Things I’ve Enjoyed #24

Each Sunday I compose a list of the most worthwhile content I’ve consumed during the past week. Primarily as a way to keep inventory of material that influenced me and my way of thinking.

Papers

Moneyball for Modern Portfolio Theory (2021) by Chris Cole. Building upon the ideas popularized in Dennis Rodman and the Art of Portfolio Optimization and How to Grow and Protect Wealth for 100 Years.

When your favorite sports team trades for a new player, what you care about is whether the player helps the team win, not the individual player’s statistics or scoring averages. A player with gaudy statistics can sometimes hurt the unit; other times, a player with less impressive personal numbers contributes significantly to team success. Likewise, in investing, what matters is whether or not a new investment helps your portfolio ‘win’ by improving the total risk-adjusted returns. When you pay active manager fees, you are not ‘buying’ the manager’s risk profile; you are buying the risk profile of your new diversified portfolio. You pay for ‘wins.’ Unfortunately, the Sharpe Ratio (and its variations) have little value in discerning that result.

Writings/Essays

Sometimes, Paying Attention Means We See the World Less Clearly by Henry Taylor.

I’m glad this didn’t veer into the world of the prescriptive. You see what you value, and not in an abstract subjective sense – ”oh my favorite color is pink” – but in an evolutionary sense. The primary goal of anything living is survival (usually a precondition for procreation), tricking the brain via optical illusions can be a worthwhile exercise as long as you don’t make the error of believing ”objective reality” should be prioritized.

”Our brains can only do so much, and there is far more information available to our sense organs than our brains can fully process. But, of course, not all of this information is equally relevant. In order to prevent ourselves from becoming overloaded by a torrent of information, we need to select which bits to concentrate on. This is the main job for attention: it’s in charge of picking the most important things to concentrate on, and to filter out surrounding noise. On this way of looking at attention, its job is not to get everything perfectly correct, but to select what’s deserving of our limited cognitive resources. What’s most important is that we’re concentrating on the most important things at that particular time. Once we start thinking about attention this way, it’s unsurprising that it doesn’t always get everything 100 per cent right.”

It Is Obscene: A True Reflection In Three Parts by Chimamanda Ngozi Adichie.

”In certain young people today like these two from my writing workshop, I notice what I find increasingly troubling: a cold-blooded grasping, a hunger to take and take and take, but never give; a massive sense of entitlement; an inability to show gratitude; an ease with dishonesty and pretension and selfishness that is couched in the language of self-care; an expectation always to be helped and rewarded no matter whether deserving or not; language that is slick and sleek but with little emotional intelligence; an astonishing level of self-absorption; an unrealistic expectation of puritanism from others; an over-inflated sense of ability, or of talent where there is any at all; an inability to apologize, truly and fully, without justifications; a passionate performance of virtue that is well executed in the public space of Twitter but not in the intimate space of friendship.”

This know also, that in the last days perilous times shall come. For men shall be lovers of their own selves, covetous, boasters, proud, blasphemers, disobedient to parents, unthankful, unholy, without natural affection, trucebreakers, false accusers, incontinent, fierce, despisers of those that are good, traitors, heady, highminded, lovers of pleasures more than lovers of God; having a form of godliness, but denying the power thereof: from such turn away. For of this sort are they which creep into houses, and lead captive silly women laden with sins, led away with divers lusts, ever learning, and never able to come to the knowledge of the truth. – 2 Timothy 3:1-7 KJV

Mom Genes and Father’s Day by Ross Douthat. Embrace Hume’s law.

”A better argument for conservatives (not a winning one, but a better one), I think, would have been to acknowledge that norms of lifelong monogamy are, in some important senses, un-natural — that they work with biological realities, including the realities described above, but that their aspirations and expectations are a civilizational artifice, a cultural superstructure that isn’t exactly necessitated by the substructures underneath. (The religious can interpret the development of marital norms in the Bible this way: As divine tutelage working on a fallen human nature that absent divine prompting constantly lapses toward, well, King David’s behavior toward Uriah and Bathsheba.) And that being un-natural in this way, these norms actually quite vulnerable and fragile to shifts in the human ecosystem — technological, economic and cultural alike.”

Kids Need Dirt and Danger by Matti Friedman. I’ve been through this before. Pathemata mathemata. Scar tissue is the foundation of future character. #antifragility

”Some people asked Haas, for example, if it was a good idea to let children work barefoot in the yard. The answer, she wrote, was obvious: ‘A barefoot child learns faster to take care of himself, because the feelings he gets through his feet sharpen his understanding.’ Her articles are among the rare works on education that stress the importance of tetanus shots.”

Bonds are Like Meme Stocks by Fed Guy. See also Robots are Making Us All Buy Overvalued Bonds by John Authers and Passiva Flöden – Del 1 for further inquiry.

”For example, a 2045 Target Date Fund targets a retirement date 25 years from today and would be heavily invested in equities today but gradually rebalance towards bonds over time. These funds take in money and invest according to their preset allocation formula, regardless of inflation or earnings or any other economic fundamental. They literally have no choice but to keep on buying.”

Zombies are on the March In Post-Covid Markets by John Authers. My two cents on the proliferation of zombies.

”You can say that again. After Reid’s default study last year, I suggested that credit bailouts were a Faustian bargain. We could avoid another financial crisis, but it would be at the expense of yet more of the agonizing slow and unequal growth to which we have become accustomed. Weak and unprofitable companies, free of the risk of going to the wall, tie up capital that could be used more productively. Such zombie companies are incapable of growing, but thanks to artificially low interest rates they are able to stay alive, spreading their deadening influence across the economy. It’s a debased form of capitalism that almost nobody likes.”

”Fire Insurance” by Harley Bassman.

Wrong Solutions to Math Problems are Not Due to Cognitive Biases by Michael Harris.

Eureka – What’s the Truth About Archimedes’ Cry? by Armand D’Angour.

Podcasts/Conversations

Paul Kim, Co-Founder and CEO of Simplify Asset Management, Alpha Exchange.

Philip Verleger: Energy Economics and Inflation, MacroVoices.

Conversation with Glenn Loury, Cornel West & Teodros Kiros, The Glenn Show.

Publicerad av Olof Palme d'Or

filosofie magister i analytisk filosofi. optionshandel. risk. autodidakt.

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