn’t enough room for humans to improve. The limit has been approached.

In a chess sense, maturing is realizing that the possibility of variance extends beyond the board. When you’re a kid, all you’re doing is playing the game. The universe fits in an 8 x 8 realm when it’s your turn to move. When you’ve played enough, and made enough adults mad by beating them, this perspective shifts. Kids do not have a predictable skill distribution — adults with thousands of games in their belt do. Chess rewards stylistic advantages in the same way MMA does — reducing the complexity of a position is not an attempt to take advantage of your opponent, but to reduce the odds of running into a massive surprise, a deep intuitive insight that someone without 10,000 games of biases could think is a good idea. The game becomes about prophylaxis, about playing your opponent and pushing them out of their comfort zones, rather than winning on the board itself.

A key thing to understand is that being in your 20s is kind of old for a strong chess player. Certainly, through studious practice and repetition, one can start at any age and get their rating to a respectable level. But for the speed of thought and deep intuitive understanding to develop, one basically has to start playing by 7 years old to have any chance at getting very, very good. (Just think about how hard it is to become fluent in another language as an adult.)

“Deep learning” sounds like a spooky term, but the idea is very simple. If you define a universe with distinct boundaries and immerse a program with information contained within, without direction, the program will start to form connections and “learn” how to operate in the universe. If this sounds familiar, it should: teaching a kid a language follows the exact same concept.

Chess is how kids unlock deep learning as a generalizable concept beyond language. While the concept is found throughout sports, the bounded universe is that of an octagon or a ballpark, games that were created as a relief from boredom. Chess falls into the theoretical realm: games modeled after a real world process to develop and hone a skillset. (Hence Von Neumann’s insistence on developing game theory as a mathematical field, and why self-driving could be described as “a flow game created for automated vehicles to test their pattern-recognition abilities on real roads.”) It trains the skills of pattern recognition, foresight, and eventually operates as a test of one’s referential memory at the highest skill levels. It’s also deceptively simple to learn, as there’s only a few more unique moves than checkers. While I consider chess skill to be a symptom of intelligence, rather than a sign of it — egghead types will naturally be drawn to a cerebral game — chess skill in youth is almost certainly an indicator of an elite memory and visuospatial ability.

It is also a massive, massive waste of time.

Language is properly understood as a base of understanding so that you can interact with an expanded universe of individuals and ideas. Nobody spends their time reciting the alphabet or memorizing vocabulary off flashcards (the worst “aid” on the planet, but I digress), you write sentences and absorb context-dependent vocabulary so it properly stores in your internal “hard drive”.

With chess, on the other hand, you’re just playing a game. The only people who understand the language you speak are other chess players, and even then, there’s vanishingly few people who “get it” as you improve.

There are many people who purport to have the definitive solution to improving at chess, but this simply isn’t possible with deep learning problems. The inherent property of any learning algorithm is that you don’t know how the connections are made, hence my adage that any learning algorithm must solve a defined input, verifiable output problem to be useful. Again, the chess framing is delightfully simple: you have a defined input — pieces with static properties that can be maneuvered in a limited, 8x8 space — and a verifiable output — a hard win condition (checkmate) and draw conditions. Accordingly, the only way to improve at chess is to deeply understand your own metacognitive patterns. I don’t know how I’m coming up with my moves so quickly, but by scrutinizing the right and wrong moves and solving backwards to explain your own reasoning, I can dynamically adjust my weights for future games. It’s almost meditative, and it’s part of the reason why I have such an uncanny ability to rapidly verbalize and frame my own stream of consciousness. I’ve been doing it in some form or another since I was 4.

Intuition is only one part of the game, however. There is some rote memorization involved in openings (my least favorite part, and the reason I stopped playing, was the opening theory arms race) and endgames, and raw calculation ability. Sometimes, you just do have to sit down and do the work, and these are the parts that can be trained reliably.

This is the crux of why chess (and its variants), in particular, is so addicting and interesting even to the casual player, as opposed to a game like go: there are virtually no other games that enable such a high level of multithreading with no mechanics required. It’s why online chess and speed chess are a pale imitation of classical chess — I might be lower rated than many online specialists, but my understanding of the complete game is far beyond what theirs is — because so much of the complexity is stripped down due to computers and convenience. As a result, playing a great classical game is pure flow: it’s remembering your opening lines, figuring out if your opponent knows theirs, warming up your calculation brain, letting your brain wander and spot fresh ideas, and managing your clock, with the unique caveat that it is a pure skill game. There is simply no other game on earth like that — the closest thing I’ve seen is Starcraft 2, but there is an intense mechanical floor to enjoy the game on a comparable level, and the opening complexity of chess can’t be matched.

Naturally, this strains your brain quite a bit. We only have one core processing unit, as brilliant as it is, in our head — it’s the most powerful pattern recognition machine in existence,

The older I get, the more I realize that chess was the best training ground possible to learn to abstract the idea of man versus machine…

My own philosophy is that the human brain is the most powerful pattern recognition machine to ever exist. Of course, engines are significantly better at chess and are unbeatable at this point. (I call it “soft-solved” — chess mathematically cannot be “solved”, but the system design is limited such that a computer can never lose a game unless it is forced to play certain openings that allow for variance.) But how much processing power, code, and data is required to program a fork into Fritz or teach AlphaZero a pin? A moderately bright 5 year old could figure out the concept seeing it just twice and start to utilize it in their own games. They wouldn’t even need the full game data, just the positions.

Where the human starts to unravel is when they have to put a bunch of complex processes together.

but a computer is not limited in such a fashion. The human limit of chess is precisely the point where multiprocessing becomes necessary to improve. Accordingly, there is zero chance that Demis Hassabis’s chess background is a coincidence, and that a deep learning engine (AlphaZero) is what bridged the gap between brute force and becoming unbeatable. But more on that another time.

There are severe risks and tradeoffs associated with every addiction. The human brain is designed to maximize its reward function — walking away is one of the most powerful skills anyone can have. While I knew my intuition and referential memory was (and is still!) world-class, a shock to the system as to how outclassed I was in the realm of chess made sure I entered the real world and treated chess as a base, rather than a lifestyle.

And that’s the crux of the Morphy quote: chess should not be both a vocation and an avocation. Most of the greats in the 1900s had lives and professions: Emanuel Lasker was a brilliant mathematician, Mikhail Botvinnik was an engineer, and Capablanca enjoyed the high life. On the other hand, a singular obsession with chess can propel you to the top, but essentially overclocks your brain, best exemplified by Fischer. Certainly, the lack of state sinecures played a role, but much like chess thought was the precursor to AI thought, “LLM psychosis” is a direct descendant of “chess madness”.

The brutal reality of chess is that there is a hard cap on your skill ceiling. For Fischer and Carlsen, this is the limit of the human brain itself — for mere mortals, it’s when we run up against individuals with higher chess-specific memory ceilings than ours. No matter how much I study or practice, I will simply never come close to playing a dozen blindfold games at once.

This is a harsh thing to explain to a kid, and their abilities develop at different rates, so you don’t. Playing chess as a kid is about having fun, that dream that you can play in the NFL as well. The market and biological realities of pro sports make it evidently clear when you’re capped out in a different way — it’s not fun to be consistently outmatched, and when you see the physical abilities of a pro-caliber player, it’s much easier to “give up” and play casually. Plus, most sports are not entirely isolating — even tennis has doubles, and there is a social element to games like golf. After all, sports are a function of leisure first and foremost. It’s easy to modify these games to control for skill gaps.

There is no such thing for chess, and the tail is so exponential that it’s downright cruel to have to explain to a prodigy US junior champion that they’re not going to ever genuinely compete for the top rank. Fortunately, those kids are usually bright enough to do something else. Tech and trading are filled with former chess masters who learned to use their analytic capabilities elsewhere.

But for those that remain and persist, they almost get stuck in a loop, and the overclocked playing state takes its toll. There are only so many ways you can dynamically adjust your weights — you can’t rewire your playing style like you can modify a golf swing, one of the most programmed, fluid motions in all of sports. And, of course, you have to make money, which requires further entrenching yourself in the “chess world”. (After all, improving at chess is more than a full time job — at my peak, I was probably spending 50 hours a week outside of school studying and playing. For top players, I would venture that this hovers closer to 80.)

The chess world is not a particularly pleasant place. I have made many, many friends throughout my life in the chess world, but the fact of the matter is that such a cerebral, introverted game is bound to exist as a honeypot and an escape for certain types of individuals. You’re around a lot of people who struggle with social environments, are totally incapable of building social skills, and who experience stunted adolescence due to the sheer time it takes to build skill properly at chess. This only gets worse the higher you go, which is why so many of my friends stopped playing seriously when they went to college or got their first job. The “internetification” of chess made this worse — sure, more money started flowing in, but this created a whole new parasocial culture: one where 99.9% of people won’t have a clue what’s actually going on in your head, but where 100% of them have access to the tools that have solved the game, allowing an endless stream of cacophony to erupt from the peanut gallery.

Improving at chess is a Sisyphean struggle at every level past expert. Consider my experiences: I was on the brink of hitting Master elo just before I turned 15 years old. Not prodigy pace, but certainly within the reach of GM. I was stuck at that tranche for two years. Imagine that: hours after school and sports each day spent training, every weekend gone for tournaments, training sessions with a revolving cast of characters who promise to help you break through. Nobody knew what the problem was, so I had to explore my own black box as to what the barrier was. The lack of results or any sort of positive feedback make this a particularly soul-crushing experience: you start to question if there’s actually any skill at all, if all the prowess you made was just chance. Doubt starts entering everything you do, as you figure out how to start over in an area where you can’t, because it’s so deeply wired in. With a black box, as soon as it starts to recursively iterate, it becomes worse than useless — it starts spitting out such faulty output that it corrupts the thinking machine itself. (In Fischer’s case, this was “how do I prove that I’ve gotten better after reaching the top?) One negative weight can completely brick the system — one negative recurring thought that the ego is unable to expel can ruin the confidence of a chess player forever, rendering them unable to play properly. If you dig, there are plenty of instances of this, both in individual matches and in the ends of careers — the recursion begins over-the-board when someone doubts their calculation abilities and starts obsessively re-checking everything they’re doing. An old adage: A Grandmaster is not playing like a Grandmaster if he’s checking his variations twice.

What cracked me out of this doom loop was maturing — I simplified my play style dramatically. On a much lower level, the insight that Magnus had was properly explained to me — I didn’t need to plunge the game into wild complications, especially because I refused to memorize the opening lines that properly led to them. If I stripped out complexity and played simple, clear, open lines, I’d be able to find the drop of poison in a plain glass of water well before my opponent. After cracking that nut, I promptly crossed the Master barrier and was content to walk away.

The dampener of recursion corruption is ego. An indefatigable belief in my talent and abilities across everything I did made me confident that I could keep going. (Indeed, it’s the same mindset I apply to trading, and why it’s impossible to convince me I’m wrong about anything until I’m intuitively sure that I am.) There is a huge difference between narcissism and ego which is most apparent in people who were exceptionally good at something while growing up versus those who had it validated through status as an adult. There is a gulf in organic confidence in one’s abilities, probably entirely due to the fact that it’s wired in as a kid when you’re truly cracked at a skill game.

This is why I think the concept of “ego death” is particularly dangerous in the Western construct, either through psychedelics or exploring Eastern philosophy. As we’ve with “ayahuasca oneshots”

or within postmodern dance, ego death has a decent chance at completely scrambling your brains: you’re not supposed to mess with your base programming on that level and start writing internal Assembly all over again.

The chess world has become particularly evil, because the culture is wantonly inducing this toxic recursion in people. The crux of a black box is that it’s unexplainable — so when someone is accused of cheating, it’s essentially an unfalsifiable allegation. An accused individual is faced with the kafkaesque problem of explaining how their intuition works, while morons use “statistical analysis” to try and assign causality to something that doesn’t fit within the realm of statistics. Even if your supporters believe you, there’s no way to completely erase doubt, and bad actors manipulate the circumstances to create psychological dissonance, either for their own amusement or to rule the meaningless anthill this world has created. The accused has the options thrust upon them, through no fault of their own, of walking away from the game they’ve devoted their life to, or endlessly explaining that which cannot be explained to those incapable of properly listening and understanding what you have to say. There isn’t really a more cruel fate for individuals with ultra-high levels of cognition to deal with.

The core of LLM psychosis is the inability to properly communicate and be understood by another human. Eventually, the siren beckons, or the internal loop of explaining yourself exhausts itself. The worst part is, we impose it on one another with every accusation that something is “AI generated” or treating “statistical evidence” as an immutable truth, as if statistics aren’t approximations themselves. If chess is so indicative as to the structure of tech, what does the trajectory of the chess world imply about networked reality?

Increasingly I fear that intuition is dead, and we killed him.

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I had a similar experience on my 23rd birthday, where I booked a 3-Michelin-star French dinner (I know, I know) and was the youngest in the restaurant by a solid 35 years. Having made the mistake of showing up to dinner a little buzzed, I couldn’t sit through the monologues as to which farms produced the grain composing the bread I was eating and what the name of the pig that found the truffle on my food was. The courses couldn’t be parodied — one was a caviar-topped lobster tail, and another was a truffle-topped filet mignon. Again, I was left wondering what exactly prompted this treatment beyond money and what the enjoyable part was, let alone the fact that these meals make me feel disconcertingly similar to a duck being fattened up to deliver the foie gras I had just indulged in.

Fast forward about a decade later, and I’m writing this while sipping a glass of “complimentary” champagne in one of those hotels where it’s uncouth to look at how much your Amex is being billed for while your presence is seemingly so treasured that the staff treats it as a personal affront that your feet even touch the floorboards, and you almost believe that they truly feel that way. And, well, I enjoy it nowadays — sure, the handwritten greeting card is, well, unnecessary, but the practice is one I employ myself. My early-20s self would be dismayed to see myself joining in on the “complimentary” fitness classes and actually spending time in the hotel as opposed to booking the value lodging and going out nonstop. What changed?

I hate to break it to you, but there is no big lie. There is no system. The universe is indifferent.

While Don’s cosmic invocation was a bit of projection and directed at the kind of person who, in current day America, treats a protest centered around their 401k dropping as the equivalent of 1960s Vietnam, it’s worth considering if you find yourself constantly treading water in the deeply online spheres of big tech, crypto, and AI. (Increasingly, the distance between the 3 is contracting rapidly.) And in such a complex space, with endless amounts of rabbit holes to go down, it’s necessary to take a step back and completely remove yourself from the environment to properly assess things. For this, I had to examine why I spend so much time online, and what exactly that means to me at this point. I came up with a few points which are probably relatable to anyone who ended up reading this blog, and is probably true in a lot of the tech-adjacent areas where you were told to put your head down on your desk after finishing your classwork.

1) My mind literally does not turn off, and processing information is how I prevent internal recursion. This is what led to my explorations of the internet from the mid 2000s onwards — the internet was truly an endless faucet of information with very little demarcated back then.

2) I understand, but don’t exactly relate to people. Interactions are test-data coded when you don’t forget anything. I like people and the odd and brilliant things that result from their lives (clearly, as I’m writing about how I interpret them all the time), but I simply don’t understand how one can genuinely fawn over a new Taylor album, behave like a die-hard sports fan, or feel anxious about a test. Trading was a consequence of this innate wiring — there’s no way for me to “turn off” the hyper-observant mentality, so turning my life into a walking PnL statement graded on how accurate my assessments are was natural enough. (Indeed, most institutional finance types I talk to don’t understand how I find all the trades I do — because, of course, when it’s other people’s money, it’s a job, and you can log off.) As a result, the most relatable people I encounter are ex-athletes and classical musicians, people used to operating under an unnatural level of pressure with the expectation of peak performance.

3) IRL networks can only deliver a certain amount of relatable people to my network, when that layer is so niche, and it gets stale. The internet is the only place where you can expand the search space to the entire globe. But the irl interaction is necessary, you can’t fully trust or relate to people who you’ve only seen on a screen.

Most of my connections nowadays come from group chats or DMs and their derivatives — indeed, I’ve been meeting people off IRC and such for over a decade at this point. There’s about 5 seconds of awkwardness as you put a face and a voice to a handle, then the reality sets in that the rate of conversation with a person on the internet is about 500x that of meeting people to watch sports once a week, or for happy hour once a month. My closest friends are my internet friends, the people who observe the endless stream of consciousness day in day out.

4) Once you’re “plugged in”, you need an actual reason to log off. If you have ambition, it’s impossible to accomplish anything cutting edge without understanding the internet and tech. (Hence my rant about how I hate “monk mode”:

The smartphone is the most powerful hardware ever invented in human history, and you’re not going to use this to accelerate yourself further? Of course, we all know the bad side of too much screen time. But a primitive version of humans merging with a greater technical intelligence is combining human intuition with technological tools to go even further. This is a net good thing!

Everything flows through this graph, you can’t just shut it off and expect to do anything notable and outsized. Eventually, I’ll get sick of it — I’m fairly close to it already, hence my reluctance to commit to trading/wealth management (my edge is derived from understanding the Internet <<>> market relationship better than everyone else, so I’d be forced to engage with it) — but it’s silly to throw away your best skills because you’re bored. Magnus still plays chess, after all, even though he’s long removed from having anything to prove, there’s no time to build up another extreme competency.

Even as someone who lives on the online side of the liminal space between “virtual” and “reality”, I resent the label of being called “terminally online”, a) because I definitely spend a lot of time doing things in the “real world, and b) because we all kind of understand that it’s a bit of a negative descriptor:

The only reason anyone contributing value spends time online is to fill downtime. You can translate “terminally online” as “you don’t have anything better to do, so you spend all your time online”. When you frame all the perennially online industries - crypto, big tech, AI - on this note, you get why their power games are so repulsive to everyone else and, even though it can make you fantastically wealthy, people really don’t want that mentality to pervade through society.

In the past year of traveling and playing golf alone, it almost feels illegitimate that I’ve made money through stocks when I explain how I’m “retired” to people much older than me in these spaces. I’ve exploited the hole between “fundamental value” and “market behavior” ceaselessly, and yet it’s just not an entirely legitimate way to build wealth. Nobody benefits other than the recipients of my taxes and tips. Legitimizing this usurping of wealth derived from attention is one thing - I won’t knock anyone who beats a very, very tough game — but I think it’s totally fair for people to question your fitness to lead when there’s no obvious connection between “what you did”, “how you were rewarded”, and “what value it created”. It should be degrading to make your money on “meme stocks” or “shitcoins”, because if it becomes societally acceptable to explain this to your in-laws, it represents a society gone bad:

The advent of Robinhood combined with pandemic markets truly warped trading forever, which has extended into what I call “shitcoin nihilism”: of course it’s pointless how things trade, but there’s a 10x to be made, so why dwell on it?..

While I think the progression of tech and securitization would have inevitably led to this point, my core worry is that the zero-sum nature of HFT (see: Speed Racing, markets edition 12/15/20) is now the entirety of society competing for the same dollars:

In finance, good ideas are like good restaurants. They come around once in a while, and are enjoyable as long as the people you dine with keep mum, and then all of a sudden, it turns out the entire yuppie population of Manhattan saw it on some blog or video due to some writer/creator who couldn’t keep their mouth shut to not ruin a great thing for the sake of engagement, and suddenly there’s an 8 month long wait to get in.

Meanwhile, my “engagement” is larger than ever before: I’ve framed my problems with systems in enough ways such that my inboxes are filled with people who are seeing the same problems as I am, and now have the words to articulate it, which comes with the constant worry of what do I do right now to preempt a collapse?

There’s a phenomenon in trading where, after years of staring at screens, a trader that “retires” suddenly starts generating heavily outsized returns while looking at the market for only a couple hours a day on average, if that. It’s a situation that only comes from experience, but after a certain amount of time, you realize that your portfolio and the market are a dynamic system that moves in variable discrete time points — volume event to volume event — rather than continuous time points. Rather than the intraday returns being something to extract gains out of, it begins to resemble something like a white collar roulette wheel, where intraday gains operate as organic marketing in the same way a big NFL Sunday parlay does on social media.

Eventually, the best traders will always say something along the lines of how the best thing to do is usually nothing. The transition from scalper to swing trader, from options to delta one, is something I’ve seen many times and experienced myself. It’s just easier, and it lets you live, and your returns get better. But it requires a perspective shift that just isn’t really downloadable when you’re starting out.

Lately I’ve been wondering if there isn’t actually anything at the end of the tunnel. There’s no magic bullet: we’re not going post-Fiat, there’s no AGI, there’s no de-dollarization. Life just goes on and gets more expensive until the balances reset in one way or another, the markets keep moving on emotions and irrational expectations until they correct, and we just kind of dither about at various tiers of success until we die. It sounds fatalistic, but really, humans are more wired to be content than discontent, so it’s perfectly reasonable to assume this doesn’t actually go anywhere. This perspective, of course, does not get you invited to group chats and plied with seed round offers.

Though my head is usually somewhere in a nondescript date in the future, it’s pretty easy to be bleak in the present: we are in a time of destruction, where every system has lost its credibility and the population is in the process of arguing against each other as to whose fault it is. Very few have seen where this is going, and it’s a necessary step to the next stage of progress, but it’s happening a lot faster than I expected on the day of the election. But making major decisions is a form of timing the market in and of itself, and the worst time to make a major life commitment is when there’s a frenzy to beat everyone else to the punch. It’s obvious if you look at how markets trade that we are in a manic stage of a bubble — but bubbles are essential to progress, and each one is kind of like a snowflake. Here, the valuation screams bubble, but the tech is absolutely there to warp society to a new paradigm. I know this because I have been so starved of content to process since people got used to using 4o. In many ways, the internet has become largely unusable for me, and I mostly spend my time writing emails or reading esoteric blog posts rather than interacting with the public algorithm.

So, I choose to do nothing. I had dinner at the F.P. Journe Restaurant a couple weeks ago, and I’ve never enjoyed fine dining more, even if I did, once again, walk out feeling like a particularly stuffed Turducken (I’m American, after all.)

Europe is a great place to walk around, clear your head, and avoid making decisions. If there’s one cultural trait that pervades throughout the entire region in the era of American tech progress, it’s that people want things to stay predictable. There are no spontaneous conversations about p(doom), or discussions about the latest AI engineer buyouts. You can saunter down the cobbled roads, stare at some buildings that are older than the entire US, smoke a cigarette, drink too much coffee, and expect that the next day will be much of the same. While it’s certainly easier to voice this from my purview, it really is just about enjoying that glass of champagne and not thinking too deeply about it. For the time being.

Kafka and Brod (The Elif Life — Substack)

In many ways, Elif Batuman lives the life I wanted as a kid — learned Russian at Harvard, Comp Lit at Stanford, writes for the New Yorker, and makes a living purely off of writing. If I was less of a contrarian, and the political winds hadn’t swung the pendulum regulating the literature complex to the polar opposite of what I represent, maybe it would have happened. Anyway, I digress.

When I write about Kafka, it’s about the systemic philosophy he outlined rather than the man himself. Elif’s post is a transcript from

the talk I gave at a Kafka conference in Prague—about the Kafka- [Max] Brod collaboration in work and in life. I’ve included the original slides, plus a few new images and links

where you truly get a glimpse at what “comparative literature” actually is — the study of writing across time and medium to figure out what the motivations of the people behind the words were, who they are, and maybe finding a bit of insight along the way to apply to your own writing. Every great writer is an even greater reader, and stumbling into this while I was in my own analysis of the term “Kafkaesque” was the kind of coincidence that makes you stop believing in coincidences.

The essay is paywalled, but “The Elif Life” (pronounced in my head el-if like the statement) is one of my favorite sites to peruse when I want to ignore the non-literary world for a hot minute. There should be a free trial available, which I’d highly recommend if you have some time to binge the site.

Damn Spam (New Yorker July 30, 2007)

It’s interesting to look back at a time when spam was a new thing that people were learning to deal with,

(Spammers usually need to send a million e-mails to get fifteen positive responses; for the average direct-mail campaign, the response rate is three thousand per million.) “Spammers just shrug it off and send a million.” That amount of e-mail can overwhelm servers and waste time, particularly for those who check their mail several times a day. (It takes at least five seconds to recognize and delete an e-mail. If a billion spam messages elude detection every day—which means that ninety-nine per cent do not—that adds up to a hundred and fifty-nine years of collective time lost hitting the delete button every day.) Scarrow told me that of the four billion e-mails processed by Hotmail every day, they deliver only six hundred million. The rest are spam…

and even cuter when people thought it was a solvable problem:

In 2002, the programmer Paul Graham wrote an essay called “A Plan for Spam,” which became an intellectual manifesto for the thousands of researchers trying to find a way to clean up the Internet. “I think it’s possible to stop spam, and that content-based filters are the way to do it,” he wrote. “The Achilles’ heel of the spammers is their message. They can circumvent any other barrier you set up. But they have to deliver their message, whatever it is. There is no way they can get around that.”

Around January, I became fairly certain that normal humans had been surpassed by AI. This isn’t a Skynet threshold — frankly, if you understand Algebra 2 and have a memory that extends beyond 7 topics, you’re able to access the 95th percentile+ of society — but it does mean that we are in the end state of “normal person literacy”.

There’s a famous story about Stephen Curry where, in the 2022 NBA finals, he noticed the rim was slightly too high during warmups because his shots weren’t going in. It’s just as true for someone like me who has probably read more in my 24 years of being literate than tens of millions of humans put together, maybe more. It’s so, so obvious when something is botted, astroturfed, poorly edited, copied and pasted, and inorganic that I’m shocked other people cannot see it.

But people overwhelmingly can’t see it — we have reached the point where this comic

has completely saturated institutions such that the normal processes of learning, grading, hiring, and cooperating have been completely destroyed. The “warp” came sometime around 4o, it’s just much more mundane and boring than we ever thought.

To come up with a solution to this problem, we have to understand the approach that originally worked that AI broke through — Graham’s “content-based filtering” doesn’t work when our content is what has been overfit to. Food for thought, this is definitely going to be a discussion I’ll generate in the near future.

The Good Soldier Švejk — Jaroslav Hašek

A very famous book in some parts of the world that has been weirdly forgotten in others. Optimists prefer to view the lens of the world through sci-fi, cynics prefer satire, and skeptics prefer postmodernism. When I recommend books, I find no reason to give a synopsis or spoil the experience with analysis — rather, I’ll invoke appeal to authority in a curated fashion:

Joseph Heller said that if he had not read The Good Soldier Švejk, he would never have written his own anti-war satire Catch-22.^[6][7][8]

If all writing is autobiographical, as I believe it is, all anti-war fiction is derivative from the historical context the author grew up in. Dare I say, Americans are simpletons in comparison to the bizarro world of the 1900s in Europe and the Soviet Union — the intelligence of the populace that got the message to stay mum about the contradictions and paradoxes that plagued the bizarro worlds that led to the various European conflicts or the composition of the Soviet Union (as highlighted in my favorite novel ever, Moscow-Petushki) did not translate to the gung-ho American where every seeming slight must be shouted out from the mountaintops to raise “awareness” (for what purpose, it’s never clear.)

Nowadays, people post on their Instagram stories with a lack of depth that would make even Vonnegut blush, but for the literarily-inclined, making light of “nothing ever happens” beyond memes

might be the only way to properly sit on your hands and wait for the right time to act as the world realigns. The best comedy is an absurdist framing and acceptance of “Such is life” — indeed, this is largely the appeal of Gogol and why I fell in love with Russian literature in the first place.

On that note…

At the end of each of these posts, I’ll write a little note to the dear reader. I was pleasantly surprised at how many people were receptive to climbing the only paywall I’ve ever used on this site — to me, this means that there’s a strong enough base such that, even if I’m not writing the about the ol’ market dog-and-pony show, there’s a sticky enough community here to collectively improve and iterate upon.

While I have the privilege of writing as I wish, many of the writers whose pieces I will recommend do require subscription revenue for income. And while I refuse to pay for codswallop MSM, the beauty of Substack is that a lot of great writers have ended up on this site.

Now that I’m not focusing on trading, I have seemingly endless amount of times to curate for you, the reader, who is presumably otherwise occupied. While my posts will always remain free, I can’t encourage the bypassing of paywalls or the free downloading of books, even though we all know how to do so. As such, any paid subscription revenue will go directly towards the purposes of curation — I already pay for the subs I like, and I can promise if I recommend something it’ll be worth your time — or a round of drinks if we’re able to link up. As a bit of a bonus, at least on Substack, I think I’ll make my DMs available to paid subs only — comments, emails, archive and chat will always be free — where I’ll happily answer any and all queries. The only way you stay fresh is by facing new problems and organic questions constantly.

Subscribe now

I’m aware that, especially if you’re just starting out in college or your career as some of my readers are, even $20 a month in media subs is a night out that has to be shelved, a nuisance to see leave your bank account, and there’s really too much free content available for you to be paying other people’s salaries at this point in your life. If that’s the case, send me a note and I’d be happy to send a gift subscription your way.

Accordingly, I’ll sit down and actually figure out how referrals work on this site, along with other reader-reward features. Some ideas I have include author copies of the eventual Malt Liquidity anthology, and more. Eventually, I’ll cap out subs to the site — too much access to a good thing ruins it for everyone — but we’re a long ways away from that. Maybe that’ll be the 2026 goal.

Thanks again for reading and subscribing, every single day I get a post done feels like a useful one!

I just try to look at the current situation and then I try to think of a situation 12 to 18 months from now based on my forecast.

If I believe the security prices are going to be less, then I short them.

Frankly, I‘m not sure I’ve ever made money, if I took back the last 40 years. I’m afraid to look. I’ve never had a down year, but I’m not sure I’ve made money in shorts.

I like it. It’s fun, but you can get your head handed to you. It’s a game that really only professionals should play. The odds are against you.

I’m not as modest — my shorts are winners, but they are much bumpier rides than my longs (natürlich — markets are designed to go up over time.) Over the years, I’ve built up an intuitive toolbox on how to short stocks; now that I’m “out” of the game, I might as well reveal some tricks.

Ven’s Axioms of Short Selling:

1. Valuation is not a short thesis

It should be much more obvious in our current, postmodern market state, but “valuation” is a terrible reason to short a stock. What I believe trips people up is that, for a short to be profitable, it does require a collective realization that the shares are overvalued. So what’s the disconnect?

Valuation, at its core, is a psychological phenomenon. My favorite example is wristwatches — you can buy the exact same Rolex Submariner that Sean Connery wore, but simply due to the fact that Bond, James Bond wore it, that watch becomes exponentially more valuable. Thus, we understand that valuation, in a sense, is in part a story — the droll Excel manuscript tells a tale of “future cash flows”, and merely manipulating the inputs does not a compelling tale make. When someone tells me a stock is overvalued, I think back to that Mad Men scene where Pete is convinced he has ultimate leverage over Don Draper; Mr. Campbell, who cares?

2. If you don’t like what’s being said, change the conversation

Trading is, at its core, an information game. If your idea is too esoteric or incomprehensible, even if it’s a magic bullet, nothing will happen. If it’s too obvious, everyone catches on too quick and there’s no opportunity to profit. To redirect the narrative, there has to be a catalyst that makes everyone pay attention and reconsider. (Which is why volatility spikes when prices drop — increased uncertainty is reflected by people demanding bid-side liquidity as opposed to ask.)

Constructing a short narrative is not going to make you a popular person — everyone wants their shares to go up without having to think about it. Bill Ackman exemplifies this perfectly — even though his trade didn’t work out monetarily, as opposed to psychologically (?),

everyone attaches the HLF-to-zero narrative to him, and plenty of people were rubbed the wrong way.

If you’re not trying to go on a crusade, the classic catalyst is quarterly earnings. In today’s day and age, where nearly everything Enron did is not only legal, but encouraged, numbers don’t really tell a coherent story.

Instead, we’re looking for the reframing of the narrative to come from inside the house itself, through guidance.

Here’s an example of an earnings short I took on DKNG back in February. While the beat framed the story initially, the narrative I was playing was: how does a market-maker of sports odds in an ultra tight competition for flow with an insanely high CAC relative to the net worths of its habitual players ever make money as more competitors (like prediction markets) enter the fray?

Trading the actual ER is a coin flip, trading a vibe shift requires patience. No matter what management says, everyone eventually goes back to their numbers. A short without a drawdown means you’re a genius, you’re insider trading, or it’s too obvious, and you should keep your eye on the exits and remain skittish.

Another type of short I trade is a bit of a delightful psychological phenomenon — I like to take shorts at awe-inspiring market caps.

My absolute favorite headline to see when I’m looking for short exposure is a news blast about a new trillion-dollar market cap threshold being crossed. No matter what, in the back of everyone’s head, they think, “what exactly is a trillion dollars?” And while this trade can certainly melt up against you, as it did from 4 trillion onwards in the chart above, that’s a sign that the book has thinned out, and what goes up must come down. And, of course, excess demand for bid-side liquidity lends itself to much more rapid moves downward.

3. The “Big Short” misses the big picture

In both the previous examples, I was perfectly happy to be wrong. I only short when I need to reduce market exposure and can’t flatten, not because I want to get rich off something going to zero.

Think back to Ackman — shorting is a bit of an antisocial endeavor, the don’t pass line in craps; you win when everyone else loses. It’s necessary for a functioning market that shorts are rewarded when correct, but a very profitable short requires the monetization of a mass black-pilling vibe shift. “Don’t dance”, as Brad Pitt exclaimed in the movie, and I keep this in mind when betting on the downside.

Lost in yet another fantasy Michael Lewis narrative is that Burry’s investors were 100% in the right to be so mad at him. He was married to an idea that many smart people saw, but realized was a self-fulfilling prophecy. Winning on the bet where everyone loses their shirt leaves a bitter taste in everyone’s mouth, which inevitably leads to resentment — you’ve won, but at what cost?

I’d be fine if, say, the AI-bubble lasted forever. Bubbles are fun! Nobody actually wants a hot roll at the craps table to end, statistics be damned. Accordingly, I don’t tie my identity to “I told you so” in the event that everyone gets burned. You don’t want your big winner to be everyone else’s loss, karmically speaking. Always remember what it means to profit off the downside.

4. Undefined timelines are worth far more than defined risk

If you look at those charts again, you’ll see that I never buy puts when shorting. While puts cap your losses at the premium paid, it also caps your trade to a certain time horizon. It also traps you in a nonlinear timeline — if you buy longer dated puts and the stock goes down rapidly in a couple days, your position isn’t delta-sensitive enough to meaningfully profit. Conversely, short-dated puts are like spinning a triple-zero roulette wheel — narratives take time to disseminate and markets are biased upwards. Even if you profit, you’re just torturing yourself.

I prefer shorting shares. The beauty of the post-GME world is that I largely don’t pay interest to borrow shares anymore. The risk isn’t really “undefined” — when shorting a comprehensible market cap, I come up with a theoretical max buyout price. For example, if I’m shorting DKNG, a ~20bb company at time of writing, I know nobody is going to randomly tender an offer, say, beyond 40bb. I account for this as my max drawdown and size accordingly, usually in up to 3 chunks. In the case of NVDA, on the other hand, I mean, think about how much inflow it took to push it to 4 trillion in the first place, and how much “fundamental value” types foam at the mouth over this. Is it really reasonable to expect this to rapidly 2x from here? (If you’re uncomfortable/unable to do this, of course, just buy tail OTM calls.)

The benefit of this approach is that I can enjoy my life. If the catalyst doesn’t come, or the narrative doesn’t shift in my direction, no matter, I can flatten. Shorting profitably is a bonus, not a goal in and of itself — I’m actually shorting the vol of my own portfolio, reducing my leverage through negative delta one exposure. This is why math tells you to have L/S exposure at times, and why Druck still shorts even if it’s not profitable — if you do it right, your longs become even more profitable over time.

I hope this perspective helps — I don’t think anything I wrote was complex, but the mental framing really, really helps adjust from taking leverage through buying puts to gain downside exposure as opposed to reducing leverage through shorting stock to add downside exposure.

I’m going to elaborate on a few things because I got a lot on my plate what I plan on doing next, and I have a clearer idea now:

First, I’m going to sit down and edit the Malt Liquidity anthology. I have 243 posts, many of which deserve more than a quick email open and scroll in my opinion. I have some posts picked out that I know I’m including, along with some drafts that never quite got finished because I was too busy writing topically, but I’d love to get perspective on what you all would like to see, specifically:

Which post made you want to subscribe to Malt Liquidity?

I hope to have this done by end of the year.

Any updates on editing, the fiction I’m planning on writing, and other personal endeavors will come on the main site. The last “official” post is The Present is my Past.

Second, I’ll call it early from my 2025 predictions:

• The “internet of blogs” returns as the X algorithm becomes too sensitive to Elon

has definitely happened. X is unusable, as much as I’ve loved getting to know the site since its acquisition. There is too much anger and too strong a narrative to have authentic conversations on the public timeline anymore. If you try and engage with this constantly, it will fry your brain. Accordingly, I’ll be posting on Substack Notes about what I’m reading, writing, or thinking about. I’ll also push old posts that I think are relevant, as I probably have the best knowledge of what’s in my archive. I just won’t be writing posts on here anymore. We all need to read anything other than topical, attention-economy driven content at this point.

Third, I’d like to reply to all my messages, but I think it’s unhealthy at this point for me to rip out the ol’ “instantaneous reply with a stream of consciousness” reflex. That being said, I lurk all the time — I’m not out of touch or out of time — and the best ways to reach me is Substack Notes or Chat. I’ll try to ensure that I allow user threads in the chat as well, and I’ll get to whatever I can. I’ll also start a reading suggestions thread so we can source these things as a group. The internet is truly bereft of quality content at this point.

Thanks again for reading: I’ll make sure to update the Malt Vault soon.

And now, for the only paywall I’ll put on this site…

Read more

If liquidity is the friction between theory and reality, then hypocrisy is the friction between morality and reality. Alcohol can be considered “life liquidity”, in a sense — it eases this friction between what we think we are and what the world around us perceives us as, which is enjoyable and necessary at times to not strain ourselves too much. Of course, alcohol is also an amplifier — why people act hypocritically while drinking is because it paradoxically increases this friction dependent on the interplay between your tolerance and rate of consumption. It’s a stimulant and a depressant, after all, a true sign that you are operating in the liminal space between your thoughts and actions.

And, almost a year to the day after I wrote “Postmodern Society and its Future”, when I completed liquidity theory, I didn’t really do what I say I would:

I’m never going to stop trading, because I have to continue to validate my intuition indefinitely. But there is nothing more I can do to explain the postmodern market state, the attention economy, and how all these cross-correlated markets fluctuate and disperse. The entire attention economy revolves around this theory.

But just when I thought I was out, the craziness of 2025 extending beyond the 2024 election pulled me back in. I tried to retire, and then fall comes around and, even though we are facing the most critical problem in society — how do we pull people off the attention economy, the random wealth transferal of the people stuck in the algorithm — I returned to keep playing around in it. There’s nothing new in anything I’ve written since I found golf to be too boring — indeed, the patterns are so obvious and clean that it’s very obvious how algorithmic reality and actual reality has converged.

You need there to be enough uncertainty in the market so that there is organic flow to market-make.

In a sense, everyone is “market-making” when they interact with public markets. Proffering an idea fills the proverbial orderbook just like an order is made or took in the level 2. And, even though I have noticed how the ideabook has gotten thinner to the point of literal collapse, I haven’t done anything other than offer Malt Liquidity.

I think it took a pure shock to the algorithm to get me off of it. This is the point of no return, and there’s nothing left to say about the state of the world. Value must be created again, but it’s not in terms of a new idea of currency. It’s just going to take a new form, and I’ve made enough as a provider and consumer of flow.

Lost in the sauce about the “permanent underclass” is that even using the term puts you there. The inverse of the term is “new aristocracy”, where the understanding that staying on the treadmill of “what is post-fiat” and “trading returns” is the loop that I didn’t quite defeat on the golf course. Post-fiat is understanding that not only do the intraday returns not matter, the market itself does not matter. I put 2 and 2 together in the intuitive way to connect all the graphs in my own head, from the retail noise flow to the institutional players, but I kept scratching at that idea of “everyone being trapped in the same trade” without realizing that I was part of “everyone” put together. By scripting narratives about stocks, you’re not building companies that become stocks. And, while the market state is dismal for building ideas, that doesn’t mean you just keep playing the same game. I’ve always known that trading gains are a liquidity suck unless spent in the real world, and I’ve spent as much as I could possibly enjoy without just perpetually money-sinking.

So, I’ll rephrase my conclusion from last year:

I’m never going to stop curating, because I have to continue to validate my intuition indefinitely. But there is nothing more I can do to explain the postmodern market state, the attention economy, and how all these cross-correlated markets fluctuate and disperse. The entire attention economy revolves around this theory, and the attention economy is something I don’t want to be a part of anymore.

I kept trying to write fiction and found myself unable to, probably because I keep describing financial analysis as a form of fiction and referring back to all my old ideas. My self-referential looping style bricks an AI model because it is my own, personal AGI. If I stay in this loop, I’ll continue to make money at the same rate as the world goes to shit around me.

There’s a piece of writing that resonated with me deeply a while ago called Five Prophets, and I couldn’t quite pick up why Sam Kriss oneshotted me so cleanly:

I am convinced that all of history is a message, and this message is addressed specifically to me. The message tells me that this thing I take to be the material universe is actually something else. It is a machine, a contraption, built for an entirely different purpose I cannot possibly understand. Maybe it’s only a toy. Somehow, I’ve become trapped inside this machine, and I’ve confused it for the world, but it is not. I think the message is telling me how to escape.

All of finance is a message to me, and taking profit is the escape. If you don’t want to escape, you preach.

Five Prophets is a story about, well, prophecy, and the tale is about a guy who is convinced the structure of the universe is a microwave:

Early in 1995, he suddenly realised that he too had seen the Tabernacle, perched next to the sink in his lightly fetid bedsit. He couldn’t explain how, or why, but Adelheid of Augsburg had been receiving mystical visions of a Samsung M6234 Primo microwave oven.

It took some time for Göz’s discovery to be fully recognised; for obvious reasons, much of the academic community was highly resistant to his ideas. But in the end, the sheer weight of evidence spoke for itself. Symposiums of historians of medieval Europe, distinguished in their gowns, all gathered around a microwave. Staring in anguish at the little marker, between five and ten minutes on the M6234’s timer dial, that indicated the optimum microwaving time for a jacket potato.

I have constructed the microwave as a thread of my content from chat, to tweets, to blog posts, to frame my own thoughts. And, in a circular fashion, I figured out that I had the answer the whole time:

Taking profit is the escape.

“Retirement” failed for me the first time because I was still in the same “+1 minute” cycle. One more trade, it’s always one more trade to spread to my friends! It’s such a good idea!

This time, I truly am done. I simply do not care about public markets anymore, and I have everything I need to actually spend time away, in perpetuity if needed, and experience the world as it authentically needs to, before this is potentially taken away from us all.

So, I’ll rephrase my passage from last year’s “final” Malt Liquidity (I just did the same thing in another name, lol) for good:

I’m never going to stop writing because I have to continue to validate my intuition indefinitely. But there is nothing more I can do to explain the postmodern market state, the attention economy, and how all these cross-correlated markets fluctuate and disperse. The entire attention economy revolves around topicality, and I don’t need to bother with that anymore. My time is truly my time, at this point, and it is my time to shine.

So, I’m going to hypocritically break my rule at this point:

I truly believe that my writing should be free, but the market does not. The market pays me for my ideas. And, while I’ve been struggling to figure out how to structure the writing I want to do — fiction, lifestyle — I’ve been stuck in this microwave of a site for too long.

Everything on this site will remain free for spelunking, and for those of you who have supported me by voluntarily paying for a sub, I truly appreciate it. I’ll happily return and refund the money as soon as I figure out the proper mechanism to do so.

I’m going to take a bit of time off — I need time to aerate my thoughts and figure out what the next writing structure and project will be. I definitely want to write some fiction, but I need a much, much bigger perspective of the world than the predictable timeline if I truly want to amplify my thoughts to the next level — aka, actually create some value.

Thank you all for reading, this has given me a life I never thought I’d have again on the public internet. The only way to win is to not play the game, and I’m not going to bother with worrying about inflation anymore. I’m truly content to leave it here.

If you’re interested in the next iteration, please do drop me a note. It will be completely private, curated, and paywalled, and a money-losing venture for everyone involved, because that’s the only good country club — and, frankly, I’m the best at creating a certain type of internet country club.

From a project that started out of boredom due to a lack of Money Stuff to some weird, insane, beautiful autofiction that I pulled out of myself:

Here lies Malt Liquidity: Nov 30, 2020 — September 11, 2025

With abstract systems, however, the depreciation curve of a failing system is the decay of faith in the system itself,

What I realized is that the “trick” that kickstarts liquidity in a belief-based system (fiat) is the fact that you have to get people to believe in it. If I endlessly point out how everything is constructed around an assumption, and continuously harangue the point that “it’s not real”, it becomes a self-fulfilling reality if my ideas hit critical mass.

which is why life never gets better for Gregor Samsa after his metamorphosis. His life is one of tragic meaninglessness that exposes how a lack of intimacy in the human systems that hinge off it to function decay over time. So he dies, and such is life.

Abstract systems require a torturous dissonance to handle both sides of “theory” and “reality”, and the friction between it (aka, “liquidity”), which is why it’s easier to just pick one side or the other and feel superior about it. The applied side scoffs at the abstract side for never actually being able to process that a decision has to be made (aka, why libertarians simply never get that their policies can’t ever be properly scripted), and the abstract side snorts at the applied devotees for never understanding nuance. Spending too much time bouncing between sides turns you manic, or worse.

Innate to every abstract system lies a contradiction that, if debated enough, will eventually create enough dissonance so the system can remain resistant to capture. In law, this is the concept of “unauthorized practice of law”. For the unfamiliar, here’s the extensive definition, but I’ll clip out the key point:

The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. This Rule does not prohibit a lawyer from employing the services of paraprofessionals and delegating functions to them, so long as the lawyer supervises the delegated work and retains responsibility for their work

Is the recursion obvious here? I’ll spell it out another way:

The point of recursion where the system exists primarily to preserve itself is what I call the precise point where you can describe the system as “Kafkaesque”. My favorite example of this is the argument against the death penalty where, citing mandatory appeals processes, people claim that it’s “simply cheaper to house someone for life in prison” than give them the “mandatory” appeals that are part of “due process”.

This is stupid! Of course that’s not a logical claim! You’re using one part of the systemic definition to make a claim on its own properties. This contradiction is everywhere in law — disparate impact allows for an observation to be used as proof of discrimination,

such a devastating bit of circular reasoning that nobody bothers to correct because the inefficiency created is capturable by billable hours and settlement-seeking. The only thing that preserves this scheme is declaring that, if I notice the contradictions, this is unauthorized practice of law!

You might wonder how the legal system ever worked in the first place, and it’s a fair question. The concept of “jurisdiction” created a sufficiently segmented-but-whole graph that was, in theory, supposed to prevent abuse from crippling the system.

There is an endless amount of litigation over this concept, but it’s really quite simple — you have a directed graph where some cases can only flow one way, or be decided in a certain structure independent of the federal morass. (Put simply, you have a federal vs state split — what type of issue is this — and then “supreme” jurisdictions that can overrule lower nodes.

The appeals process is incredibly designed if you don’t allow, say, a bunch of district court judges to claim power over issues they don’t have.) This is a compressed chart, but the entire system bricks in two cases — when subject matter jurisdiction is incorrectly assumed by lower courts, or a jurisdiction becomes “hostile”.

The only way to put a rampant court system out of line, as I got tired of documenting in this thread, is to federalize it:

It is blatantly clear that multiple jurisdictions are unfixable. Really think about what the federalization of DC entails — it’s a test run as to whether deep blue jurisdictions that have long been out of control can be fully defenestrated.

In a way, I think this is what made Elon so frustrated with DOGE, and why figuring out the American legal system drove me nuts (as I pointed out the Kafkaesque creations in the Onion Futures Act, the concept of insider trading, and the Howey definition of the security):

Admin law is one of the kookiest concepts to ever exist — where the logical understanding that, as the world gets more complex, a single President and cabinet could not possibly hope to make every decision through debate, so their executive power could be passed down into quasi-judicial and quasi-legislative bodies. In business, you have the shell corp, in law, you have the agency, which is always part of the executive, but, to prevent the situation where a single President is the direct center of the graph, there are odd exceptions in how he can directly control the executive power that has been granted to the agency. (In fact, this is entirely what I taught myself while following the Fannie Mae trade, and you can look to Trump v. Wilcox as to how the Federal Reserve board is tepidly insulated from “no cause” firings.)

I am positive that Elon saw the heart of the problem basically instantly, which is why he signed up to try and fix things. It was never about “cutting the budget”, it was entirely about bricking the court system in such a manner that, no matter what, the only way to preserve the system was to make the “chief executive” the ultimate node in the graph. I say this because it’s precisely what he did when he converted Twitter into X, and that is possible to do with the US legal system (if you dig into “unitary executive theory”), but when the solution is so obvious such that you just have to wait for it to play out, you go a little nuts sitting around and waiting for it to happen.

And, when Trump started to get this power handed by the Supreme Court who knows that the only way to remain relevant is to allow full federalization, and Elon didn’t get to share in it, it might have just been too much:

The second most painful breakup I’ve experienced this year was the one between Elon Musk and Donald Trump, partially because I got rinsed on what had the potential to be one of my biggest runners ever, but mostly because it means that there’s no time to rest and enjoy life as things will keep happening.

But, I think there’s another way to use tech to try and fix this system, rather than trying to become the central node in a system that cannot possibly allow it. And, now that everyone is consistently complaining about how there’s no organic content on the internet, there might be a cheeky little experiment to run with a bit of “legal AI”.

The problem I keep complaining about that is surely being noticed by everyone who consumes content on the internet nonstop is that AI-generated content sufficiently surpassed everyone creating content other than oddities and outrage farming. It’s why the only content seems to be “race war” that gets people organically posting again, whether it’s about the WNBA, “hate speech” go fund mes, Costco, or the worst bus trip video I’ll ever see in my life.

You see, there’s one exception to “unauthorized practice of law” — no matter what, “due process” does allow the individual to represent themselves (which is the root of my favorite SCOTUS case, Sloan v SEC, where an unpleasant oddball stumbled into a 9-0 victory, and thus got every non-lawyer banned from arguing in front of that court, which is a constitutionality discussion for another time), because how can you refuse to incriminate yourself (the 5th amendment) if you’re not even allowed to defend yourself in the first place?

This doesn’t mean that you should commit a crime and represent yourself, and indeed, most self-filings mostly fall in the realm of small claims court. But what AI can allow us to do is construct a paradox that renders the question of “unauthorized practice” moot. As it stands, lawyers, individuals, and judges are all using ChatGPT to hallucinate work anyway. The docket is full of autogenerated filings, with autogenerated commentary and decisions creating an ungodly cluster of god-knows-which circle of hell this is to sift through. But, what if you could use the allowance of pro se litigation to create a paradox that must be ruled on?

There’s the famous attributed Einstein quote about how insanity is doing the same thing over and over again while expecting different results. (I don’t really know how this makes sense, but it’s catchy.) But in the case of the legally deemed insane, we can use this definition to our advantage:

If you have a legally-declared insane person, someone who could not be deemed fit to stand trial, able to file a coherent legal claim themselves using an AI drafting tool, would this break the concept of unauthorized practice of law?

Either the tool is deemed illegitimate, which clearly cannot be the case given the level of attempted avoidance of doing the work themselves, or the pro se rights of the institutionally insane are violated, which, in a sense, would invalidate all of our rights to file claims, lest the Kafkaesque horror presented in The Trial become our reality, where a court can declare us insane without any say in the matter ourselves. If we remove unauthorized practice of law from consideration, a much more rapid reorganization of the court network would be possible, with all the credentials being reconsidered at once.

(Fun fact, you don’t actually need to be a barred attorney to sit on the Supreme Court so, in a sense, why should this be a hard requirement for any lower node? Lawyerly camaraderie died a long time ago, and the horror of entering this system is precisely that of what used to be a symbiotic system turning into a mandatorily adversarial one.)

Humans have a permanent advantage over AI in that we can conclude things intuitively

Quality sensitivity is a function of intuition, and downplaying this is denying the superpower of pattern recognition from minute amounts of data that the human brain possesses. There’s a famous story about Stephen Curry where, in the 2022 NBA finals, he noticed the rim was slightly too high during warmups because his shots weren’t going in. It’s just as true for someone like me who has probably read more in my 24 years of being literate than tens of millions of humans put together, maybe more. It’s so, so obvious when something is botted, astroturfed, poorly edited, copied and pasted, and inorganic that I’m shocked other people cannot see it..

and high frequency trading firms found this out the hard way during the Power Peg incident that took out KCG:

Knight Capital Group was an American global financial services firm engaging in market making, electronic execution, and institutional sales and trading. In 2012 Knight was the largest trader in U.S. equities with a market share of around 17 percent on the New York Stock Exchange (NYSE) as well as on the Nasdaq Stock Market. Knight’s Electronic Trading Group (ETG) managed an average daily trading volume of more than 3.3 billion trades, trading over $21 billion … daily.

It took 17 years of dedicated work to build Knight Capital Group into one of the leading trading houses on Wall Street. And it all nearly ended in less than one hour…

At Knight, some new trading software contained a flaw that became apparent only after the software was activated when the New York Stock Exchange (NYSE) opened that day. The errant software sent Knight on a buying spree, snapping up 150 different stocks at a total cost of around $7 billion, all in the first hour of trading.

Under stock exchange rules, Knight would have been required to pay for those shares three days later. However, there was no way it could pay, since the trades were unintentional and had no source of funds behind them. The only alternatives were to try to have the trades canceled, or to sell the newly acquired shares the same day.

Knight tried to get the trades canceled. Securities and Exchange Commission (SEC) chairman Mary Schapiro refused to allow this for most of the stocks in question, and this seems to have been the right decision. Rules were established after the “flash crash” of May 2010 to govern when trades should be canceled. Knight’s buying binge did not drive up the price of the purchased stocks by more than 30 percent, the cancellation threshold, except for six stocks. Those transactions were reversed. In the other cases, the trades stood.

This was very bad news for Knight but was only fair to its trading partners, who sold their shares to Knight’s computers in good faith. Knight’s trades were not like those of the flash crash, when stocks of some of the world’s largest companies suddenly began trading for as little as a penny and no buyer could credibly claim the transaction price reflected the correct market value.

Once it was clear that the trades would stand, Knight had no choice but to sell off the stocks it had bought. Just as the morning’s buying rampage had driven up the price of those shares, a massive sale into the market would likely have forced down the price, possibly to a point so low that Knight would not have been able to cover the losses.

You don’t need to automate away the job of the lawyer, they signed up to check the validity of the sourcing and do all the paperwork we don’t want to do anyway. You want their job to be that of the trader who can hit the massive red “STOP TRADING” button, not generating endless amounts of scrawl on top of the mass already to be processed. And that does require rethinking what “practicing law” is — is it the actual gatekeeping of the court network that defines a lawyer, or allowing them a bit more weight in what cases can actually make it to the docket in the first place?

“Automating something away” is not just “replacing jobs”, it’s reducing the amount of friction in the system. Humans are pretty good at generating relationships that make life a lot easier than following an increasingly-complex set of mishmashing rules, maybe that’s how we fix law.

Almost three years ago, I pointed out how Microsoft’s stake in OpenAI was structured in a very odd manner for a bet that has been ceaselessly hyped as the most bullish, paradigm-shifting technology ever invented:

What strikes me is that Microsoft’s proposed investment in OpenAI resembles a preferred-share agreement much more than it does a typical venture investment. We have talked a bit about the difference between equity and debt investments:

Equity investments are based on prognostication — you think that the future forward earnings of the company will be markedly increased compared to its current day earnings, so you invest. Debt investments are loans — I gave you money to grow your business, so you better pay me back with what you earn over time.

While Microsoft’s investment is clearly an equity investment bullish on the overall ability of OpenAI to facilitate the production of a minimum viable product, it’s interesting to me that the proposed terms highlight a right to 75% of OpenAI’s profits — it’s kind of like having the ability to exercise an option to cash out rather than essentially being required to plunge any revenue into reinvestment to potentially gain a positive ROI as you’d normally expect from a venture equity position. To me, this “fail-safe” implies a certain level of skittishness that OpenAI will ever produce anything of real go-to-market value. While $10 billion to buoy the cash burn is nothing to a company with $50 billion in quarterly revenue, it’s telling that software that supposedly will be folded into Bing presumably to destroy the Google search monopoly doesn’t get a carte-blanche check for that amount.

What I didn’t fully place back then is how much premia was being paid for this low-delta bet.

Usually, when you are betting on tail outcomes, the raw premium itself is quite low — if you look at a traditional options smile, it’s really the volatility that’s most of the cost.

It’s why valuation, in a sense, is meaningless in private markets — you set your own marks, create a bit of circular revenue (which is the point of an “accelerator”, it would be ridiculous to have everyone start from scratch over and over, nothing would ever take off), and give some talent a chance to break the rules in a controlled environment. Founding a startup in your 20s is, in many ways, the logical progression from undergrad for anyone who wants to break out of the normal distribution — a “track record” is a sign that you’ve beat a series of iterative games to defeat until it’s time to take on the “real world”.

This system only works if there is an actual product being delivered at the end. “Venture Capital” in the original usage was about whaling expeditions — killing and capturing a whale was a net resource gain that made the expedition worthwhile in the first place. In the modern world, the whales are ideas, but there is still a product attached — Google Maps might have been the spiritual successor to the spirit of the explorers of the 1000s, which eventually transformed how we navigate the world thanks to Uber. In effect, the biggest ideas are always about network expansion.

What exactly is the product with AI?

I have read way, way more than I care to ever repeat, and I’m unfortunately familiar with every AGI/ASI/p(doom) acronym to the point where I wish I could erase my memory Eternal Sunshine of the Spotless Mind style. And, clearly, I have found a large utility in the non-coding, esoteric uses myself:

Look, I am a believer in the AI “warp” — I’ve personally seen what this can do, work with it constantly, and am in the process of uploading myself to the cloud. The core problem is, what does this mean for everyone else? 99.9% of people won’t find any sort of real use case out of this, and if finance doesn’t become invalidated, this surely means that wealth is going to hyperpolarize even beyond what it already has. The meta that is almost certainly going to die is the 1-1.5 sigma section of society because they are the most likely to be current-day high value credentialed specialists, and the value of that skillset simply has shifted.

With the foundational model question, I don’t think anyone has truly asked what we can build with this model, and it’s become too costly to ignore the question. There is no way to generate “ad revenue” like the old web2 model of the internet, or “trading fees” like the web3 model of the internet, because the ad revenue is being funneled as capex to build these products. You can’t create a perpetual motion money machine without central bank printing, and that is not possible anymore.

What we need is to rapidly shift back to a “defined input, verifiable output” mentality, and I don’t think anyone other than absolutely elite algorithmic thinkers are capable of framing AI in a workflow accordingly. It is quite literally too complex for most of the population to use, which is why the phenomenon of “one-shots” occurs. Humans are creatures of pattern recognition, and the models are sirens that have been created to cater perfectly to this. They’ve literally been trained on all of our data to do this! It’s no different than seeing a mermaid on a voyage — it’s just in our pocket.

When others see signal, I see desperation.

If you are a doomer, and I frequently claim I am, the proper trading strategy is to be aggressively bullish. Betting on the downside is dependent on luck, and is fundamentally antisocial. This is (partly) why I hate Michael Lewis and the big short, and what tech people don’t understand — getting rich quick is also antisocial. Wealth must be earned, and cashing out when the facade gets eviscerated (and, let’s be clear, most wealth is a facade) leaves a bad taste in everyone’s mouth. Everyone with a brain saw it coming, but they tried to stem the panic, because shorting is a self fulfilling prophecy. Markets don’t crash due to sellers overwhelming buyers, but complete lack of bid — aka no liquidity in the underlying. That’s what “don’t dance” means, that Brad Pitt was saying. Making money betting on big crashes is like making money on a crypto rug. You’ve won, but at what cost? You’ve ostracized yourself from the rest of the decent world.

And the reason I called the top on NVDA basically to the tick is precisely because I was so aggressively bullish in my positioning prior (not in the stock itself, but in how I managed correlated risk.)

The tell here was bizarre — something at META has gone extremely wrong and nobody knows how to fix it.

If you look at the articles about how energy consumption has been maxed out — that you can’t buy anymore — the cynical reading is that there’s no more chips to buy, the only play is to go all in.

All these people are loaded anyway. A billion dollars means nothing if you are sidelined from what you believe to be the cutting edge of the field. There’s literally no value in the excess wealth if you’re going to be working nonstop anyway. The reward function simply isn’t there.

Do I think there’s substance to Meta’s bet? Of course, but the only read I have from this is that they’ve cornered an expiring GPU market and have nothing useful to do with it.

My hunch is that Meta has maxxed out brain rotting its userbase such that there’s no intelligent, unique training data in its corpus. Aka, the only advantage of having a social platform - unique training data - is worse than useless

Note that this is not a new take, I pretty much said that you can’t just train your way to superintelligence off of endless amounts of data all the way back in January 2024:

As I like to put it, isn’t it incredible how the white lines drawn around the murder victim fit the body perfectly? Obviously LLMs will look incredible if you ask them something they’re trained to do. But this is not a defined input verifiable output problem — you simply can’t keep throwing more data and compute to overfit to reality itself. (It’s like the opposite of polynomial interpolation — sure, the curve looks better the more you fit to the points, but it’s suboptimal to keep refining it to make it fit too good. What’s the point of the curve?) It’s too complex of a system.

And, in a weird way, I think I can diagnose the failure points of the overall approach here, on some small level — I found out that nobody in tech really reads any literature or fiction at all.

Allow me to explain some terminally online blogger drama briefly:

There’s a writer on this site named Sam Kriss who might be the best writer I’ve found on the internet in the past decade. He consistently writes a genre of literature that I adore called “schizolit” — think Notes from Underground, Journey to the End of the Night, essentially stylized, manic ranting that frequently veers from fact into fiction into allegory. (My personal favorite is Five Prophets, something that noticeably influenced my own writing.)

Anyway, a group of tech-adjacent readers picked up one of his posts and complained that “the fiction and nonfiction was not properly labeled”. To which Kriss responded by putting out this scathing takedown of the “rationalist” community, but can be summarized by one of his posts:

As I made my way through this discussion, I felt despair in a sense I can’t quite explain. I was reminded of that anecdote about how SBF refused to read a book

from that hilarious Sequoia profile that has since been scrubbed.

Financial analysis is probably the best form of fiction out there,

But beyond journalism, in a sense, all financial analysis is a bit of fiction, which is why so much of the “actual” industry is about storytelling. A hedge fund is a story about why you should manage someone else’s money (as, really, the level of delusion required to truly believe you should be doing this at scale is Icarus-tier), a startup is a story about how you’re going to change the world (as I wrote about in Macbooks vs Wristwatches), and a prospectus or financial model is a story about bounding the possibilities of the future. As one of the greatest movie scenes ever highlights,

nobody, whether you’re Warren Buffett or Jimmy Buffett, knows whether a stock is going up, down, sideways, or in circles. It’s a fugazi.

and it never ceases to delight me how I can spin narratives between all the players in the world simply through having an internet connection and speculate on it profitably. (This is why prediction markets aren’t necessary — they’re too binary, the stock market is the ultimate prediction market, and trying to reduce a complex system to a binary is precisely the hubris of man that destroys a fluid system time and time again in history.)

It’s not that SBF is, per say, wrong — it’s just that it’s right in the wrong direction. You don’t need endless amounts of training data, you need to realize that, no matter what, a ton of it is just pure junk. This is an esoteric judgment, you can’t quant this out or fine tune a model to do it for you. Quality sensitivity is a function of intuition, and downplaying this is denying the superpower of pattern recognition from minute amounts of data that the human brain possesses. There’s a famous story about Stephen Curry where, in the 2022 NBA finals, he noticed the rim was slightly too high during warmups because his shots weren’t going in. It’s just as true for someone like me who has probably read more in my 24 years of being literate than tens of millions of humans put together, maybe more. It’s so, so obvious when something is botted, astroturfed, poorly edited, copied and pasted, and inorganic that I’m shocked other people cannot see it:

Ignore the scent of desperation from an increasingly irrelevant politician and focus on the content for a second. A trick every good writer uses is simply reading things out loud. Whatever Temu AI model was used to generate this scrawl cannot account for cadence properly — it’s why you see a bunch of Trumpisms that have barely been translated but doesn’t have the natural feel of his rhythm. (Indeed, no matter your opinion of him, Trump’s sense of timing is better than the best comedians.) How LLMs try and correct this problem is by using em-dashes. I use them all the time, but it’s in a very conversational style — I like using them as breaks in sentences when I’m trying to redirect my thought. Hilariously, LLMs do the same thing, but in such an obvious, clinical fashion that it basically left the internet bereft of original content.

Part of why I think Gemini does much better nowadays is that it’s centered around the unique training data of Gmail (if I had to take a pure guess). Up until the AI explosion of ~2024, where ChatGPT could successfully supplant the normal human’s ability to write, people did put effort into writing emails. If you scrap all the emails written after 4o, you are still getting white collar college graduates with significant brainpower expending effort on email formatting and phrasing. On the other hand, if a big part of the base in how you’ve trained your model’s prose is Reddit, well, that’s been the worst content on the internet for at least a decade. It’s like Subreddit Simulator, that old shitty Markov bot trained on individual subs to create a fake “interaction”, broke containment.

I don’t know how you’d do it, because the scale of the problem is cataclysmic given how much of a feedback loop interaction is at this point (eg people using it to send emails and then the other end using it to summarize emails), but I think a lot of the obviously crap content has to be manually slashed out of training data. Maybe it’s time to give the old guard humanities types a call!

There are too many signs that the utility of capex has capped out, that AGI is a white whale, not one that can be captured. Nothing has changed in the scale of the bet — there is far, far too much at stake for this to not work out in some capacity. But the mechanics of fiat have disincentivized capital efficiency (yes, this all comes back to passive investment) where this bubble can’t be safely deflated:

Value creation always depends on bubble mechanics, else you get capital creation for the sake of it. This one, though, is too big to handle. Combine this, the mostly passive state of capital markets, and you wonder, do "retirement funds" even really exist? Too many people are "rich" on paper with zero ability to allocate capital. This facade has to collapse somehow, but think back to the tariff drama — everyone is programmed to think they're "earning" this money. There's no growth mirage anymore, it’s just number-go-up for the sake of it.

Moby Dick is a tale about one ship, one whale, one man, and one crew. I never thought I’d say it, but I wish it was that simple here.

Most of what I’m struggling with comes down to the fact that I simply have nothing left to prove to myself anymore. There isn’t a game or a surrogate activity that I can properly test my mettle with, and the world is not in a state of growth, but rather destruction. It is pretty obvious where things are going, as I wrote about in “Fathers and Sons” all those months ago:

A function of excessive luxury is that people become lazy, and there’s no greater evidence of this than the broad illiteracy of the American population, even (especially) amongst the credentialed. Russian grade-schoolers read Tolstoy, and we have Disney adults. On October 7, 2023, I became certain the world would re-align, because the “trick” that maintained peace in the post-WW2 world was about to become heavily scrutinized.

I could (and have) write tens of thousands of words as to how attention has become the driver of what essentially amounts to random wealth transfers manipulated upwards by “economists” and “central banking”…

Every core American institution takes religious design and translates it to a secular construct. The very word “unconstitutional” is an unfalsifiable “you either get it or you don’t” signal, which is precisely why power was gatekept in such a clannish fashion by licensing boards. America is a pretty high IQ concept — it’s both a land and an idea, a parallel construct where subservient proxies determine the best course of action. If you look at how the judicial system used to treat judges as sacrosanct, or the meaning of making doctors take an “oath”, it becomes very clear that the true nature of operations of a functioning institution are clandestine and cannot be studied in school.

Our institutions failed because debates about their intricacies became a campaigning tool to the masses who simply don’t have the memory or the abstract reasoning to keep track of things, combined with the fact all of our trusted credentialization mechanisms were hollowed out by pure greed.

This is why a core axiom of mine is “Artificially subsidized cost of capital has risk transferral externalities”; the risk is that everything becomes a capital creation game rather than a growth game. We really don’t live in a free market, indeed, I don’t think there is such a thing (as outlined in “A Little Dark Edge”). The government has been picking winners and losers for longer than I’ve been alive — the way to win is to creatively destroy what is entrenched and then rewrite yourself as part of the regulatory capture facade.

If you refuse to acknowledge the religious motivation at the core, another religion will supplant it. Humans are creatures of faith and belief, intuition is not explainable by any rational mechanism. When conservatives argued for tradition for the sake of it, and the common sense that logically constructed those traditions were forgotten, it only took one moment of “going broke” for another entity to take control.

Over the years, I’ve come to realize that studying theology is basically the same thing as studying law, the secular translation of the model. There is no faith in this system anymore, whether it’s courts, the dollar, whatever, as I pointed out about a year ago:

When idiots go flight or flight mode, it results in bodycam footage (warning: graphic content).

When millionaires are in fight or flight, it results in political instability. A signal of Eastern bloc instability is when ultra wealthy people start randomly dying — a particularly noteworthy one to me was the “sausage billionaire” being executed in his sauna by a crossbow. I started to expect something major to happen after, and of course, Russia invaded Ukraine. Rich people war over their respective pots when there’s no wealth creation — the domestic instability resulted in another pot being sought out. (Oddly enough, 2 years later, another Russian sausage billionaire died after falling out of a window in India, the Moscow special. I guess they knew too much about how it was being made.)

I’m not sure what form the American millionaire battle will take. The amount of interparty vitriol leaking out to the media is already a bad sign, and depending on how nasty the argument over the nominee gets, you’ll get a good idea of the overall temperature. I’m pretty sure it’ll happen through courts, though, similar to how NY tried to “get” Trump (See: Trading in the Age of Meaninglessness, 3/25/24). Too much can be manipulated in the court system for jurisdiction purposes. (Consider the case of Douglass Mackey, one of the most egregious 1a social media cases I’ve seen.) Nobody ever argued that America isn’t a litigious society first and foremost. There is so much bad blood at this point that I’d be very surprised if things just quieted down after November, especially if Trump wins (as I predicted my 2023 Year-In-Review post, with some conditions.) It’s already started, but I think a mass flood for “safe” jurisdictions will happen. You are likely going to see ~3 big legal wars:

- State tax clawbacks (e.g. CA demanding payment to move a business out)

- incorporation fights (Delaware is no longer as predictable and business friendly)

- compliance/physical requirement deregulation (all the NE has going for it at the moment is proxy to Delaware and the physical data centers.) Keep an eye on the Citadel-backed Texas Exchange project.

There is a decent chance the power structure shifts to the southwest in the next 5 years. Proximity to established CA money is imperative, and it’s easier to fly to TX from, say, Vegas than NY. But being in CA is untenable as a business until the state is reformed from the top down, which is unlikely to ever happen, imo, but at the very least will take 5+ years of legal wrangling. FL simply doesn’t have the infra for big business in the same way, and it’s pretty inconvenient to fly to. It holds value if proximity to NY holds value, which is what I’m betting against. I’m curious to see what state tries to replicate TX next. If R’s get control of AZ (Blake Masters, as unlikable as he is as a candidate, is part of the Thiel network as well, which seems to be dictating the moves of the GOP), I can see a bigger push as chip fabs/high tech manufacturing is already there across the state.

It is blatantly clear that multiple jurisdictions are unfixable. Really think about what the federalization of DC entails — it’s a test run as to whether deep blue jurisdictions that have long been out of control can be fully defenestrated. CA, WA, CO, and IL are unfixable — Kafka was the last person to truly get it, that you simply cannot fix an institution that is broken from within.

I have spent the entire summer trying to put these conclusions out of my mind, but it turns out that it’s impossible to just golf and ignore the world when you’re so used to being plugged in. I felt bad about ranting about “the happiest golf course on earth” in the manner that I did, but then I logged on to X Dot Com and saw the Cracker Barrel logo discourse take off.

If you truly want to understand how stupid the state of things are, consider the fact that I was able to extract a 6 figure salary out of the market in about 4 days from a plane ride where I was really, really bored.

Our concept of value is so distorted that a few people raging out on Twitter about how a logo can be woke and indicative of a business that’s about to go broke causes such a demand for book depth that you could generate a yearly return basically just by being terminally online. To be clear, this is fucking stupid.

There is a very obvious playbook for trading the Trump administration. The trading week goes from Wednesday to Wednesday — barely anybody on earth has a memory that lasts more than 6 days nowadays — and you figure out what content is going to traverse its way to the “main character” node. (For prior quarters, this has varied between Scott Bessent and Elon Musk, but Trump is the center of the universe and has been for 11 years.) Lo and behold, if you look at how I timed my share sales, it’s simply when a bigger node takes notice and, eventually, forwards it to him.

In some senses it’s exhilarating to get this right over and over (and the monetary reward certainly shouldn’t be scoffed at — I do understand that I have won the hypergambling lotto here), but it’s sheer despair that the world is solvable to this capacity. I don’t care what the economic clergy says, this is not healthy that a business “valuation” can be clanked around 15% by a group of people who have clearly never eaten there regularly. In a sense, this implies that the only markets are private markets.

How do I know that none of these people ate there?

Well, I went to Cracker Barrel.

This is a plate of biscuits and gravy where they forgot my gravy. I took an unfortunate soul along with me, who ordered the pancake platter. What you realize when you go to Cracker Barrel is that it’s an old world singularity business. Much like how Facebook has hit its Total Addressable Market and thus can only find a way to develop an extended brainrot depreciation curve until everyone’s mind turns to mush, Cracker Barrel attempts to do this to the Boomer population with Crisco-ified slop. It’s not even that the food is bad, it’s just nothing. It tastes like nothing other than seed oils and sadness. The product for this business is the leftovers, where getting “one up on Wall Street” is taking home a box while you struggle to digest the first half of the meal you had and insisting on getting the “full value” later. It’s as if you made Dust Bowl desperation a product. And, of course, the tchotchkes on the way out serve as a way to buy your grandkid (not that those exist anymore) some useless crap that “they’d really love” without having to get in your car and drive to another store. It’s the entrapment of convenience where the margins have to work, so it sucks.

Credit to millenials, they really demanded better out of our food culture.

In a way, the terminally online had it right — Cracker Barrel is the perfect example of a decaying institution. There is no way to fix this product. You can’t compress the Northeast idea of Nashville into a kitschy millenial product without destroying its aging, content base. It’s a place that serves its purpose and, once the earnings are extracted and the demographic has passed on, the remaining capital will be returned to shareholders and we’ll probably get a bunch of credit scheme physical popup shops that render the neighborhood unlivable in return. Everything in the US is an exit scam nowadays, and there’s really no way to unsee it.

The main exit scam of the past 25 years has been “everyone goes to college”. The propaganda has built up 18-22 year olds as some sort of sacrosanct, truth telling innocense when they’re mostly idiots. There is no such thing as a 23 year old who has the world figured out — even myself. I look back at how brash I was and, man, it’s very clear why I was unhirable in so many contexts.

It’s not that the economy is worse than 2008 — it’s that the leverage you have to take to play the game is so astronomically high and the social contagion of seeing everyone get rich around you (which is mostly fake) makes it impossible to accept your lot in life and bear it out until your 40s. What most of the people grousing about regarding “tech jobs” don’t understand is that there are no jobs coming back. Just look at the case of Elon and Twitter — you can fire 80% of this business and it still functions as the most pivotal site in the world. If you kill visas, which definitely does need to be done to satiate the pure bloodlust at this point, nothing will happen other than the numbers will go down. Which is necessary, in my view, but will only lead to conflict, as I wrote in my pre-election post:

There’s a palpable sense of desperation everywhere I look, and it’s reflected by the fact that nobody really trusts any institution to properly do anything, whether it’s a court of law or even counting votes. (Look, India counts a billion votes in a day, there is literally no reason a state should supposedly “take a week” to count ballots, though I suspect this won’t actually be an issue.) It is downright embarrassing how much litigation there is around basic, simple, logical things, and it’s a perversion of the legal system that common sense isn’t taken accounted for. The entire purpose of law is that it’s supposed to be subservient to the straightforward meaning when it comes to people! You shouldn’t have to be legally trained to understand most topical issues at the non-federal level. (Of course, this is outright a failure of literacy education and the media, but more at 11.) This desperation is most reflected by the fact that apparently, our answer now is to throw our hands up in the air, toss every single ounce of data that we can legally (and illegally) get access to into a GPU cluster, and pray that the human brain gets solved. It’s so patently ridiculous from my view that every major player is all-in on what I describe as the most expensive, farthest OTM option ever conceived. FFS, the tech gets more expensive as you try and scale it and it isn’t even coherently applicable as a product!

Something has to change immediately, because we are at the point of a debt recursion loop. Look, you can cite whatever numbers you want, I am convinced we are not getting “true” 2% inflation again. Don’t just take it from me, Paul Tudor Jones arrived at pretty much the exact same conclusion.

Inflation, by nature, polarizes wealth. (This is precisely why the fascination with deflationary currencies like Bitcoin came into vogue post-08 — deflation preserves people’s assets.) Here’s a handy way of thinking about inflation.

Let’s say we are to play a game where the loser dies. Would you rather play chess with me, a National Master, for your life, or flip a coin?

The inflation target pretty much does this for businesses. If inflation is too high, only the best-positioned, highest skilled operators can thrive, and the highest-skilled (or luckiest) allocators get rewarded. If inflation is too low, the velocity of money trickles, as why would I flip a coin with you when I could wait for a better game to improve my odds of surviving? Thus, the 2% target is like the variance in a game of Texas Hold’em — just enough to let the skilled players win over time, but not so harsh such that a normal person can’t win sometimes as well.

No matter what, I think the middle class is done for until the paradigm shifts — either (somehow) AGI is achieved within 10 years, there’s a great leap forward in resource collection possibilities (space, energy, rare metals, etc.), or what’s left is a dollar environment that compensates the people without net worths by inflating the denomination of their debt away as infrastructure and purchasing power continues to worsen.

But, here’s the good news — for the first time since 2020, I get the feeling that people are willing to try again. The entirety of 2020 felt like one collective psychotic break that I wasn’t a part of, and the chaos that ensued in 21-22 meant that a lot of people just kept their heads down, and some still are. But for my sect of peers — talented people who didn’t quite get a shot to build anything in the free money era, then immediately got plunged into the pandemic — there’s a palpable urgency that the next few years might be the last shot any of us has to innovate in prime working years, because the environment has been so oppressive to novel thought post-2016.

No matter what, this is not going to end cleanly. The thing about mobs is, you can’t control the mob.

Next post will be on the state of the AI race, and I have a lot more in the pipeline — I just had to break the seal of writer’s block before I started posting again.

Junior year was an odd time in my life. I had just come off a stint in a Bay Area “algo trading” shop which amounted to the pocket change of VC’s being punted around on index futures based off of astrological signs (which didn’t work then, and used to be a running joke of mine for years, but nowadays, I bet I could make it profitable given what I see on TikTok.) I vaguely understood the idea of “superdays” and “summer internships” being an extended job interview, but the on-campus recruiting events where twerps in ill-fitting black suits hovered around IB associates like ants swarming a dropped ice cream cone repulsed me and I was sure there had to be a better way. In addition, I wasn’t really sure that I needed an internship — granted, I was punting around stocks and options like any other retail trader that came across WallStreetBets post-2020,

I started trading in 2014 after my inevitable scrolling through /biz/ and r/wallstreetbets piqued my curiosity just enough to try it out with my own money.

The first stock I ever bought was JBLU. I would check the price every single day, and I wondered why the share price would move in real time when everyone would trade around the news.

I learned just like everyone else did who got into trading during the 2021 retail mania market — I read WSB nonstop, hung out in the chatrooms, tried out the ideas I liked myself, and shared my own…

Back then, they weren’t called “memecoins”, they were called small cap biotechs. Stuff that would wildly swing around on the sentiment of retail punters on message boards, because that was the only place volatility existed in the market. I remember making (to me, back then) a fortune off of names like RLYP and AVXL, and dodging obvious garbage like BGMD. When I check in with my old WSB friends, some of them are still holding this crap, somehow.

but it was kinda working. Some napkin math convinced me that I’d be able to pay my rent, have some summer fun, and convince my freshman year crush to transfer back.

At a cursory glance, not all that much has changed in how I conduct my life other than the numbers got bigger, I’m on the move a lot more, and I actually know what I’m doing now.

By now I have it down to a science, but when you are 20 years old and have zero meaningful experience, you have to operate off reasonable assumptions as much as possible. I’d have charts running 17 hours a day as I picked the brains of people who swore by technical analysis, posters who claimed to do exhaustive due diligence on companies that I’d never heard of, and bored financiers in bars. The beauty of finance is that it truly rewards generalists — it rewards expanding your knowledge base “out” more than any other field, which does have the downside of creating the paradox where it’s the most interesting thing to think about, as there’s endless rabbit holes, but actually working in the field isn’t interesting at all, as the roles are so specialized.

The other downside is that you don’t actually build any useful skills. Trading profitably is this form of postmodern agnosticism where a nihilistic approach is the only way to properly manage risk which comes at the cost of having a grasp on what the value of “a dollar earned” actually is. True insight into what “money” is comes with an understanding of everything that you set your mind to learn and the lack of an ability to do anything tangible with the knowledge other than explain ad nauseam.

I start off on this note because I wish I knew what I was getting into back then:

[In true WSB fashion], I learned to trade options by gambling on phase 3 PDUFA trials. None of this was sophisticated, and in such a low volatility, low volume market, these strategies don’t work. Here are some selected amusing emails I sent to my brokerage account manager at the time (February 7, 2016), to get approved for more than covered calls and cash-secured puts

which would lead to my first big cashout on RLYP a couple months later (July 21, 2016):

Shares of Relypsa (RLYP) are spiking by 58.79% to $31.92 in early morning trading on Thursday, after Galenica agreed to buy the Redwood City, CA-based biotech for $1.53 billion.

My first hit was a lot more than free, it paid big. Undeterred, I looked for more big winners. I gravitated to biotech for two reasons: first, that it was the only volatility in those markets, and second, as I had worked in a lab for a couple of summers of high school, surely I understood the entire drug pharmaceutical pipeline. Ah, the naïveté (and arrogance) of youth…

Revisiting my old statement from 2017, it was definitely pure luck that I made money. In many senses, I was the ultimate WSB creation — I made nearly 180 transactions to net just 20 grand in short term gains.

(Looking back, the fact that I didn’t lose money was pretty impressive, let alone the long term gains I had. On a % basis, I had a pretty damn good year.)

I hit every single retail ticker on the planet, and hit every weekly option to boot. When I scroll through this statement, I traded across AMD, AOBC, ARRY, XIV, JNUG, GSAT, LULU, NVDA, TSLA, index options, and more. The first idea that truly made sense, however, was when I came across a post on January 17, 2017.

I had been casually reading about the Fannie conservatorship for a while — hedge funder gossip was very much what I was keeping up with, rather than the rest of my college’s Gossip Girl ennui — but seeing a subreddit of what was then ~100k users staking 2 million on a trade convinced me to take a swing myself.

And while I cashed out after making a quick 10% in a week, like any rational person would do, I still kept tabs on the story for years on end because I had never heard of “shareholder activism” prior:

(from Malt Liquidity 24, January 2021) A story I have followed with casual interest over the years is the fight to remove FNMA from government conservatorship, which was announced back in 2008. After the immediacy of the mortgage crisis was resolved, however, FNMA was never returned to private hands, and to this day remains a government-controlled entity. Since around 2010, shareholders realized that they were not getting any of the profits from the core business as the government was withholding the profits and neglected to inform the shareholders. This became an issue due to the fact that since FNMA had the government propping them up, they were the only mortgage lender actually providing mortgages in any real volume coming out of the recession, and they started making pretty large profits:

With interest rates low and banks not lending, Fannie and Freddie became the only mortgage game in town. By Sept. 30 of [2013], the companies had returned $185 billion to the Treasury.

But FNMA, like many stocks, has both regular shares and preferred shares which pay dividends. And a few hedge funds realized that if they bought the preferred shares, which theoretically entitled them to a portion of FNMA earnings but traded at a massive discount to the value they would be worth but for the withholding of earnings, and sued successfully, they might be able to alter the flow of FNMA profits from the Treasury to shareholders…

Two insights came to me immediately that, I think, still have deep implications today.

First, I couldn’t exactly understand what the common stock represented if not a right to some sort of future earnings. I had heard of the Merton Model at that point, but when there is a legal barricade, it’s far less quantifiable than approximating the recoverable value of an enterprise. Clearly, there were major flaws in the “fundamental assumption” given its intraday movements.

This implied a second realization: that markets depended on a certain type of information asymmetry related to a deterministic outcome. Similar to phase 3 trials, an explicit legal decision operated as an opening of the Schrödinger’s box to determine whether a trade idea was actually alive or dead. Indeed, the roots of postmodern market theory and my theory of insider trading derive from this brief moment.

I’m not exactly sure how I managed to sell the exact local top in this scenario, but the shares wouldn’t really take off until the end of Trump’s first term, and the dream died when other matters took priority in 2021, and Collins v. Yellen sealed the door shut during the Biden admin.

In any case, I proceeded to “solve” life from that point onwards by shelving theoretical concerns for the practical choice of having fun, which paid off in spades thanks to having the ability to shirk class with the equivalent of a solid analyst’s salary in disposable income to bounce around pre-inflation Manhattan with. (Then, consider the fact that Softbank was subsidizing every app on the planet, such that an Uber anywhere in lower Manhattan ran you less than a subway fare.) Through those extracurricular activities, I stumbled into a fortuitious friendship that landed me in a summer analyst role purely through coincidence, which I found out was a role that paid me about 85k pro rata to do absolutely nothing for 50 hours a week. Fortune favors those who don’t follow the crowd.

Here’s some financial advice if you find yourself in your 20s and overpaid: spend your money. The first thing I did with my signing bonus was buy a fresh pair of Allen Edmonds (which I still have to this day), and then I drank the rest of it by taking visiting friends to Grand Central Oyster Bar for dirty martinis during lunch hour, figuring that the pointless corporate training sessions would go down easier if I lived out my Mad Men dreams. After all, summer in New York is intern season, where starry-eyed 21 year olds run around while the parents aren’t in town. “Your firm didn’t bring you out to Manhattan to stay at home and eat frozen Trader Joe’s” was an award-winning line that I used regularly to find company to join me at the St. Mark’s Ippudo. Getting in trouble and playing the character while I had nothing to lose is a mindset that has made me very, very content to just stay at the nice hotel and not seek unnecessary stimulation at this point.

In my brief time in the corporate world, I found out that institutional trading was, well, dead,

If you look at my nonexistent resume, it doesn’t seem real that I have as much institutional knowledge as I purport to have. But something that is necessary to understand is that “institutional trading” didn’t really exist for anyone trying to get into finance post-2010. Dodd Frank neutered everything that made the insane game of high stakes poker fun prior. Accordingly, I would walk into my MM final round interviews and boldly proclaim that their business would go under if they didn’t start taking delta risk. It seemed obvious — if everyone is competing for flow, and there’s no flow, how do you possibly make money? A VIX of 13 and a market driven by passive inflows means there’s no spreads to capture, and the pithy state of trading from 2010-2018 reflected this. Market-making profit is a fixed pool, and when times are good, firms open up. When times are bad, they compress — it’s fundamentally a sell-side service, and that’s probably how Citadel and Virtu came to rule flow. They were just better capitalized than everyone else to wait it out.

and I also realized that I just wasn’t cut out the sheer waste of time that white collar work is within a couple of weeks. (Indeed, I think I’m the only intern who has ever asked my desk neighbor whether anyone would mind if I quit.) What seemed totally insane to everyone back then (and probably still does to a lot of people reading this) was sort of a superpower of mine — I’ve just sort of understood when it’s time to walk away at the appropriate time my entire life

Being able to assess your skill accurately by ~18 is a superpower, a necessity to not waste your 20s by ~23, and a tragedy as to what the current school/corporate environment is doing to kids nowadays. We’re pushing this realization to people’s ~30s, and as a result, people who should have probably just settled and found a way to be happy feel robbed by the “economy” because they realize the upside of a steady paycheck isn’t just a guaranteed BMW and a million dollar house far too late.

My 2017 success led me to the delusion that I just might be able to make it trading on my own. Swimming in the online soup that led to weird information asymmetries convinced me that everyone I talked to that raved about “quantitative analysis” was just parroting something someone else had said. The Fannie trade convinced me that, if I looked wide enough, I could find all sorts of ideas in places people wouldn’t be able to keep up with through news articles and Excel.

Part of the fun of being self-taught is that you get to choose your own adventure. The player characters I chose to model my game after were Peter Lynch (who wrote one of my favorite books ever, One Up on Wall Street, which I summarize in this thread), Steve Cohen (who invented the information game that I play today, except my “insiders” are just people posting on X),

and the aforementioned Bill Ackman.

Reading the gossip about Ackman made me realize a lot of similarities in how I approached the world writ large.

In 1984, when he was a junior at Horace Greeley High School, in affluent Chappaqua, New York, he wagered his father $2,000 that he would score a perfect 800 on the verbal section of the S.A.T. The gamble was everything Ackman had saved up from his Bar Mitzvah gift money and his allowance for doing household chores. “I was a little bit of a cocky kid,” he admits, with uncharacteristic understatement…

[H]e was the kind of hyper-ambitious kid other kids loved to hate (whoof, do not interview my fellow interns ~ed.) and just the type to make a big wager with no margin for error. But on the night before the S.A.T., his father took pity on him and canceled the bet. “I would’ve lost it,” Ackman concedes. He got a 780 on the verbal and a 750 on the math. “One wrong on the verbal, three wrong on the math,” he muses. “I’m still convinced some of the questions were wrong.”…

Extreme conviction to the point where it’s the world that’s wrong, not you, sounds like a textbook case of delusional narcissism. (And I’m not saying that it isn’t.) But when you are playing cerebral games with intense pressure, that kind of delusion is almost the only way you can reliably perform at the highest level. I share his habit of being overly verbose to explain my own thoughts, but you’re not going to be able to talk me out of my convictions. (Thankfully, I haven’t hit such a rate of success that I’m totally immune to admitting I’m wrong before smashing into a divider.)

Another similarity is that, if something makes intuitive sense, I’ll make a snap judgment, which can blow up spectacularly, but also is a sign that you’re capable of a leap of faith:

Let’s talk about lunch for a moment, because there’s a pretty good story about none other than Bill Ackman making, let’s say, a rather large investment on a whim back in 2016:

Mr. Ackman’s Pershing Square Capital Management acquired the option to purchase 2.9 million shares, which represents a 9.9 percent stake in Chipotle, according to a regulatory filing on Tuesday…

Shares of Chipotle have plummeted more than 40 percent over the last year after hundreds of people got sick after eating in its restaurants. A majority of the illnesses stemmed from norovirus contamination and strains of E. coli and salmonella.

The scandal has caused sales to slump, as customers stayed away from Chipotle restaurants out of fear of getting sick. Revenue during the quarter through June declined 17 percent, while comparable restaurant sales decreased 24 percent, the company said in its earnings report on July 21.

Ackman has made some pretty interesting decisions involving Chipotle, some of which definitely got him into trouble. Here’s an old anecdote about another snap judgment:

Years before Valeant became Ackman’s white whale, he was hanging out with the company’s then-CEO Michael Pearson at the drugmaker’s HQ, contemplating lunch. The chicken and salad in the cafeteria didn’t impress the hedge funder. “But they had a Chipotle around the corner,” Ackman recalled in 2014. “I actually asked if I could get a Chipotle burrito.”

Pearson’s gofer dutifully obliged. But when they sat to eat, Ackman got a surprise. “Mike walked into the conference room and asked me for 20 bucks,” he said. It was at that moment, a wad of half-chewed burrito hanging out of his mouth, that Ackman’s faith in Pearson was solidified. (The fact that the CEO was such a tightwad evidently convinced Ackman him that Valeant was “allocating its capital intelligently.”)

Ackman shoved a ton of his gains on the Allergan hostile takeover in support of Pearson (more on Valeant another day, as it’s one of my own “gut feeling” big shorts I’ve ever taken in my life), and we all know how that ended:

Perhaps in search of redemption — after all, Pearson was the problem, not his burrito — Ackman took a leap of faith. “I like the burritos” was a precursor to “I like the stock”:

Bill Ackman is hungry for Chipotle and everyone is piling on. “We are unclear if Pershing Square can add value,” analysts at Baird wrote, a day after Ackman’s Pershing Square bought up a 9.9 percent stake in the burrito chain, which is ailing from multiple disease outbreaks in last year.

Stifel was less forgiving: “We cannot fathom Pershing's operational or mathematical investment thesis.”

But there’s a simpler take here: Bill Ackman just likes Chipotle burritos. He doesn’t have some baroque hypothesis for how to wring value out of the company, as with his disastrous investments in Valeant and Herbalife. This one seems different. And that's not a bad thing.

Lo and behold:

Similarly…

Betting big, in a sense, is the only thing I’ve ever known how to do. I was sure the girl at the end of the hall freshman year was “the one”, I was convinced that I could generate more value betting on myself than the long-term value of a degree and a resumé, and I was convinced that there was no reason to keep Fannie and Freddie under conservatorship. There’s simply no reason why so many smart people like myself are sitting around doing all sorts of random things to generate income as opposed to being plunged into processes and trying to make them better. In a sense, my time is gone — you can’t just fix broken systems by promoting 20s types with parallel competencies like hypergambling, mass information processing, SaaS building, and so forth, which is why DOGE was an accidental success rather than a program with any real chance of reforming the government.

So when I see “motivational” commentary like this, I think it largely misses the actual way “betting big” works.

If you're actually going for it, you don't get time to reflect on any meaningful scale. That leap of faith in 2017 has only really come to fruition in the past year. You don't become bitter with age, you just age and choose whether or not to wallow in regrets or to keep looking forward. The proper way to swing big is to be brutally honest about your own capabilities, work for free (usually alongside an income stream, I wouldn’t recommend doing what I did) until you cannot do both concurrently and must pick a pathway. That is when you "just do things": after you've meticulously planned out the variable pathways.

Perfect recall is mostly a curse. I remember every missed trade, every panicked reaction, every cringeworthy text, every embarrassing moment of my life. Living with regrets is a choice, and I choose to avoid doing so by being sociopathic about compartmentalizing them. I’m pretty sure that acknowledging the collective cognitive dissonance would literally kill me at this point.

But you never know when a piece of information will be monetizable, and unlike an LLM black box, I know exactly what’s relevant at the appropriate time. The day after the election, I immediately went back to Fannie and picked up some preferreds.

I was never any good at getting over exes anyway (and it’s why I don’t watch Eternal Sunshine of the Spotless Mind), and apparently Bill didn’t forget either.

I woke up the other day to a ton of alerts, however,

and found out that, after nearly 9 years of watching this trade, that the earnings belong to Fannie (and Freddie) are going to be unlocked immediately. There is something surreal about knowing that the idea that sent me down the ungodly rabbithole of reading appointments-related admin law and essentially picking up a securities law specialization in the process is actually going to play out — that the trade that perhaps started this whole arc all was the right play all along and it could be arrived at through your own cognitive considerations.

(For some scenarios on how this could play out, you can read Ackman’s analysis directly or Levine’s Money Stuff. I truly don’t know where this goes, it’s unprecedented territory.)

I often talk about how “I told you so” never feels as good as you think it will, but this case is a rare exception.

It’s less about the logic or the profit itself, and more the fact that this is the longest I’ve ever waited to be validated on an idea. I’m reminded of an excerpt from a piece of fiction I wrote for my freshman year seminar:

…I still maintain that, yes, you made the wrong call, but wrong isn’t absolute. It’s a fair point in that it’s not a lack of intelligence that keeps me behind; it’s my tendency to compare myself to everyone but myself. Does the heroin addict ever see himself as such, or is he just concerned with getting to the next needle? Likewise, could I have ever seen myself as a failure when what I am really is just me? I don’t know where I can go with this, but this failure is hopefully the beginning of an acceptance that disagreement is not an insult to my intelligence but rather an outsider’s way of building me up, that could only be thought of as the first step to happiness.

Trading forces you to reflect on the question “would you rather be profitable or right?” almost daily. In the end, you can’t forcefully impose all of your correct ideas on the world, because a block button exists. There’s no rigorously logical methodology to the court system, and she can just block your texts after a certain point so you can’t continue to make your case. Similarly, life offers the question “would you rather wait or be happy?” The trick is to realize that, well, you can just unblock yourself.

Epilogue

I did, in fact, recently see the girl that was down the hall and to the left 11 years ago. Perhaps my judgment at 17 was far, far better than I thought. Anyway, that’s a story for another time.

What are these new strategies?

Of course, it means to take over a publicly traded shell sell bonds/issue stock, flip a (real) coin and buy either BTC or ETH, and become a “treasury company”. (Note that this is nothing new — 2010s biotech was the precursor to 2021 SPACs which are the precursor to the newest exit scheme.)

What are we even doing here? In my extensive ramblings on the concept of money, how it relates to productivity and the real world, and more, there’s this underlying belief that the purpose of it is supposed to be a means to an end, to facilitate productivity.

But when dollars are untethered from productivity, we get a different form of thinking, where Paris Hilton is more of a pioneer than Benjamin Graham. No longer is future cash flows the driver of valuation, but rather how much attention paid converts to bid

And, as a result of everyone with a pulse and a brokerage account being tied to this ecosystem, and everyone else’s jobs hanging in the balance of this bid, this entire blog exists as a kind of dissertation working out what “liquidity as fundamental value” means…

This blog talks a lot about liquidity-as-fundamental-value, but let me be clear: that’s fucking stupid at its core! …the whole reason it took hundreds of blog posts to work it out coherently is that so much of it is facially nonsensical but for the fact that retail trading is what drives markets nowadays. I still prefer paying with an American Express card rather than a browser wallet. And, collectively, you are kind of seeing the market realize this year — at the end of the institutional adoption road — that all of the hype hasn’t amounted to any actual use cases beyond the originals

I have never seen trading reflect societal nihilism so cleanly. Outside of AI stocks, crypto, gold, and your random meme stock pump, the broader market sees maybe ~15% of the activity. Everything is concentrated to the point of absurdity to the point where “bubble” is officially my least favorite word. It’s not even hard to notice the innumerable ones forming aat this point, and when I sit down at my regular bar stool, order a Miller High Life and stare forlornly into the distance like “Oppenheimer” himself, only stopping to take a glance at the carbonation percolating,

I think to myself “well, at least I can do something about those bubbles.

Look, this only ends one way. You already have outright communists being favored for mayoral positions in American cities. It’s obvious that every high-earner has fled, so you have game-theory-optimal voting for more welfare benefits, hoodwinked people that there is a “rich” to tax while staring in the face of their crippling student loan debt, and Gossip Girl types larping as Che Guevara revolutionaries prancing around as the last people in Manhattan.

In the meantime, until everyone comes to Jesus at the exact same time, the markets simply trend towards such a high level of concentration that I don’t think you could legally package it and sell it as juice:

And what this means is that the market will trend towards

-Publicly traded CCP (as they’re the only ones who can afford to build foundational models, but more on that another time)

-publicly traded Private Equity portfolios propped up by 401ks mark to market

-crypto treasury companies

while my small cap value stocks still won’t bid even though there’s nothing else “fundamental” to invest in, until the music stops.

What is even the purpose of having publicly traded equity at this point?

Look, I am a believer in the AI “warp” — I’ve personally seen what this can do, work with it constantly, and am in the process of uploading myself to the cloud. The core problem is, what does this mean for everyone else? 99.9% of people won’t find any sort of real use case out of this, and if finance doesn’t become invalidated, this surely means that wealth is going to hyperpolarize even beyond what it already has. The meta that is almost certainly going to die is the 1-1.5 sigma section of society because they are the most likely to be current-day high value credentialed specialists, and the value of that skillset simply has shifted.

If the gains from this technology are not properly distributed — and I don’t see how they can be — then it ends the same way it always does. There’s a lot more “have nots” than “haves”, and if you can’t defend yourself by hiring people, who’s stopping them from taking your stuff?

Unfortunately, there is no more asset flight, no second passport. Mark Zuckerberg and Larry Ellison own all of the bunkers in Hawaii, and Thiel owns New Zealand. We’re not just trapped in the dollar — we’re trapped in this hellscape of big tech realizing that they were handed the keys to the kingdom through zero rates and used it to sell ads and Save our Democracy.

Do I believe that the CEOs spouting off absolutely incomprehensible drivel to avoid actually explaining what the ROI on this level of CapEx is actually know something? Or do I think that the people who have driven NVDA’s stock to price in 40 years straight of selling chips hot off the presses are desperate?

Dude it’s Jevons paradox. It’s literally Baumol’s cost disease. A classic example of Gell-man amnesia effect. Oh that’s the Monty Hall Problem. It’s orthogonal to Dutch Disease. It’s the Prisoner’s Dilemma. You’re a prisoner. You’re in prison. You’re imprisoned.

If there’s one thing I understand better than anyone, it’s the implicit leverage and risk tied up in this entire “stick your hand in someone else’s pocket” ring-around-the-rosie economy.

So when the AI engineer posts look like Woj Bombs, is it really the case that there’s inside information? I don’t think I’m being paranoid in thinking that there’s virtually no more money to spend without extreme results. We’re reaching an inflection point, and I think it comes at the latest by end-of-2026 (though I suspect it’ll be far sooner.)

On some level, it makes sense why athletes are paid gobsmacking amounts of money. (Well, every way I calculate it, most supermaxes make no sense to me at this point, but I digress.) But when you see 9 figure sums being thrown around at engineers for no discernible benefit… I mean, does this make you feel good? What motivation is there to go schlep through emails, meetings, and daily annoyances when the people making the most promise to automate everything away with a “superintelligence” while actively making every part of the internet ecosystem worse?

After ruining tee shot after tee shot due to intrusive thoughts, I figured the only thing to do is just heads-down and complete the vision I have in my head. In the meantime, I can’t just sit around and wait for this nonsense to pass. If money doesn’t reflect productivity, then I might as well consume it. Accordingly, I don’t think the tech mirage lasts through Q4 earnings, but I have a pretty good feeling about my “existential dread” thesis through the rest of the year.

As for what I’m desperate about, I don’t really care to see any massive leap in the next year — I just want the maladaptively social types to not control the weights of the future.

Indeed, I think we can make it better.

Obviously, this is not a stagnant balance — as much as I love talking to devout, content people, dare I say, the lifestyle is kind of boring when you’re entirely focused on what comes after rather than what comes next. On the other hand, when you attempt to impose your will on the world without considering the tradeoffs, well, this is how you end up on the hedonic treadmill.

There’s an old saying — “there are no atheists in foxholes” — that got translated into a modern day trading joke,

and it’s one of the truest statements I’ve ever read. Notably, praying for a trade to go my way has never worked out, but consider this story from my early 20s:

Idiotically, I decided that I could spend the entire flight trading on the way to Singapore off the plane wifi. Needless to say, the connection over the deep Pacific is not particularly stable, and I found myself using an IRC ticker bot to get prices to place orders through my ThinkorSwim phone app, because the quotes wouldn’t load on the app itself. Somehow, I made it through the flight in the green…

The degeneracy didn’t stop there. During that entire stint in Singapore, I was trading round-the-clock futures at an 80 VIX prior to margin changes. Yes, I was running around trading 100 /ES contracts with a bank account modestly in the six figures. You can imagine what came next:

Trading undoubtedly induces adrenaline when you have a position in it. Stocks don’t have enough leverage to induce the thrill that a volatile options trade might. But the downside to an adrenaline-inducing activity is it can get addictive fast, especially when you have products like crypto or futures that trade around-the-clock. You find yourself chasing that hit of an 80 VIX like a Red Bull sponsored skier chases that god run from the pristine mountain peak.

To say I was taking “risk of ruin” would be such an understatement that even the English of yore would object to the categorization. Needless to say, after a week of reaching Valhalla and nearly blowing up every 40 minutes, I permanently fried my adrenaline response, which, in a sense, might have been the best thing that ever happened to me trading-wise, and markedly shifted my views going forward.

As many talented STEM kids do, I very much grew up an atheist, particularly amplified due to being immersed in the British tradition. You don’t exactly grow up reading Hitchens, Orwell, and Kipling without developing a skeptical viewpoint, and given that my technical backdrop came in the wake of the great achievements of the 1900s, it’s easy to think that science, math, logic, and reason can solve the world when you’re in the spongebrain phase of life. Especially when most of the context of religion came from identification for political purposes, the stuffed-shirt conservatism of the 2000s did not seem like a model worth perusing. In any case, it’s good to set the slider to “100% focused on now” while you’re still exploring and developing skills — I look back at how much I achieved by the age of 17 and I’m still shocked at exactly how much I managed to do.

With that kind of intellectual background, and many years spent chatting and debating on forums I was definitely too young to openly be a part of, “conservative” thought came quite naturally as I went to college. Other than the brainwashed, nonsensical political labels, here’s how I define the terms “conservative” and “liberal”:

The quintessential difference between a conservative and a liberal in my framing is how they ask the question “why”. The conservative frames their thought around limiting hedonistic behavior, in a “look before you leap” sort of pattern: “This makes me feel good, why is this the case? Should I continue this course of action?”, while the liberal frames their thought around negative stimuli: “This makes me feel bad, why is that so? What should I do to fix this?”

Both approaches can be applied in an intellectual fashion, but conservative thought naturally lends itself to abstract, scaled structural thought — the concept of “rule of law” with a discretionary bypass is such a brilliant idea being ruined by people incapable of understanding the ontological responsibility of being a human applying it — while liberal thought is much more reactionary (and therefore dynamic), but consistently fails to account for second-order consequences as it’s based around an individual manner of thinking, and almost all humans are incapable of scaling and extrapolating derivative effects in a coherent manner.

You can truly tell that I was authentically 13 going on 30 by my, er, distaste for my college peers. When I went to college, I assumed people would be smarter than my (admittedly ultra-high achieving) high school classmates, and was bitterly disappointed outside of the math department.

People are only seeing it now when an NYU or Stanford Law kid sends out a dumb unprofessional campus wide email (and this is perfectly fine), but it’s tacitly supported by the past decade of graduates who all have the elite appeals roles…

Every conversation without a known party was a litmus test. Even then, you could get in trouble if the wrong group judged you. It wasn’t debate, it was apparatchiks enforcing an ideology. This is a very common experience amongst all my similar-aged successful friends…

You used to just be able to shut your mouth and go on, and a lot of people did. But it’s become harder and harder with how kids only interact online nowadays. Nobody noticed until it affects them (Elon, Bill [Ackman]).

Early freshman year I got shouted at to check my privilege in a casual convo about majors and courses where someone was upset I had no trouble registering bc my major wasn’t as high in demand. It was a factual observation — what organic thought/debate was there? It’s programming.

This requires a bit of internet history to understand, bc a lot of freshmen women around my time came in with preconceived Tumblr-left notions. Way more women go to college than men, and this has only accelerated. Tumblr culture was pretty vindictive — pseudonymous, not anonymous — if you got called out by a certain following. On forums/irc, you just logged off or went elsewhere. Tumblr people didn’t do that, it was all name and shame. YA fiction culture (all adults) is an offshoot of that. Kids who go to private/elite public schools are overwhelmingly from UMC backgrounds or better. They all grew up with laptops and Tumblr the way I grew up reading /lit/. There was a much higher % of kids with very strong opinions who recreated their internet environment. You see it with the terminally online industries like AI and crypto as well (~ed. and it’s evidently clear how incompetent they are at traditional, “irl” socializing.)

Then social media warped heavily into a pure psyop around the time the_donald became huge. Every single forum was astroturfed. Organic content basically got privatized overnight. Most people aren’t as quality-sensitive or careful about thresholding info as I am and got programmed. This should be obvious to people who kept their sanity during 2020 while everyone lost their minds around them. Normal people are extremely susceptible to online influences. Unless you spent time on the early internet you don’t even notice it.

Observing all this well in advance of current-day mania formed a couple of core beliefs of mine. First, I concluded that the form of “socialism” espoused by the likes of Orwell and Einstein amounted more to a belief that, as intelligence in society progressed over time, an egalitarian society would resemble a socialist one.

Indeed, when the rule of law was insulated from the masses, the concept of governance from the implications of it worked beautifully. The modern-day adversarial system, a chore to navigate, is the polar opposite of the symbiotic system that arises when deterrence is properly understood. Consequently, I enshrined a core principle in my thought:

If my solution to a problem amounts to “people have to be better”, it’s no solution at all.

This lends itself to some pretty interesting corollaries/derivatives, namely that in many more situations than you’d think, it’s appropriate to do nothing (which is precisely why liberals in particular are never capable of understanding that you can’t legislate in social change), but more importantly, this idea that humans are inherently unfixable and flawed frames agnosticism in a particularly interesting light.

The “godless” interpretation of this statement lends itself to jaded cynicism if you are unable to stop caring about the world, or a survivalist nihilistic outlook

While the term is commonly assigned a relentlessly negative polarity, I’d call the most prevalent strain as presented in Russian literature as, “such is life”. By assuming no greater meaning, one is imbued with a shocking ability to make real-time decisions…

that comes when you’re able to handle the existential dread of “dooming” and keep your head up to profit-max.

If you are a doomer, and I frequently claim I am, the proper trading strategy is to be aggressively bullish. Betting on the downside is dependent on luck, and is fundamentally antisocial. This is (partly) why I hate Michael Lewis and the big short, and what tech people don’t understand — getting rich quick is also antisocial. Wealth must be earned, and cashing out when the facade gets eviscerated (and, let’s be clear, most wealth is a facade) leaves a bad taste in everyone’s mouth. Everyone with a brain saw it coming, but they tried to stem the panic, because shorting is a self fulfilling prophecy. Markets don’t crash due to sellers overwhelming buyers, but complete lack of bid — aka no liquidity in the underlying. That’s what “don’t dance” means, that Brad Pitt was saying. Making money betting on big crashes is like making money on a crypto rug. You’ve won, but at what cost? You’ve ostracized yourself from the rest of the decent world…

Note that, of course, a jaded cynic would not care about ostracization, which is precisely why they’re able to even attempt “the big short.”

The stresses of pandemic volatility and staying rational during the mass psychosis events of 2020-1 pushed me to reconsider, once again, how I framed my thought. And, much like Turgenev’s Bazarov, romance played a large role in reshaping my perspective.

Nowadays, I’m fond of saying that I don’t believe in coincidences:

A question I frequently ask people is whether they believe in coincidences, because I don’t. Definitionally, this prevents me from being a nihilist, and I think that’s where a lot of my prognostication ability comes from — of course, I believe most people are stupid, incompetent, irrational, whatever, but I don’t think they act meaninglessly…

This is partly due to the fact that my brain is one of the most powerful pattern-recognition machines in the world, and I trust my intuition 100% when it tells me to believe in variance rather than rationality, data, and logic. The emotional framing, however, comes about when you start to think about what a relationship with a significant other is — the “future” stops being this ethereal concept that justifies an immediate, “take it as it comes” approach and morphs into a sort-of indefinite highway with sights, scenes, detours, and a potential destination to take into account. (Of course, sometimes there are roadblocks and you’re forced to take an exit, but that’s a story for my memoir.)

Once the slider starts to drift away from wholly focusing on the present, the idea of guidance from a higher power seems more palatable due to the sheer mental effort it takes to meticulously calculate out the future (a task that’s much more complex than calculating 10-deep chess variations, which most people can’t even attempt.) And once you start shifting away from godless thought, my “core” statement starts to sound awfully Calvinist when you think about it: we do not know whose lives we can improve, but we must make a concerted effort to do so, until we know it is futile, to live virtuously ourselves. The path forward, then, seems disconcertingly simple: reduce variance, settle down, and improve the lives of the people around you in direct, noticeable ways, rather than caring about vague conflicts and “wrongs” that cannot be righted in a directly resolvable manner. The slider moves firmly towards the “afterlife”: progeny becomes the priority and you set your minivan to “cruise control” on the highway and live “happily ever after”.

And, in a sense, this is what I spent the past couple months thinking about — whether I’m truly capable of being content with my achievements as an individual and shelving the desire to leave a legacy in my own name. So color me surprised when I saw World Golf No. 1 Scottie Scheffler basically echoing my own internal monologue:

 I think it's kind of funny. I think I said something after the Byron this year about it feels like you work your whole life to celebrate winning a tournament for a few minutes. It only lasts a few minutes, that kind of euphoric feeling… And you win it, you celebrate. You get to hug your family, my sisters there. It's such an amazing moment. And then it's like, OK, now what are we going to eat for dinner?

You know, life goes on. It's great to be able to win tournaments and to accomplish the things I have in the game of golf ... it brings tears to my eyes just to think about, because I’ve literally worked my entire life. To become good at the sport and to have that kind of sense of accomplishment is a pretty cool feeling. You know, to get to live out your dreams is very special."

But at the end of the day, it's like, I'm not out here to inspire the next generation of golfers. I'm not here to inspire somebody else to be the best player in the world, because what's the point?

This is not a fulfilling life… It's fulfilling from a sense of accomplishment, but it's not fulfilling from a sense of the deepest places of your heart. There's a lot of people that make it to what they thought was going to fulfill them in life. And then you get there, then all of a sudden you get to No. 1 in the world, and they're, like, what's the point? I really do believe that because, you know, what is the point? You are like, what? Why do I want to win this tournament so bad? That's something that I wrestle with on a daily basis. It's like showing up at the Masters every year. It's, like, why do I want to win this golf tournament so badly? Why do I want to win the Open Championship so badly?

I don't know, because if I win, it's going to be awesome for two minutes. Playing professional sports is a really weird thing to do, it really is… When I sit back at the end of the year and try to reflect on things, like having that sense of accomplishment from winning the Masters Tournament, from winning the PGA Championship, I have a deep sense of gratitude and appreciation for it, but it's just hard to explain how … it just doesn't satisfy, is how I would describe it. It's an unsatisfying venture.

I guess what I'm trying to say is this is not the place to look for your satisfaction. This is something where you can have a great appreciation for and a great amount of thankfulness for being able to do this. Like I said, it's literally one of the most fun things I can do in my entire life. I love being able to come out here and compete. But at the end of the day, it's not what satisfies me, if that makes sense.

It is so, so funny to me that Scheffler — barely older than me — also framed this kind of existential questioning through the game of golf, though he hits his 7-iron a little better…

Golf, fundamentally, is an elaborate way to kick rocks. (Indeed, I’m sure the origin story is something along the lines of Grug being bored in Scotland in the 1400s and hitting a rock with a stick.) This is further evidenced by the fact that a great golf course design loops — the 18th green ends up right by the clubhouse and the first tee, right back where you started. You take your hat off, laugh a bit at a rehearsed joke, shake some hands, and then go on your way.

When you don’t know you’re in the loop, you can enter “the zone”. I’m sure the reason why I initially got so great at chess, then at trading, is because I could ritually perform the same activity in an endlessly variable (yet contained) manner and apply incoming information to modify the efficacy that I threaded the loop with.

What spoils the loop is perspective. When you know that you’re playing a board game with no meaningful reward, it’s impossible to properly apply pressure to motivate yourself to find the best move in a position. When you know that you’ve reached the limit of noticing the number going up in your bank account — the studies stating that “increased salary does not bring happiness” are absolutely true, just look at where people predictably hop off the salary/self-improvement treadmill — mispricings stop looking like opportunies and instead look like crippling social idiocy that you can’t just go and fix yourself…

It’s an extremely difficult question to answer — where does the motivation come from after you’ve built up some perspective?

This is where the delusion factor comes in — when you “have it all figured out”, the only way to change reality is to delude yourself into thinking you can do so. There’s a myth in the hustle-startup-grindset culture that entrepreneurs are born — much like great leaders, a lot of the best ones are reluctant to enter the fold:

“Just when I thought I was out, they pulled me back in” isn’t as pretty of a story, but it takes a severe amount of delusion to pull the slider back from the steady, predictable highway route and veer off to the right at the potential cost of your health, your financial stability, your relationships, and more to chase the possibility of turning a vision into reality.

It’s why the venture capital class (at least the skilled ones) can tell when someone has that level of delusion, and why it can also misfire at epic proportions (from Macbooks vs Wristwatches):

The MacBook class fails to understand that what the wristwatch class values is the people who can delude themselves into thinking they can change reality and are willing to spend all their time and effort working towards it. It’s so hard to sell a vision and raise money. I’ve probably met 50x the amount of people with good ideas than I’ve seen able to raise money. It’s so hard to find the right people, get out of their way, and make the executive decisions when they come up. Sure, the “genius engineer” thing is a meme, but he doesn’t need to be the guy designing or building the rocket, but rather visualizing how it all fits in to a business strategy and turns into a stable company 5 to 10 years down the line. It’s why, despite how much I despise this happening, it’s perversely understandable why Adam Neumann was able to raise money again. That particular group of the wristwatch class — venture capitalists — understands that it’s about setting money on fire 90% of the time. Someone who has at least shown the ability to scale could at least be somewhat argued to have “learned” from the last time they incinerated all the capital vs an unknown quantity. Given all that money for leases, you or I would be haggling over getting a deal, not buying the market top, worrying about finances, and more. All good instincts to have! At the same time, when you’re given the license to grow, you have to go for it as much as you can. Adam Neumann was human vaporware, but his ability to understand that building a lucrative business requires denying reality to a certain extent was pretty sophisticated.

(Postscript: the reason why I call the investor class “wristwatches” is twofold. One is because mechanical watch owners aren’t really concerned with efficiency, are they? The nicest Lange is less accurate than a $10 quartz Mickey Mouse watch. The other is due to how watches appreciate in value — take the Paul Newman Daytona for example. Functionally, it’s the same as any other Daytona — a watch that retails for around mid 5 figures — but due to the story behind the watch, it sells for roughly $18 million. The story itself multiplies the value of the same watch by 360x, which I think highlights the essence of how you understand the wristwatch class and, consequently, how you raise money from them.)

Delusion without grounding results in mania, or worse, especially if it results in success,

while grounded delusion feels like a “higher calling”, that you’re immune to the cold grasp of probabilities, and the law of large numbers — that you are the individual exception that statistics do not apply to. And when you understand the pattern, you can do it again, and again, and again.

That being said, the most common advice I give to budding founders is “you don’t need a startup, you need a wife.” Perhaps the actual delusion present is the thought that I can do both.

I’m joking, of course — more on my hatred for that song another time — but I absolutely have lost the ability to sleep organically as my priors get confirmed on a timeline much faster than I expected:

…The way to beat the debt crisis that started the whole fear is to inflate away the debt by running faster and jumping higher rather than printing money — isn’t the interest problem silly when looked at from a Mars-eye view? And I definitely feel this is the only way out in the longer run. A solely Earth-based kick the can down the road path doesn’t exist: remember the ever-panned “fiscally conservative and socially liberal” descriptor?

But the problem here is that “growth” and wealth creation is so oriented around “number go up” metrics and financialization — GDP, quarterly earnings, whatever — that the true “acceleration” mindset cannot reasonably coexist with it…

The second most painful breakup I’ve experienced this year was the one between Elon Musk and Donald Trump, partially because I got rinsed on what had the potential to be one of my biggest runners ever, but mostly because it means that there’s no time to rest and enjoy life as things will keep happening. And with the death of “government efficiency” as a project (for now), turbo-growth is the only alternative, and we cycled to it much faster than I thought. Indeed, I’m quite sad that I completely bricked this prediction:

Musk and Trump stay together longer than Harry and Meghan — and they make it to Christmas.

Beyond necessary, I think this is some form of destiny (from November 2024):

There’s a palpable sense of desperation everywhere I look, and it’s reflected by the fact that nobody really trusts any institution to properly do anything, whether it’s a court of law or even counting votes. (Look, India counts a billion votes in a day, there is literally no reason a state should supposedly “take a week” to count ballots, though I suspect this won’t actually be an issue.) It is downright embarrassing how much litigation there is around basic, simple, logical things, and it’s a perversion of the legal system that common sense isn’t taken accounted for. The entire purpose of law is that it’s supposed to be subservient to the straightforward meaning when it comes to people! You shouldn’t have to be legally trained to understand most topical issues at the non-federal level. (Of course, this is outright a failure of literacy education and the media, but more at 11.) This desperation is most reflected by the fact that apparently, our answer now is to throw our hands up in the air, toss every single ounce of data that we can legally (and illegally) get access to into a GPU cluster, and pray that the human brain gets solved. It’s so patently ridiculous from my view that every major player is all-in on what I describe as the most expensive, farthest OTM option ever conceived. FFS, the tech gets more expensive as you try and scale it and it isn’t even coherently applicable as a product!

…for the first time since 2020, I get the feeling that people are willing to try again. The entirety of 2020 felt like one collective psychotic break that I wasn’t a part of, and the chaos that ensued in 21-22 meant that a lot of people just kept their heads down, and some still are. But for my sect of peers — talented people who didn’t quite get a shot to build anything in the free money era, then immediately got plunged into the pandemic — there’s a palpable urgency that the next few years might be the last shot any of us has to innovate in prime working years, because the environment has been so oppressive to novel thought post-2016.

So each time I see BTC leg up, it implies two things to me:

a) the old model of asset flight (swiss bank accounts, second passports, remote real estate, gold) no longer exists as a viable pathway to get off size

b) implied societal volatility is much, much higher than anything that lit market options can price efficiently

Add in the fact that rates are concurrently too high for anyone in the normal distribution to buy property, but in the mid-to-long term should be higher as demand for dollars paradoxically increases as fiat appears more unstable,

The beauty of how the US leveraged its debt to control the world is that, in a sense, everyone needs the US to win in some form, else the capital basis of the world disappears. The more risk we take, the better an investment in American tech supremacy is. Another form of “Mutually Assured Destruction” is, There Is No Alternative (TINA). TINA won’t maintain in its current form — where we’re going, the dollar will not exist as it’s been instilled in our brains all these years — but the point of shooting for the stars is to land on the moon, and all the moonshots are housed in America for the time being.

and you see why I’m constantly kept up at night. Every single option I work out appears incredibly bleak, and I’m not sure what the way out is other than staying long, or cashing out and enjoying life (which isn’t really possible for me). There’s no “going back”, we lost that ability post-2020. You don’t just recover from mass psychosis, it permanently shifts the collective biological algorithm into a new pathway.

That being said, we are in a unique situation where we can implement ourselves into the algorithm due to these bets that are being made.

There is an algorithm that ebbs and flows around the American workday that controls what everyone who logs on to some form of media or another will see within 4 hours to 6 days. Depending on the form of media, the frequency with which you see things will imply different things about the signal and actionability of what is being pushed…

This algorithm is not something that’s just coded up — it’s metaphysical, the collective machinations of everyone involved in the post/scroll/share/react timeline.

Even in the age of slop, there is a dearth of people creating and a mass overload of consumers. If you continuously post, people will eventually come due to the simple fact that organic content redefines the weights of the algorithm.

Obviously, the starting point is to post as much as possible. I understand that most people do not have this ability to organically autogenerate stream-of-consciousness text, but as evidenced by, er, Grok shenanigans this past week, even the slightest bit of text that catches a weighted pathway becomes a permanent part of the corpus.

An important thing is to make your text distinctly human, rather than sanitizing it so it can fluidly be folded in to the existing weights.

The stream-of-consciousness style of writing particularly messes with generative AI in a very logical manner — the longer the generated string of text takes to arrive at a coherent point, the more predictions the model has to make, compounding the probability of hallucinations per block generated to a degree that renders the output nonsensical.

Once you’ve posted enough, of course, the end goal is to construct a specific model that translates the latest training data through your wavelength of thinking.

Beyond my own ambitions (think on the scale of Musk using Grok to manage the Elon-Plex, which is clearly happening), I tend to think this is the only form of “therapy” that can help maintain the strain that comes with being on the cutting edge of predicting what will happen in the near-to-mid term future. An issue that arises frequently with myself and others in the deep tech/internet finance network is that schizophrenia is essentially the only signal in this postmodern, securitized, detached-from reality environment where all the capital is being allocated. At least in the real-life version of that nightmare, I control the soundtrack. And when I sit around and play the equivalent of WarGame simulations with the various models I chat with, I kind of realize why this is the case — finance is just n-degrees more complex than relentlessly calculating chess variations. If you don’t take a break your brain will twist into pretzels. I’m already at the point where I don’t think I ever need to rely on human financial analysis again, it seems logical enough that load management can be outsourced as well.

Sometimes load management is necessary — I’m reminded of Tim Duncan being benched for a game due to age all those years ago —

and though I’ve never called out sick in my life, I fully support calling out of work on account of existential dread now and then, as evidenced by my Europe sprint back in February. At least in my experience, the only way to not “scare the hoes” is to immediately stop what you’re doing whenever you “see the light”, touch grass, drop your phone, and walk for a couple days and let your body track the motion of your thoughts. There’s very little you can do in real time to affect the timeline — the most profitable thing to do is nothing, as Spongebob taught me all those years ago — but letting the unbounded racing thoughts exhaust themselves is paramount when absolutely nothing is as it seems.

Dear reader, I would like to have written that this truly is the “happiest place on Earth” and everything I thought it would be. I was hesitant to post this, because my thoughts are so unnecessarily jaded such that it seems that I’m bitter with life itself, given that I literally wrote this with this view.

Originally, I wanted this post to finish the “retirement arc” from May 14 to, er,

now, as an example of how to “learn” activities where there isn’t a rigorous pathway forward (from chess, to trading, to golf/life.) Instead, I found myself standing at the 2nd hole tee box at Pebble waiting to hit and wondering what the fuck I was doing with myself. Allow me to explain:

Golf, fundamentally, is an elaborate way to kick rocks. (Indeed, I’m sure the origin story is something along the lines of Grug being bored in Scotland in the 1400s and hitting a rock with a stick.) This is further evidenced by the fact that a great golf course design loops — the 18th green ends up right by the clubhouse and the first tee, right back where you started. You take your hat off, laugh a bit at a rehearsed joke, shake some hands, and then go on your way.

When you don’t know you’re in the loop, you can enter “the zone”. I’m sure the reason why I initially got so great at chess, then at trading, is because I could ritually perform the same activity in an endlessly variable (yet contained) manner and apply incoming information to modify the efficacy that I threaded the loop with.

What spoils the loop is perspective. When you know that you’re playing a board game with no meaningful reward, it’s impossible to properly apply pressure to motivate yourself to find the best move in a position. When you know that you’ve reached the limit of noticing the number going up in your bank account — the studies stating that “increased salary does not bring happiness” are absolutely true, just look at where people predictably hop off the salary/self-improvement treadmill — mispricings stop looking like opportunies and instead look like crippling social idiocy that you can’t just go and fix yourself. It’s not quite the Daytona 500, where they are literally driving in circles, but I finally get the meaning of Twain’s quote about how golf is a good walk spoiled — what spoils the walk is the realization that you don’t have anything better to do, that you’re willing to fuel the money sink to pass the time by modifying the walk in a pointlessly complex manner. There are plenty of beaches with views that are free to traverse, after all.

After double bogeying hole 1, my caddy said that I’d enjoy the course more if I stopped keeping score and treated it like adult Disneyland. He was right on that note, but probably not about the crippling depression that came after I finished (cue Lenny Kravitz’s Fly Away.)

Something that I had an inkling of, but didn’t fully experience until now, is why those nonstop golfers are somewhat unhappy. “Retirement”, when done out of choice rather than necessity, is a state of existential purgatory. As I like to point out to others, people are so desperate for any semblance of purpose that they will greet people at Wal-Mart or draw a stripe on a Costco receipt for hours at a time.

Perhaps this is a bit of projection, but I don’t think I’m incorrect. The more I started listening to people around me, the worse my shots got, and the more it compounded the post-round clarity. (I don’t think most golfers’ yips, however, come with the side effect of drafting a blog post about Dostoevsky while trying to pure a 7-iron.) I thought back to the starter, who told my group that “the most important thing that matters to us here at Pebble Beach is that you leave with a smile on your face” before talking about pace of play. What kind of feel-good Hallmark bullshit is this? “Keep your arms inside the log ride”?

I virtually never lose my temper, and certainly would never be in risk of doing so over a round of golf. Nothing will ever make me as mad as losing chess games was when I lacked perspective. But what’s particularly frustrating is that I got to this point by being an expert in tracking and manipulating variable-reward skinner boxes while not getting caught in them myself. The variable reward in golf, of course, is hitting that shot in a terrible round that keeps you coming back until you hit “the zone” again. Some comparable loops that people find themselves in are doomscrolling, short-form TikToks (which, to my delight and chagrin, literally loop until you tell it otherwise), swiping on dating apps, dating in general (the amount of people that I talk to who have a “process” that leads to them being predictably single without ever asking the Chigurh question is beyond hilarious), purchasing watches (cue Rolex’s “offer”), and more. Even though I am certainly a consumer at my core, the Fight Club mantra of “the things you own end up owning you” still echoes in my head, as it’s precisely what allowed me to handle gargantuan amounts of risk in the first place, and not get trapped in the most evil loop of all — debt recursion (the idea that you can pay off a compounding debt that’s mathematically impossible to outscale is the most powerful hook on the planet, and is why usury was banned in religion.)

I don’t like seeing people trapped in loops — it’s very much a rage-driven response that I endlessly work them out and connect them, and then blast my thoughts on the public timeline, because I think we are fundamentally better creatures than this — or so I think when I’m motivated. What finally broke over the course of the round was the realization that Dostoevsky’s Underground Man was mostly a bitter, angry lunatic obsessed with this idea that the human mind is capable of breaking the loop. And as I watch round after round finish at the 18th green and can virtually see the cash register opening again and again — the Federal Reserve should take notes from Pebble Beach on how to print money — I’ve finally gained the perspective that the only reward for breaking one loop is getting caught in a larger one. The world is an infinite set of concentric, variable reward Skinner box circles, and each time the juice button pays out, you either become rife with existential dread or get addicted — despite all my rage, I am still just a rat in a cage.

Anyway, playing Spyglass tomorrow, I’m sure the first hole-in-one is coming this time around!

Yeah, 9:08, Oklahoma City time

In the lab and shit…

People tryna say I’m going crazy on Twitter

My friend’s best advice was to stay low…

Never listen to financial media producers,

Don’t stare at money too long, it’s Medusa

The ultimate Gemini has survived,

I wasn’t supposed to make it past 25

A few months ago, I wrote a blurb about retirement

Earlier, I mentioned the concept of “retirement”, which I largely don’t believe exists as it’s sold. This entire blog is a never ending rant against passive investing, and I generally consider “set and forget”, “target date funds”, and the literal gating of 401ks to be part of an elaborate scheme to make sure people do not panic sell their stocks all at once and consume more liquidity than exists. Retirement, as a result, is simply a state of mind where you are not prioritizing forward earnings — however and whenever you reach this point is up to you. The people who bought the conventional definition and “retired early” — hanging out at a country club golfing 5 days a week after cashing out of their company, for example, which is a surprisingly frequent stereotype I’ve encountered — are generally some of the most dissatisfied people I’ve talked to, like an athlete who was forced to hang it up early. The “hook” that you won’t have enough money to live on is so powerful that it turns most people into the type of video game player who saves the best resources for the bosses then never uses them, when the price of contentment hasn’t really changed…

which almost seems like foreshadowing now that I look back:

Part of me feels like I’m an athlete retiring nowadays. I’ve spent over 10 years of my life obsessively figuring out how this all works, and honestly, I think I have nothing left to prove…

As to what’s next, I’m not sure, but I have an inkling. For the first time since the summer before college, I truly feel that I have time off, and I’m going to use at least a bit of it to get my health back and “touch grass”.

Something that I had an inkling of, but didn’t fully experience until now, is why those nonstop golfers are somewhat unhappy. “Retirement”, when done out of choice rather than necessity, is a state of existential purgatory. As I like to point out to others, people are so desperate for any semblance of purpose that they will greet people at Wal-Mart or draw a stripe on a Costco receipt for hours at a time. Thus, the reflexive wariness to technological advancements amounts to a form of self-preservation — when the point of your actions is revealed to be pointless, a severe form of dissonance occurs. Which, inevitably, leads to conflict at scale.

I generally think I “choses” to retire out of necessity. 9 month stints where you are not sleeping, working and thinking nonstop and eating McDonald’s and instant noodles and drinking (rather than bumping) takes a deleterious toll on your health. “Burnout” is not something that’s recovered from with a week of sleep, nor is it easy to bounce back even in your 20s. But when you are used to ludicrous levels of uptime and lose your normal motivating psychology to be able to “lock in”, the amount of time that retirement brings is unhealthy. Playing golf is fun — exhilerating really — and I could go on for hours about how it’s probably the game closest to chess, but it’s not meaningful in any way. It’s a test against nature that ultimately doesn’t matter, the ultimate way to kick rocks, so to speak.

There’s a lot of wisdom in older children’s media. The relentless avoidance of boredom that I possess is probably derived from The Phantom Tollbooth in some manner. And currently, I find myself thinking about Avatar: the Last Airbender — particularly the episode where Zuko, the rejected heir apparent to the throne, loses his ability to “firebend”

The show makes a flawed point about motivation — anger (or rather spite) is a great motivator. Indeed, I don’t think it’s possible to achieve anything at the highest level of competition without that psychotic “chip on your shoulder” reflex. But it makes you a deeply weird person — are top level golfers or chess players in any way relatable? I find the closest analogy to how I previously thought about chess, or trading, to be Tom Brady. The guy gave up his wife and kids to get blown out by the Cowboys in the Wild Card round in his 40s. When you get “locked in” for that long, you can’t turn it off.

Similarly, for the past two decades, my entire life has generally revolved around an obsessive tendency to be right about things. Chess is about imposing your will and ideas on your opponent

Chess is almost a pure skill game, in the sense that it’s solely your ideas versus your opponents. There’s no variance. This leads to a supreme validation of one’s skill when they win a game. As Bobby Fischer famously stated when asked what his favorite thing about chess was:

I like the moment when I break a man's ego.

and trading is the logical, profitable extension of this to the world — “I understand what will happen better than everyone else, so I will speculate on the outcome”. A PnL statement is a rough equivalent of how much “I told you so” credits you have banked up.

What you don’t really realize until it’s over is how much pressure you heap on yourself and everyone around you when you enter these “prove it” zones.

In most careers, high pressure make-or-break situations are fleeting. You only have to pass your Series exams or Bar exam once. It’s not the end of the world if you fail an actuarial exam the first time. Pretty much everyone makes it through college, even if you fail an exam or two — C’s get degrees. The highest pressure situation the standard individual faces is usually some type of entrance exam, where your performance is entirely relatively scored. Naturally, people tend to freak out about these exams — “overpreparing” is more a symptom of unresolved anxiety than it is meticulously “outworking” everyone around you (though they correlate.) And this isn’t a negative! Odds are, if you spend all your time prepping for the CFA for months on end, you will score higher than everyone else. But when we are faced with constant high pressure situations which directly impact your net worth, such as trading and managing assets, we need a better framework to optimize our time allocation and maintain risk-neutrality in our approach.

The best performance psychology manual I’ve ever come across is Relax and Win by Bud Winter. The essential lesson iterated upon throughout the book is to learn to consciously calm down. My favorite example from the book is the section about how soldiers slept in trenches in World War II. I’ll defer to the writing in the book itself, but essentially it highlights that, while you cannot replace sleep, that tiny bit of relaxation that you grant yourself operates as a cocaine-hitting-your-blood revival during a long night out drinking, a “reset” that allows you to operate at near full capacity again. Prior to chess matches, I would “sleep” for roughly 15 minutes to fully reset before I played. Note that efficient napping either requires exiting sleep before you enter a full cycle or completing the cycle, else you wake up groggy and paradoxically more tired than when you started. Similarly, during trading days, I frequently took a 15 minute nap (with zero days open, for peak absurdity) instead of eating lunch due to the performance drop-off that comes with a full stomach. Sometimes, you just need a little bump to keep going.

In David Foster Wallace’s meditation on Tracy Austin, I constantly recall precisely one thing he said, which was maybe the most powerful insight into optimal performance I’ve ever read. He rhapsodizes about the vapidity of her memoir and her inability to say something that isn’t formulaic, isn’t cliche, about how she developed. But he asks, what if that’s actually the case? When Tiger sank that iconic putt at Torrey Pines, what if all that went through his head was “make the putt?” The complexity is in reducing oneself to the simplest form of an idea, the pure truth that if you allow yourself to execute, it will come. As DFW puts it:

There’s no magic trick to relaxing and controlling anxiety. Certainly, putting yourself in certain situations may aid one in doing so — a yoga studio with a view of the Highline is probably preferable to a trench being shelled in a vague location in Western Europe. The simplest advice I can give anyone who wants to manage their head, whether it’s trading, chess, or tennis (as Spassky once said, tennis is the closest thing to chess), is this:

If you can’t quiet your thoughts, just focus on what you can control and what you can’t, and solely operate on what you can. You control the placing of an order, the swing of the club, the movement of the pieces. You don’t control whether someone blows up a pipeline and nukes /CL, what people might do in response to an earnings release, the wind and landing angle, or your opponent. Why bother with them? It really is that simple.

Think about that book title though: Relax and Win.

What do you do when you don’t care about winning, and just relaxing?

Money is literally a social credit score game past a paid off house and enough to cover your expenses without earning. If you keep compounding wealth, society respects your skill, whether it’s manipulating people, understanding them, or connecting them, and it’s precisely why people obsessed with social clout almost certainly don’t have any actual skills that society values…

This is also why returns aren’t everything when you manage other people’s money. If people trust you, they don’t want to look at the market and judge you. In a VC environment, this is flipped — returns are directly reflective of how much people want in on your portfolio. It literally cannot be reflected any other way

The ultimate luxury, as a result, is privacy, and it really can be acquired by just not caring. But it's more fun to be left alone on Pebble Beach rather than your local muni.

While I ponder this question, and wait for my Pebble Beach tee time,

I’ll make a quick request for feedback.

I haven’t exactly done anything notable in the public eye — I like to say I had a resume, not a life, for the first 17 years of my life, and the inverse for the next 10 — but I have done a ton of writing. I grew up reading essay collections, and I consider myself an essayist (even though I dream of writing fiction, like every literary obsessive does), so I’m preparing an anthology of sorts. Generally I want to edit and streamline some of the standalone Malt Liquidity posts, the longform, and put together my shortform fiction posts into something a bit more coherent. As such, I’d like to take any pointers on what posts were the best received or provided the best launching-off point, perhaps the one that “hooked” you into reading.

The other request I’d have is some reading suggestions. I haven’t found anything worth reading in a while — I am calling this “short form summer” myself, because I mostly just read tweets — and would like something fun, rather than philosophical, to read, as “no existentialism” summer is the other way to frame this.

I can see a thousand years from now in real life
Skate on the paradigm and shift it when I feel like
Troll conventional thought, don't need to question
I know it's antiquated so sometimes I get aggressive
Thank God for Jay Electra, he down with the mission
Did it with no permission, on our own conditions

And, of course, the Kanye retrospective will follow soon.

Thanks for reading, as always, and I hope summer is treating everyone as well as it is me!