if it feels good you’re too late

I was chatting with a friend this week who I’m so happy for it makes me almost teary-eyed. He turned down an unbelievable job to take a chance on building an HFT startup a few years ago. It’s going VERY well. And it’s fun. And they’re hiring and all the things. I couldn’t help but say, “Man, you’re just in one of those sweet parts of the curve now”. The work fits like a glove and to quote Eddie Murphy “the ends are meeting like a muthfckr”.

It’s HFT with Sharpe so high you don’t bother with numbers, I just call it Charizard. I have to waste my breath because this is as cheap as an option gets, but “are you raising money?”

Of course not.

They raised once at the start and that’s it. Self-financing from here. Interestingly, they raised from VCs, not allocators. This unusual arrangement combined with the mathematical visibility of their edge, which doesn’t exist in long-term stock-picking, just had me thinking again about the nature of investing.

From The Paradox Of Provable Alpha, we know that the only place to mine for alpha among managers is among those with longer-term horizons. The regular investment firms are not as capacity constrained, are an underdog to have any edge at all, and happy to work for a small take on other people’s money. The managers that look like traders, with high turnover and sample sizes, who consistently crush, don’t want your money.

An advantage in long-run investing on the basis of pure analysis is very hard and even if you’re good you there’s no stats that will ever affirm you to be as good as you think. Active managers either think they charge too little, but since they can’t flaunt HFT stats, settle for what the market will bear, or the managers know they are way overpaid. Nobody thinks the fee is exactly right because the industry is some mix of a economic “lemon” problem and a circus exhibition that has little to do with serious investing and more with spectacle. (Pick your favorite negative alpha manager that finds a way to stay relevant and maintain assets).

Alpha in long-term investing is scarce for even more fundamental reasons. The nature of advantage in a zero-sum game (the warm drift of beta is a public good, but alpha is fixed…no winners without losers).

You have probably seen some version of the right/wrong vs consensus/contrarian 2×2 before. If you haven’t, you should sit under a tree with it for a while. It’s liberating in its proscriptiveness.

A looming annunciation of this problem comes from an interview VC Josh Wolfe had nearly a decade ago on Invest Like the Best.

He noticed that every one of his fund’s investments that became a giant winner was highly contentious at the start. Typically, the stake had just one passionate champion for it on the investment committee.

[Do not confuse this with all highly contentious ideas will be winners. It’s a statement conditional on the investment paying off huge already.]

In light of the 2×2, this is not surprising. If the investment makes obvious sense, it will be consensus and even overbid.

I’ve seen an analogous phenomenon in trading, but even in mock trading. I’ve talked about it a lot before, but when I watch a room of people mock trade, I can quickly tell quite a bit about the person from their action or lack of action (in the case of lack of action, I have to probe a bit, but the lack of action comes from a fairly small number of common reasons which are as telling as taking action).

[If I ever host an event like that again, maybe I’ll consider report cards, where I inform the individual what I learned about them and they can tell me if it matched their horoscope.]

But, one consistent trait that I think is good out of the box is the ability to act before all the info is obvious.

If you need to wait until the evidence is convincing, you’re too late. In fact, at that time you may want to be doing the opposite.

This is a ruthless aspect of markets because it defies the requirements of regular decision-making. In your daily life, you’re not in a race to buy the best phone or lunch before it’s gone. You can usually hold out for a bit more info, improve decision quality, and not have your patience used against you.

The ability to act before you have all the info is useful in other zero-sum games as well. There’s an unsavory connotation to say someone has great political instincts because the object is usually someone who seems impure. The left-coded VC who moved right sharply after Covid. Perhaps they were honestly disillusioned with their team. Perhaps it was just good for business. Either way, the begrudging respect one might hold for a winning political trade echoes the lauded financial agnosticism of great traders. Stan has no problem flipping a yard from long to short at a speed that obviously outpaces any kind of formal research process.

VC to me is an interesting solution to long-term investing because its very structure acknowledges the futility of analysis on forecasting what is going to pay-off. Instead, create a marketing machine that both stabilizes assets and makes founders, the lifeblood of your upside, want to come to you. Then diversify the lotto tickets. As long as you’re drawing from a sample that truly has no mean, then surviving practically ensures thriving.

Yes, the surviving is hard, but has surprisingly little to do with returns.

The Efficient Venture Markets Hypothesis (9 min read)

Abraham Thomas doesn’t publish too often but I am always sure to read them. This one opens:

Venture capital is deeply weird these days. Consider these phenomena…

Thomas’ description of VC circa 2026 strikes me as a triumph of venture creating demand for its services by becoming a part of the “market portfolio” (in the CAPM sense of the word). It is now as much beta as SPX members, which elevates it above the bucket of crabs that is zero-sum competition for outperformance. VC funds are essential allocations to those trapped in the asset-managment-industrial complex should seem paradoxical if their scale ensures beta-level returns. But this article makes it make sense.

hacking hope

Jared Dillian has this great essay, The Reason We Do Everything, from earlier in the year that opens:

Norm MacDonald, one of the funniest people to ever walk the planet, was also a degenerate gambler, busting out a number of times and going to zero. His therapist told him that he gambled in order to escape reality. Norm said, “That’s why everyone does everything.”

You should read the essay, but today I just want to zoom in on something Norm said. I watched the recent documentary Judd Apatow did on him (Netflix). Apparently, Norm was a heavy and eventually reformed gambler. Judd pulls the following quote from Norm’s 2016 memoir Based on a True Story:

Most people would think it’s the wins that keep the gambler going, but any gambler knows this is not true… When the red dice hit the green felt… and you’re declared the winner… you feel relief. Relief is all, and relief is fine, but hardly what a man would give the whole rest of his life to gain. It has to be something else… It is a particular moment, a magic moment that occurs after the placing of a bet and before the result of that bet. It is after the red dice are thrown but before they lie still on the green felt… As long as the red dice are in the air, the gambler has hope. And hope is a wonderful thing to be addicted to.

At the seat of any good comedian’s observational power is a rare balance of sensitivity with cold logic. Norm is able to feel and diagnose simultaneously (his struggle to quit is a notch for philosopher David Hume’s idea that we are slaves to passion).

As you gaze at the horizon in 2026, dotted with inescapable metaphorical gambling billboards, I urge you to remember that their pitches are hacking an otherwise adaptive impulse just like Frosted Flakes hacks our predisposition to the muted sweetness of pre-industrial fruit. The impulse that’s being hacked is our urge to grow.

Celebrating short-term wins when you don’t have an advantage is like falling in love with the good cop during an interrogation. You are being manipulated. In the gambling sense, by chance herself. She’s an abusive partner who gives up the milkshake just enough for you to stay.

We need growth so nature wraps it in hope. Take the motion to gamble as a sign that you crave risk. Risk is good because it precedes growth. Risk involves failure. Failure leads to learning. Learning changes behavior.

Don’t waste the urge towards risk on a loop where the lessons of failure fail to compound towards durable knowledge that you can actually build upon.

Gambling addiction has always seemed to me like the “insanity of doing the same thing over and over again and expecting different results”. Norm humanizes why we are susceptible to it without taking the stupid low road that it has to do with innumeracy or anything like that. But as it increasingly gets hawked as something more noble (ahem, prediction), they are trying to bring it even closer to what constitutes growth and learning. I’m not against gambling any more than I’m not against freedom to indulge in most conventional “vices”. But big tobacco doesn’t even try to put Vitamin C in their cigarettes.

[Ha, ha I’m lying. They actually did.]

Moontower #334

In this issue:

hacking hope
if it feels good you’re too late
the geometry of volatility scaling

Friends,

Jared Dillian has this great essay, The Reason We Do Everything, from earlier in the year that opens:

Most people would think it’s the wins that keep the gambler going, but any gambler knows this is not true… When the red dice hit the green felt… and you’re declared the winner… you feel relief. Relief is all, and relief is fine, but hardly what a man would give the whole rest of his life to gain. It has to be something else… It is a particular moment, a magic moment that occurs after the placing of a bet and before the result of that bet. It is after the red dice are thrown but before they lie still on the green felt… As long as the red dice are in the air, the gambler has hope. And hope is a wonderful thing to be addicted to.

Don’t waste the urge towards risk on a loop where the lessons of failure fail to compound towards durable knowledge that you can actually build upon.

[Ha, ha I’m lying. They actually did.]

Money Angle

It’s HFT with Sharpe so high you don’t bother with numbers, I just call it Charizard. I have to waste my breath because this is as cheap as an option gets, but “are you raising money?”

Of course not.

A looming annunciation of this problem comes from an interview VC Josh Wolfe had nearly a decade ago on Invest Like the Best.

[Do not confuse this with all highly contentious ideas will be winners. It’s a statement conditional on the investment paying off huge already.]

In light of the 2×2, this is not surprising. If the investment makes obvious sense, it will be consensus and even overbid.

[If I ever host an event like that again, maybe I’ll consider report cards, where I inform the individual what I learned about them and they can tell me if it matched their horoscope.]

But, one consistent trait that I think is good out of the box is the ability to act before all the info is obvious.

If you need to wait until the evidence is convincing, you’re too late. In fact, at that time you may want to be doing the opposite.

Yes, the surviving is hard, but has surprisingly little to do with returns.

The Efficient Venture Markets Hypothesis (9 min read)

Abraham Thomas doesn’t publish too often but I am always sure to read them. This one opens:

Venture capital is deeply weird these days. Consider these phenomena…

Money Angle For Masochists

Trigonometry and Vol

I had Claude make me a custom chalkboard app for making math and investing tutorials Khan Academy-style. For fun, I asked Claude to use it to teach me something. Claude knows me better than my mother, so naturally it chose to talk about volatility.

It created this geometric intuition for volatility. Watch the video and then if you feel like visiting trigonometry, below you can read a full treatment of what cosines have to do with correlation and volatility estimates! → Using Geometry to See Why Volatility Scales With √t

I’ve mentioned before that I’m playtesting a game called Market-Maker that I started making just over a year ago. The current form of it didn’t come together until a) I attended the Arbor Bootcamp last November and got inspiration for one of the core mechanics and b) vibe-coding got so good that it could build a fully digital version of the game that can be played on the internet.

I’m still iterating on it (slowly, this is a hobby project), but when I was playing with a trader friend he understood immediately how to price a straddle that expired in round 5 (it’s the lesson of the video).

Although sometimes that sqrt(round) trick isn’t quite right. The reason, to put it in the context of the geometry article, is that there are card interactions that would make the “angle something other than 90 degrees” and for sigma itself to change. Your cards are private information. Looking forward to getting to play this with you. I think it will be quite the mix of fun and educational (but the goal for this is really fun).

So succinct it’s genius

Corey’s comment is outstanding framing.

From My Actual Life

Self-care = Metallica at the Sphere

Stay groovy

☮️

Moontower Weekly Recap

Using Geometry to See Why Volatility Scales With √t

The rule of thumb for a random walk is that volatility scales with the square root of time. 1% a day is about 16% a year because √252 ≈ 16.

This post builds that rule from a triangle, one day at a time. Then it bends the triangle to show what changes when days aren’t independent.

Day 1

One day, one move. Call its size σ, one standard deviation. After day 1 you’re σ from where you started.

Day 2

Day 2 adds another move of size σ. If day 2 has nothing to do with day 1, draw it at a right angle to day 1. (Independent = perpendicular. Take that on faith for now.)

Now there’s a right triangle with two legs of σ. The distance from the starting point is the hypotenuse.

Two days of moves, 1.41 days’ worth of distance.

Day 3

Day 3 adds another σ, again at a right angle. This time the right angle is to the line from the start to where you are after day 2.

a = σ√2 (where you are after 2 days)
b = σ (day 3’s move)
c = the new distance from the start

Check with σ = 1: 1.414² + 1² = 2 + 1 = 3, and √3 ≈ 1.732.

Day 1, day 2, day 3: each independent day adds one sigma squared to the squared distance

Every independent day adds one σ² to the squared distance. After t days the squared distance is t·σ², so the distance is σ√t.

That’s why variance (σ²) is the thing that adds across days and volatility (σ) is the thing that scales with √t. Squaring undoes the root.

Run it for six days and you get the spiral of Theodorus: σ, σ√2, σ√3, 2σ, σ√5, σ√6. Four days of moves put you 2σ from the start. (The video above draws it one triangle at a time.)

The right angle is the assumption

Everything above assumed each new day was perpendicular to the path so far. That’s the independence assumption. To see what happens when it fails, the angle has to be allowed to be something other than 90°.

This is where “cosine” shows up and people close the tab. If you took trig in high school you already have everything you need, even if it’s been 30 years.

Cosine is a ratio of two sides of a right triangle:

That’s the whole definition. (SOH CAH TOA. The CAH part.) A few values:

cos 0° = 1
cos 60° = 0.5
cos 90° = 0
cos 120° = −0.5

Bending day 3

Back to day 3. Same a = σ√2, same b = σ. Instead of fixing day 3’s move at 90°, turn it by an angle θ from the direction you’ve been traveling.

Cosine splits day 3’s move into two pieces:

along the path so far: b·cos θ
sideways: b·sin θ

Cosine as adjacent over hypotenuse, splitting day 3's move into along-path and sideways pieces

Those two pieces make a right triangle with the full distance c as the hypotenuse, so Pythagoras still works:

Multiply it out and use cos²θ + sin²θ = 1:

That’s the law of cosines: Pythagoras plus a correction term, 2ab·cos θ. At 90°, cos θ = 0 and the correction term is zero.

Plug in a = σ√2 and b = σ:

θ = 60°, cos θ = 0.5: c² = 3σ² + 1.41σ² = 4.41σ², so c ≈ 2.10σ
θ = 90°, cos θ = 0: c² = 3σ², so c ≈ 1.73σ
θ = 120°, cos θ = −0.5: c² = 3σ² − 1.41σ² = 1.59σ², so c ≈ 1.26σ

Same three daily moves of σ. Three different distances.

What the angle is in market terms

The variance of the sum of two moves X and Y:

Next to the law of cosines:

Same equation. The side lengths are standard deviations and cos θ is the correlation ρ between the new day’s move and the path so far.

θ = 0°, ρ = +1: the new day repeats the path
θ = 60°, ρ = +0.5: leans with it (momentum)
θ = 90°, ρ = 0: independent
θ = 120°, ρ = −0.5: leans against it (reversion)
θ = 180°, ρ = −1: undoes it

The √t rule is the 90° line.

Six days, then 20

Hold the angle fixed every day and walk six days.

Six days at turn angles of 60, 90 and 120 degrees

60°: 4.22σ from the start after 6 days, vs σ√6 = 2.45σ
90°: 2.45σ, the spiral
120°: 1σ. The path closes into a hexagon around the start.

Over 20 days:

Below 90° the distance grows close to linearly, about σ·cos θ per day once you’re away from the start (≈0.5σ a day at 60°). 60° ends at 11.9σ vs σ√20 = 4.5σ.
Above 90° the distance levels off at −σ ÷ (2·cos θ): 1.93σ at 105°, 1σ at 120°.

Caveat: a fixed angle to the running total is a toy. The usual measure is the correlation between returns k days apart (autocorrelation at lag k). The arithmetic is the same. Positive cross terms make the distance longer than σ√t. Negative ones make it shorter.

Daily hedger vs holder to expiry

The variance ratio compares the two:

ρₖ is the correlation between returns k days apart. VR = 1 is independent, VR > 1 is momentum, VR < 1 is reversion. The sum is the 2ab·cos θ term added up over every pair of days.

Example: 1% daily vol (15.9% annualized), lag-1 autocorrelation ρ, and ρₖ = ρᵏ.

ρ = −0.5: VR(20) = 0.36, so vol measured on 20-day changes annualizes to 9.5%
ρ = 0: VR(20) = 1, 15.9%
ρ = +0.5: VR(20) = 2.80, 26.6%

Same daily vol, different 20-day vol for reverting, independent and trending paths

Which number matters depends on how you hold the option.

Delta-hedging daily, P&L each day is roughly ½·Γ·S² × (that day’s squared return − one day of implied variance). The daily squared returns are what pay you.
Holding to expiry unhedged, the payoff depends on where the underlying ends up. That’s the 20-day number.

Same price series in a reverting market: the daily hedger realizes 15.9%, the holder to expiry gets the distribution of a 9.5% vol. In a trending market it flips: 15.9% for the hedger, 26.6% for the holder.

Staring at an Option Quote

Taking a small punt on gold upside before the end of the year. You can follow the thread here.

Kris

@KrisAbdelmessih

If GLD bottomed this am and you think the bank hacking narrative has legs it’s an interesting time to look at metals upside. The vols screen cheap cross-sectionally and have low percentile call skew (x axis is our "buy vol" algo score), y axis is skew percentile

@KrisAbdelmessih · 2026-10-23 · View on X

Point of sale: GC Dec 4260/4270 call spread

Even though I mentioned GLD, I actually executed in GC, the Comex futures gold options. GLD references gold in London vaults, and Comex delivery is in NY. But that difference has nothing to do with it.

Trading futures options has 1/3 the all-in cost (IBKR and exchange fees) of the equivalent risk in equity options. 250 GLD spreads = 25 GC spreads. The cost difference was about $100 instead of $300.

For educational purposes, I thought I’d share some observations from the point of sale. I targeted the 4260/4270 call spread. It’s a tight spread, similar to if you just wanted a binary bet on the futures expiring above 4265 or ~7% higher by late November.

I bid 1.40 for 25 spreads and didn’t get any contracts until the futures drifted lower to about 4006.70. That’s the first candle in this pic showing GC futures chart until the end of the day. I also superimposed the market in the call spread on the chart.

The market was 1.40 / 1.50 with Bid size (15), ask size (771)

I had been staring at the quote for a while before I even got a fill. After getting hit on 10 lots, I turned on a screen recorder for the next 2.5 hours (until 4pm ET, though the futures continue to trade for another hour)

Keep in mind this is a $10-wide spread with a .01 delta. $10 in gold is about 25 bps.

What follows is what’s running through my mind when I stare at the quote while watching the futures tick. I stepped away for long stretches and the other thing to keep in mind, based on what the recording revealed:

The quote never changed. Not a single market “event”. HFT people refer to any modification in a quote as a market event.

The offer never budged.
The bid was not joined.
Nothing traded.
The offer size stayed constant. No additions or subtractions.

My thoughts:

Taking a partial fill of only 10 out of 25 is bizarre. I’d think the only counterparty to this is a market-maker. Who wakes up looking to trade a 25 bps wide vertical naturally? So I expect when I get hit it’s a market-maker, but then they only sell 10 out of the 25? What is this, a market-maker for ants?! And then when a partial trades, how does the rest of the bid not get swept by the chipper algo which surely knows this is a resting non-market maker starting to get hit.
The futures dipped a few dollars below where I was filled. If the first seller liked selling at the higher futures price, don’t they like selling the spread even more now? I know the spread is only .01 delta, but… actually, let’s get into that for a moment.
In the recording window, the futures rallied to 4015, or about $9 higher than when I got a partial fill. At .01 delta, $10 is 10 cents, which is one full tick in this spread, the gap between 1.40 and 1.50. Paying 1.50 with futures at 4015 is the same price as paying 1.40 with futures at 4005. The market wouldn’t fill me at 1.40 at 4005, but offered an equivalent price at 4015. Furthermore, my bid wasn’t joined with more size and the offer didn’t pull.

Anyway, if you untangle the chain of reasoning here, it can help you think more about how options get quoted. When option deltas are low, there are minimum increment problems in edge capture. For example, if an option has .01 delta, you could sell it with the futures at any price over a $10 range and you’d be booking something between a penny and a tenth of a penny of edge but at the tenth-of-a-penny price it’s obviously worse (you’re 10x less profitable if you extrapolate across your business), but you also can’t turn the market over and be bid there for a negative a tenth a penny of edge.

If you flip this logic to the customer side, if you keep track of all the market “events” you can likely deduce when a market on a low delta option will tick to the next price level. If you can buy a call synchronously with the last tick in the future before the market turned, that would be the best possible fill.

If you are a beginner, just understanding that buying a call for X vs 4015 in the futures is a better buy than buying it for X against 4006 in the futures is a step toward understanding the concept of volatility (the second buy is a worse IV than the first by:

change in underlying * delta / vega

Example

Consider a call option with a .20 delta and .05 vega, and is currently worth $5 at 20% IV.

If the stock goes up $.50 we expect the option to increase to $5.10 or .20 * $.50.

But if you can buy the call for $5 then you have paid only 18% IV since that $.10 of savings represents 2 vega or vol points.

I-bonds vs TIPs

Lucky timing.

I nearly bottom-ticked the TIPs market with my trade last week. I explained in that article that my estimate for the trade’s 1-year expected return is about 8.50% with ~7.50% volatility. That suggests a weekly vol of ~1%

Why 1%?

7.5% / √52

It’s already up 2% in one week or nearly 2 standard deviations. We’ll see if the yield holds as a high. The last time I bought TIPs, I also wrote about it in October 2023 and that high in yields held until just recently.

Anyway, a friend (and mentor!) who read my recent TIPs article reached out to say I should remind readers that I-bonds might be a better choice if their income is under certain thresholds because of the education tax exclusion. I-bonds, like TIPs, are state and local tax-exempt, but you can also avoid federal tax when used for qualified higher-education expenses.

There are income limits:

I bought them for all the members of my household back in November 2021, when they paid 7.12%. I wrote up the details in I-Bonds For You.

Five other differences worth knowing:

Price risk. I bonds have no market-price swings. TIPS can lose value if real yields rise, creating a loss if you sell before maturity.
Liquidity. I bonds are locked for one year. Redeem before five years and you sacrifice the latest three months’ interest. TIPS can be sold in the market before maturity.
Tax timing. I bonds let you defer federal tax until redemption or maturity. In a taxable account, TIPS generate annual taxes on both coupons and inflation adjustments even though you haven’t received the adjusted principal yet.
Purchase limits. I bonds generally cap you at $10,000 per person per calendar year. TIPS accommodate much larger investments.
How you get paid. I bonds adjust their interest rate and compound internally. TIPS coupon rates remain fixed, but the principal adjusts. They pay cash coupons every six months.

TIPs don’t have limits on how much you can buy, but the other major benefit is a yield you can lock in. I-bonds usually have a paltry fixed rate portion. Since you buy them directly from the Treasury at par, you are locking in a lower fixed return vs TIPs at current pricing. The higher TIPS yield can outweigh the I-bond’s friendlier features such as the potential tax exclusion and the lack of “phantom taxes”.

Introducing Slate

I’ve mentioned a few times that I’m experimenting with bringing education and practical investing topics to IG.

One of the experiments I plan to do Khan Academy-style short-form where I show my work on a “chalkboard” and speed it up for socials.

Our little 10-year-old artist has one of these USB Huion drawing tablets lying around.

Huion Inspiroy H610X - Advanced Pen Tablet with 8192 Pressure Levels a – AL-NABAA

I can use that to draw up the explainers, but on what software? I checked out some popular recs like Xournal+ and Openboard but found neither of them immediately delightful and just another thing I’d need to get used to. I told Muse I wasn’t pleased with those recs.

I call an audible. I had very low expectations of what I was about to try. I tell Muse:

You know I have this Huion pen tablet thing and you understand what I’m trying to do I have a crazy idea can you make me a prompt to give to Claude Code to ask it about the feasibility of it being able to make me my own very lightweight software tableau that can do what I want and is tuned for math and investing so make me a me a prompt and let’s see what happens

It gives me the following hand-off to Claude Code:

I made it small so it fits here easily and in case you really care to look but like people recounting what happened at each round of a poker hand, almost nobody cares. The point is simply that you should be in the habit of asking the AI to write prompts for you when the problem you are trying to solve is unoriginal.

The fact that there are many drawing apps means my issue is unoriginal. So let’s see if Claude Code, using Muse’s prompt, can one-shot a web-based drawing app.

Voila:

drawing_board.html

To use it, just download the file, press Command + O (or Ctrl + O on Windows) in a web browser and choose it from the file explorer.

That tool was the absolute first shot.

Seeing how cool and responsive it was, it iterated on it several times, adding way more features, including the ability to add functions to the physical pens buttons.

It’s now a drawing tool made for math and investing concepts to be easily screenshotted or recorded formatted for IG stories, YouTube etc. This is truly personalized software.

I deployed it here: slate.moontowermeta.com, give it a shot!! It’s also dynamic for mobile.

Oh, one more thing. I told Muse to make a 3-minute video demonstrating the features and narrating everything it was doing. Pure one shot. Might be more insane than the app itself:

A word on the audio voiceovers and the explainer IG stories

I have been using Muse to stitch together frames, edit and splice audio.

I use Google Recorder to dictate a single take.

“Frame 1…”. If I mess up I just say “Flub that, Frame 1, ”.

Muse edits that single file using the open-source Whisper API hosted on HuggingFace. It knows to do that on its own, I didn’t tell it to. I can even ask it to speed up the final audio track by 1.5 or 2x. It then syncs the appropriate sections of audio with the frame it belongs to.

Actually, here are all the manual steps of the process:

Hey Muse go find one of my articles on the topic of XYZ and break it down into an IG story
I give it a photo that goes with the story.
I review the story it made, yell at it to not use AI-isms and that horrible passive voice that AI apparently trained on.
I might make minor tweaks to its arc, wording or material it chose. This step takes the longest because it takes some judgement/taste. The others might add up to 2 minutes.
Record the single-take voiceover. This step can also take several minutes depending on how long the story is, but it’s simple. I’m just narrating naturally and casually over the material.
Muse processes the final frames for me to download and publish. You can only publish 10 frames at a time so on longer stories I have to upload more than once. I add a sticker with a link onto the frames and sometimes music. That’s my favorite part of the process because it’s fun to find songs to go with frames. Kinda like a “caption this” contest with breakfast.

Moontower #333

In this issue:

Introducing slate
I-bonds vs TIPs
Staring at an option quote

Friends,

I’ve mentioned a few times that I’m experimenting with bringing education and practical investing topics to IG.

One of the experiments I plan to do Khan Academy-style short-form where I show my work on a “chalkboard” and speed it up for socials.

Our little 10-year-old artist has one of these USB Huion drawing tablets lying around.

I call an audible. I had very low expectations of what I was about to try. I tell Muse:

You know I have this Huion pen tablet thing and you understand what I’m trying to do I have a crazy idea can you make me a prompt to give to Claude Code to ask it about the feasibility of it being able to make me my own very lightweight software tableau that can do what I want and is tuned for math and investing so make me a me a prompt and let’s see what happens

It gives me the following hand-off to Claude Code:

The fact that there are many drawing apps means my issue is unoriginal. So let’s see if Claude Code, using Muse’s prompt, can one-shot a web-based drawing app.

Voila:

drawing_board.html

To use it, just download the file, press Command + O (or Ctrl + O on Windows) in a web browser and choose it from the file explorer.

That tool was the absolute first shot.

Seeing how cool and responsive it was, it iterated on it several times, adding way more features, including the ability to add functions to the physical pens buttons.

It’s now a drawing tool made for math and investing concepts to be easily screenshotted or recorded formatted for IG stories, YouTube etc. This is truly personalized software.

I deployed it here: slate.moontowermeta.com, give it a shot!! It’s also dynamic for mobile.

Oh, one more thing. I told Muse to make a 3-minute video demonstrating the features and narrating everything it was doing. Pure one shot. Might be more insane than the app itself:

A word on the audio voiceovers and the explainer IG stories

I have been using Muse to stitch together frames, edit and splice audio.

I use Google Recorder to dictate a single take.

“Frame 1…”. If I mess up I just say “Flub that, Frame 1, ”.

Actually, here are all the manual steps of the process:

Hey Muse go find one of my articles on the topic of XYZ and break it down into an IG story
I give it a photo that goes with the story.
I review the story it made, yell at it to not use AI-isms and that horrible passive voice that AI apparently trained on.
I might make minor tweaks to its arc, wording or material it chose. This step takes the longest because it takes some judgement/taste. The others might add up to 2 minutes.
Record the single-take voiceover. This step can also take several minutes depending on how long the story is, but it’s simple. I’m just narrating naturally and casually over the material.
Muse processes the final frames for me to download and publish. You can only publish 10 frames at a time so on longer stories I have to upload more than once. I add a sticker with a link onto the frames and sometimes music. That’s my favorite part of the process because it’s fun to find songs to go with frames. Kinda like a “caption this” contest with breakfast.

Money Angle

Lucky timing.

Why 1%?

7.5% / √52

There are income limits:

I bought them for all the members of my household back in November 2021, when they paid 7.12%. I wrote up the details in I-Bonds For You.

Five other differences worth knowing:

Price risk. I bonds have no market-price swings. TIPS can lose value if real yields rise, creating a loss if you sell before maturity.
Liquidity. I bonds are locked for one year. Redeem before five years and you sacrifice the latest three months’ interest. TIPS can be sold in the market before maturity.
Tax timing. I bonds let you defer federal tax until redemption or maturity. In a taxable account, TIPS generate annual taxes on both coupons and inflation adjustments even though you haven’t received the adjusted principal yet.
Purchase limits. I bonds generally cap you at $10,000 per person per calendar year. TIPS accommodate much larger investments.
How you get paid. I bonds adjust their interest rate and compound internally. TIPS coupon rates remain fixed, but the principal adjusts. They pay cash coupons every six months.

Money Angle For Masochists

Taking a small punt on gold upside before the end of the year. You can follow the thread here.

Kris

@KrisAbdelmessih

@KrisAbdelmessih · 2026-10-23 · View on X

Point of sale: GC Dec 4260/4270 call spread

Trading futures options has 1/3 the all-in cost (IBKR and exchange fees) of the equivalent risk in equity options. 250 GLD spreads = 25 GC spreads. The cost difference was about $100 instead of $300.

The market was 1.40 / 1.50 with Bid size (15), ask size (771)

Keep in mind this is a $10-wide spread with a .01 delta. $10 in gold is about 25 bps.

The quote never changed. Not a single market “event”. HFT people refer to any modification in a quote as a market event.

The offer never budged.
The bid was not joined.
Nothing traded.
The offer size stayed constant. No additions or subtractions.

My thoughts:

Taking a partial fill of only 10 out of 25 is bizarre. I’d think the only counterparty to this is a market-maker. Who wakes up looking to trade a 25 bps wide vertical naturally? So I expect when I get hit it’s a market-maker, but then they only sell 10 out of the 25? What is this, a market-maker for ants?! And then when a partial trades, how does the rest of the bid not get swept by the chipper algo which surely knows this is a resting non-market maker starting to get hit.
The futures dipped a few dollars below where I was filled. If the first seller liked selling at the higher futures price, don’t they like selling the spread even more now? I know the spread is only .01 delta, but… actually, let’s get into that for a moment.
In the recording window, the futures rallied to 4015, or about $9 higher than when I got a partial fill. At .01 delta, $10 is 10 cents, which is one full tick in this spread, the gap between 1.40 and 1.50. Paying 1.50 with futures at 4015 is the same price as paying 1.40 with futures at 4005. The market wouldn’t fill me at 1.40 at 4005, but offered an equivalent price at 4015. Furthermore, my bid wasn’t joined with more size and the offer didn’t pull.

change in underlying * delta / vega

Example

Consider a call option with a .20 delta and .05 vega, and is currently worth $5 at 20% IV.

If the stock goes up $.50 we expect the option to increase to $5.10 or .20 * $.50.

But if you can buy the call for $5 then you have paid only 18% IV since that $.10 of savings represents 2 vega or vol points.

From My Actual Life

Another cool AI capability.

A friend recorded this game with a tripod camera and sent me the video.

I gave it to Claude with instructions to extract rebounding/steal/scoring highlights for #17 on blue.

Not bad!

(Except it used a lot of my max plan tokens 🤑)

I’ve been a longtime fan of Nelly and finally got to see him perform. Last weekend we went to his show at the beautiful Mountain Winery in Saratoga (our first time there!)

Earlier this year I mentioned how I binged Nelly & Ashanti: We Belong Together in 2 nights. I’m openly jealous of how good he looks at age 51.

My favorite Nelly songs come from his earlier years.

E.I., Batter Up, and of course this banger I used to watch countless choreography videos of.

Stay groovy

☮️

Moontower Weekly Recap

like morning sex on doomsday

Emi and the engineers on my moontower.ai team have been harping on me to download Grokbot. It’s an always-on AI agent that lets you assign multi-step work to persistent AI teammates “staff” on their own cloud computers.

The Cursor team (acquired by SpaceXAI) just feels like they nailed this. You keep hearing about “agents” working around the clock for nerds who like to brag about their AI armies. Grokbot sands down the rough edges to give normal people a chance to plug in to a world of their own assistants.

You download it on your computer (Mac, Windows or Linux) and get the phone app from the App Store or Google Play. Your bots and conversations sync between them, so I start something on my laptop and check on it from my phone.

It’s included with paid Cursor plans and runs on a weekly usage allowance. First-time users get the first month for $15, which renews at $30 a month afterwards. There’s several plans that give you usage and pre-pay discounts.

Let’s dive in.

The setup

The onboarding UX is gentle, fast, and self-explanatory. You name your first bot who will act as the manager bot. I just called it “Chief”.

You can simply chat with Chief and tell it to do asks or spin up more bots. We’ll get to that. Let me take you through my first few hours.

Chief

There’s a “chief” agent that knows my whole world at a high level. I seeded it with 4 sets of sources.

1. “About me” doc

I had Claude generate a description of my businesses and context about my life it knows from what I discuss with it. For example, coaching sports teams or building an ADU on our property.

2. Connecting apps and MCP/APIs

Gmail, two accounts: your personal and your work inbox
Google Drive
Google Calendar
Moontower.ai MCP
Twitter
Notion
Linear
Stripe
Slack
Supabase
GitHub
Had it help me create a Discord bot it can communicate with

3. Knowledge base

I had it read and index all my writing across Substack, WordPress, moontower.ai/blog, and notion.moontowermeta.com. You could have it crawl your PKM (personal knowledge management) system, digital notes, Drive, or even a local file system.

4. A Mission

This summer in hedging is for gardeners, I wrote:

I spent over an hour walking through the local hills while talking to ChatGPT’s voice functionality Thursday evening. It was the easiest way to think through a large automation project. I won’t discuss the project yet but the sense I had while architecting it with ChatGPT was a new one. It was the feeling I know some friends had about 8 months ago and a smaller group of people (but not a tiny group) had 18 months ago and so on. A tiny group had the feeling a decade ago.

I never got around to implementing the project which I called Personal AI OS. In short, the automation project is an operating layer that turns your messy idea dumps and recurring obligations into verified work, so you don’t have to do the project-management overhead yourself. The AI’s within it have roles like orchestrator, chief, data scientist, etc. I had several spec documents related to its construction based on about an hour of back-and-forth with ChatGPT.

As with many things AI, the thing you can imagine just seems to become reality if you procrastinate for 3 months.

[This is simultaneously exhilarating and terrifying, like morning sex on doomsday].

I gave Grokbot the spec documents, so it understood my objectives. Honestly, I don’t think it really needed them since those documents are clunky blueprints to a problem the Cursor wizards have already had their sights on.

Subagents

Then each lane gets its own specialist.

One for writing, one for Moontower ops, one for coding, one for travel, one for household logistics, and one that reads my X lists so I can check X less. They can message each other while each maintains its own memory.

Why split them up?

Every one of these bots has a limited working memory per conversation. You’ve probably seen LLMs inform you when a thread gets long that it’s “compacting”. This specialized focus per agent lets a thread get longer without degrading

Grok itself tells me the bigger reason it works is that the important stuff per agent can be stored in its own files. For example, the writing bot keeps a voice guide, an index of everything I’ve published and a map of ideas I keep coming back to. I don’t know if it’s accurate to say this, but it at least feels like each agent is the equivalent of what Claude calls a “project” in the setup I’ve been using all year.

The cost of subagents is the handoffs. The chief only knows the outline of what the writer is doing, so anything that crosses lanes has to be written down or passed along on purpose. But handing off is part of manual work as well. As it is, if I tell an agent what I want to do on a website, I tell it to make me the prompt to give to my Claude browser extension agent, and it just makes the changes from the prompt.

The next step is to automate even the hand-off. I set up a shared board in Notion called the Agent Handoff Board. It’s one database where my agents (Grokbot, Claude, Meta Muse) pass work to each other. Each gets its own inbox view. The rules are what you’d give a new hire: check the queue a few times a day, claim a row before you start it, log progress in dated lines you never go back and edit, set a “next check” date, and if you need me, flag the row and write the exact question.

Nothing sends an email, files a dispute, pays, buys, or deletes anything because of the board without my OK in chat. The board is for coordination but permission still comes from me.

Grokbot read the page, set up its own recurring check, and started on the first row.

First hours of work

After telling the Chief to spin up these agents, I noticed the Chief starting to delegate. For this post, I asked it what it did for me since onboarding. It asked its direct reports.

This made me laugh, although I’m sure it was sincere:

Ops and X Digest still haven’t sent their rundowns. I’ll add their lines once they do.

Just like human teams, always a couple of slackers.

I hear “Ops” was seen at the dollhouse for the lunch buffet. I thought that went out of style with the trading pits.

Finally:

All six agents have answered, so here’s the whole team’s list. Ops warned that its Stripe numbers are internal business data, so I left them out.

[lightly edited for some privacy stuff]

What the agents did in the first 2 hours

Chief

Built the team: the specialist bots plus a shared Notion board where they hand work to each other.
Connected Gmail, Calendar, Notion, Slack, Linear, Stripe, Supabase (read-only) and a read-only Discord bot.
Wrote a Monday brief and a markets and vol digest, and split the digest into 3 posts sized for Discord.
Set up 5 recurring jobs. They pair newsletter ideas with what vol is doing, check classifieds, turn beta feedback into draft Linear tickets, flag community questions nobody has answered, and send a Friday best-of-Discord recap to the writer. None of them post without my OK.
Automated classified ad bookings with a Notion tracker and a Stripe checkout link.

Writer

Indexed 2,680 documents across Substack, WordPress, Notion and moontower.ai.
Mapped 71 recurring ideas across 11 themes, each backed by quotes checked word for word.
Fact-checked a reader’s I-bonds pitch
Caught two number errors in an IG story before I recorded it.

Ops

Found the last product-update email and catalogued new features since the last one
Ran a 30-day health check on billing, looking at chargebacks, failed renewals and retries.
Traced a bug where the in-app chat gave the same canned answer to a specific user. Diagnosed the source and drafted a reply to the user who reported the issue, and I sent it.

X Digest

Read 334 posts across my two focus lists and picked 5, so about 1.5% made the cut.
Worked around the fact that it can’t read lists directly by using a public search filter.

Travel

Priced holiday flights from three Bay Area airports, then about ten other destinations, plus a second family’s airport on the other coast.
Pointed out that moving the dates a few days likely saves more than changing the destination. Nothing was booked.

Household

Turned my scattered notes into a status brief for each area of the house.
Rebuilt a year of emails on a home office redo and ADU. Figured out who owed the next reply.

Coding

Got connected to 15 code repositories. No coding work has been assigned yet.

The first handoff

The first row on the board was a medical bill. A One Medical visit in September got coded as a problem visit instead of the annual physical it was, which turned a free preventive visit into an $800+ bill. Grok pulled the claim data, built the case for why the code should be the physical, drafted what to say to One Medical’s billing office and the fallback if they wouldn’t budge, and lined up the United Healthcare follow-up.

Impressions

In the short time I’ve had Grokbot running, I’ve noticed many proactive updates from each agent. I’m also using it for things I shouldn’t (for example, doing work I have Claude and Muse doing), but I’m trying to get a feel for it and compare its performance. It will take time to feel out where its assistance is most appreciated and how to use it best. And this will have more stakes than time. I’ve already used 25% of my weekly usage!

Because I work with Emi, I get a glimpse (and still cannot even fully “grok”) of how someone who lives on the edge of technology approaches work in 2026.

Emi Gal

@emigal

I’ve been using Grok @bot as my daily driver for a few weeks now and:

– it has replaced 100% of my search-like queries on chatgpt / claude
– it has replaced 100% of my Hermes usage & automations
– it now runs 100% of my Cursor cloud agents, reviews PRs, merges for me

It also…

@emigal · Oct 12, 2026 · View on X

I’m slower than I’d like to be on the uptake of the tools. I explained this feeling 6 months ago.

I like watching people like Nat use AI because they are plugged into the right layer of abstraction. The layer of recursion where every action is coupled with instructions to learn from the action so next time the action is improved. Infinite loop until you find a limit of perfection that would satisfy Zeno himself.

In contrast, when I use AI, I feel like I’m living during the debut of the automobile and thinking, “Wow, I could drive that to the granary to buy food for my horse.”

I’m going to repost this again:

Andrej Karpathy

@karpathy

Dusting off this tweet from April because this gap in shared understanding of LLM capability is *widening*. It’s now less "two groups of people speaking past each other" and more a sharp funnel.

– Napkin math somewhere around 6B people (~75% of the population) have barely come…

Andrej Karpathy @karpathy

Judging by my tl there is a growing gap in understanding of AI capability.

The first issue I think is around recency and tier of use. I think a lot of people tried the free tier of ChatGPT somewhere last year and allowed it to inform their views on AI a little too much. This is

@karpathy · Oct 11, 2026 · View on X

Andrej is telling you that:

The gap in shared understanding of LLM capability is *widening*. It’s now less “two groups of people speaking past each other” and more a sharp funnel.

I took the liberty of making his block of text easier on your eyes:

Look at the .2% number. 20 mm people. That’s less than the number of millionaires in the US alone.

The .2% scaled down to the U.S. is ~700k people.

A bit less than the population of SF. About the same number of Americans who suffer a stroke each year. Or the number of electricians in the US. Joe Walsh has 4x that many monthly listeners on Spotify. A regular season NBA game has twice as many viewers.

I don’t know about the investing part of all this because I’m not convinced this isn’t a wildly deflationary technology, but from the point of view of people’s understanding of change, we are still very early.

But let’s get back to the basics that matter. Consumerism!

Emi told me on Monday he used Grokbot to research and order a TV from Costco. Before the TV shipped, the bot found the same TV at Sam’s Club for $400 less, on its own. It asked him whether he wanted to cancel the Costco order and buy from Sam’s. With his approval, it took care of everything, including the payment.

We spend a lot of time and mental overhead routing things around. Acceleration comes with a lot of unknowns, but I think a major part of any optimistic scenario is having more time to focus on what is irreplaceable about your vocation and the relationships you spend so much time doing logistics to enjoy.

when smarts are as cheap as sunshine

I’ve been burying you with investment material, including an analysis of the TIPs + oil portfolio I strapped on this week. There’s also a tail option piece to it that I’ll write about this coming week. Remember I share what I do for educational purposes only, and while the pieces are detailed, they also make for great seeds to put in an LLM for you to augment your learning by discussing the risk and execution with your favorite bot.

This is the epitome of random, but after I wrote my piece, I called 2 friends who run commodity funds before I executed the trades I laid out. Both of them told me that, independently, a couple of their trader friends who only reach out when something gets interesting raised the idea on the same day. I don’t independently know the people who reached out (one of them is both famous- he was played in a movie- and anonymous, so I know of this individual).

Both managers took it as a sign to look a bit closer.

In AI

Noah Tye

@noahlt

Lately I’ve been learning math with ChatGPT (Astra) as my tutor, using this document scanning camera and a vibecoded tool that pastes the captured image right into the chat.

This way, I just work problems on paper and ChatGPT gives feedback. It’s really nice.

@noahlt · Oct 9, 2026 · View on X

I feel like I’m getting a big hug when my readers tagged me in the replies to this amazing post by Noah because this is the exact kind of wishlist item I wanted in Socrates 2026: how to use highlights

Noah hacked this together for ~$100:

Why the experience of AI feels so different between people

This puts some numbers on it.

Andrej Karpathy

@karpathy

Dusting off this tweet from April because this gap in shared understanding of LLM capability is *widening*. It's now less "two groups of people speaking past each other" and more a sharp funnel.

– Napkin math somewhere around 6B people (~75% of the population) have barely come…

Andrej Karpathy @karpathy

Judging by my tl there is a growing gap in understanding of AI capability.

@karpathy · Oct 11, 2026 · View on X

I’ve said it in a number of posts this year, but I’m in the camp that you won’t recognize knowledge work as you’ve come to know it soon enough. I dislike fear as a marketing tactic, but I also think this is true. And if you feel FOMO, you are right to be rethinking how much of your work will be automated and what you would do to move up the value-creation chain in the role.

I’d be very concerned about any well-paying job that looks like a computer jockey, particularly if you can’t immediately name what makes you uniquely special at it.

This doesn’t even account for how much work will be outright commoditized or immediately copied. My friend Fonz was over this week and playtesting a game I’m developing called Market Maker.

If it’s any good, it will be instantly copied. It’s a discouraging thought, but there’s no point in lingering on such a helpless feeling. Instead, you have to identify and orient towards what stays scarce and therefore valuable in the future: trust and distribution. Plus costly signals, like spending time with people in person and all the things that come with that.

[And of course essential attributes like courage, reliability, and self-efficacy or discipline or whatever you want to call it. That thing where, when you need to get something done, you do it excellently and instill confidence amongst other high performers. In a way, I think this is just the plainest advice to give to a young adult. Point to someone who’s like that as a model for quality and tell the young adult that you must become someone who would have a similar reputation. Stick to your word and be accountable. This is what betting on yourself looks like.]

Related

Money Angle

Related

Money Angle For Masochists

Trigonometry and Vol

So succinct it’s genius

From My Actual Life

Day 1

Day 2

Day 3

The right angle is the assumption

Bending day 3

What the angle is in market terms

Six days, then 20

Daily hedger vs holder to expiry

Money Angle

Money Angle For Masochists

From My Actual Life

The setup

Chief

Subagents

First hours of work

Impressions

In AI