I referenced one of Kevin’s articles about funding trades in Thursday’s letter. I have several of Kevin’s tweets saved. This one is a counterintuitive argument for why the stock’s left tail is probably smaller than you think. In a June 9th tweet, Kevin considers one of ASTS insider sales:
Scott W sold 50k shares today. Here are a few things to keep in mind:
This sale was NOT made under a 10b5-1 automatic trading plan.
Many insiders use 10b5-1 plans that pre-schedule sales based on price targets or preset dates. The benefit is that these plans are adopted well in advance and help shield the insider from allegations of trading on material nonpublic information (MNPI).
Since this was not a 10b5-1 sale, it appears Scott made a discretionary decision to sell, likely recently. He sold about 10% of his holdings, which is a very reasonable action for personal liquidity or diversification.
Importantly, if Scott were aware of materially negative, nonpublic information (e.g. major technical failure, regulatory issue, or business disruption), securities law and internal compliance would typically prevent him from selling. Doing so could expose him to legal risk and internal disciplinary actions.
So while insider sales are typically not a bullish signal, this one significantly reduces the probability of catastrophic near-term news…the idea is the left tail is less likely to occur due to the insider sale, so it makes the left tail worth less.
The thread caught my eye because it’s a neat example of an action that affects your opinion of the tail more than the heart of the distribution. The sale likely has no influence on general bullishness/bearishness but there’s a good chance an insider wouldn’t want to be seen selling shares off-cycle right before some terrible news came out and if they were willing to take that risk in possession of MNPI it doesn’t really make sense to do so with a token amount of shares.
For whatever it’s worth, ASTS is up about 41% since June 9th.
For a frame of reference:
ASTS is about a 100 vol name.
It’s been 76 biz days since June 9th or .30 of a 251-day year.
For a 100 vol name, 1 standard deviation is 100%*√.30 = 54% so the move is well within the range one might expect given its vol.
For Friday’s family pizza/movie night, we finished watching the 1978 Superman starring Christopher Reeve. It’s one of my favorite movies, so I was nervous it would feel too outdated to the kids, but phew, they approved!
My older kid likes rocks and crystals, so he loved the “programmable” sunstone that acts as a telecom, computer, and data storage in the Fortress of Solitude. My younger kid was pre-inclined to like the movie because he knows his middle name, Kalil, was derived from Superman’s Krypton name, Kal-el, with an Egyptian twist.
My love of the movie is not just nostalgia, but the myth. The struggle Superman lives with. The tension between power and restraint. He is explicitly told by his biological father, Jor-el, not to interfere with the human course of history. When Lois’ car is swallowed by the fissure, Superman, accepting that he cannot revive her, is torn. The wise father’s warning weighs heavily on the man of steel, but is ultimately overwhelmed by Superman’s mortal emotion — the pain and regret of allowing his Earth-native step-father to die of a heart attack within earshot of him on the farm.
Superman’s response is profoundly human. He rationalizes his step-father’s words, “you must be here for a reason”, to mean “I should save Lois”. A goal that’s hard to argue against as bad, yet conveniently flatters Superman’s romantic self-interest.
He’s not a god.
That’s the first moment in the film when he’s wearing the cape that he’s relatable to the rest of us messy creatures. (Clark’s dramatized bumbling makes him cringefully-relatable and Reeve’s portrayal of the awkwardness is, as the kids say, “S-tier”)
There’s more to love in this movie. Namely Gene Hackman’s Lex Luthor. He’s a magnetic mix of wry humor, brazen arrogance, flowery proclamations, and dapper style. From the ornate, booby-trapped Grand Central station lair, complete with an indoor pool, to the most elaborate master-villain plot to…make a killing on real estate.
Wait, what?!
The imbalance is breathtaking.
The feat of imagination required to subdue Superman with kryptonite, hijack 2 warheads, one as a backup plan to distract Superman in New Jersey, and the other to send CA into the Pacific by triggering the mother of earthquakes along the San Andreas Fault…so Luthor’s central valley land purchases would become valuable resorts on the new waterfront “Costa del Lex”. Really. This is the long game.
I mean are you even a supervillain if you don’t have a resort named after your gal’s boobs (screencaps via Reddit)
You have to laugh.
Have you ever seen Lex and Trump in the same room?
(Ok, calm down)
The self-proclaimed “greatest criminal mind of his time”, Lex mobilized earth and sea for something that barely rises above a CA political scandal.
[The plot echoes the early 1900s corruption and land speculation around CA water rights. The “water wars” were also the backdrop for another film I love, this one, 4 years earlier than Superman — Polanski’s Oscar darling, Chinatown, starring Jack Nicholson.]
Really, if Trump did nothing but use the presidency to make his family billions in crypto pumps and bribes, it would be quite Lex. You re-arranged humanity to…make a quick buck??
Ya know what, when I put it that way, it seems British historian Arnold Toynbee was almost right. “History is just one damn [real estate scheme] after another”.
In related news, we were shaken awake last Monday at 3 am by a 4.3 earthquake. The number betrays the experience. It was in Berkeley, less than 15 miles west of us. It was the strongest quake I’ve ever felt, although I’ve only been in CA for 13 years. [I couldn’t feel the large Napa quake from where I lived in SF shortly after moving West.]
The silver lining: doing math at breakfast before school. We talked about the Richter Scale. I explain the difference in relative strength by saying that the number represents the quantity of zeros. So a 7 has 3 more zeros than a 4 (1000x stronger).
This pic is from a tweet saying, “Honestly some of the best life advice I’ve ever heard.”
I’ll stop short of ranking life advice, but this one was timely because it was a not-so-subtle lesson in what I was trying to teach my 4th grader.
Here’s the backstory:
His class has an economy. Fake money you can earn for achieving certain goals. You can use the money to bid on monthly auction items which are provided by the students themselves. Your kid is now looking around the house for stuff they can sell.
You also have to make “rent” on your desk which is a way to force students to participate in the capitalism of the classroom economy. (The idea that a CA public school teacher might not be Marxist must be a narrative violation, but I’m reporting from the field that there’s more to reality than memes.)
So what happened?
Max came home upset and complaining about how the day’s auction went down. One of the kids paid a price far higher than anything has ever traded. (The auction item was a Labubu — I only know what that is because of South Park).
Max says it’s “unfair” because the other student apparently discovered the website that the teacher buys the fake money from and bought a bunch of it himself.
My immediate internal reaction was “great, this is an opportunity to talk about lots of important stuff” but first I had questions.
Did the teacher notice this increase in the money supply?
I got no satisfactory answer from Max on this, casting doubt on his allegation. But if the allegation is imagined, I’m probably raising a supervillain. The irony tracks.
Isn’t a Labubu worth more than the amount of classroom money it garnered at auction once you adjust for the price it costs to buy the classroom money online?
Almost certainly.
Whatever kid sold the Labubu might need an economics lesson. Or they stole a siblings’ toy and arbed the fact that the COGS were $0.
In any case, the inconclusivity of the answers don’t materially affect the conversation I had with my kids.
1) Address Max’s sense of justice
Look, if the kid really bought currency online, it is wrong because it’s not in the spirit of the rules. If the teacher thought fine print was necessary, this would have been covered. We’ve talked about values recently. Disagreements often come from the different weights people assign to certain values. In our household coat of arms honesty, in its many forms, is a chief value. Cheating a game that isn’t about winning but educational is poor form. It’s one thing to find disagreeable edges when that is part of the meta, but this is not the wild.
I don’t judge the alleged perp either because discerning between a clever gotcha and anti-social behavior is so clearly difficult that we can fill a daily Matt Levine column about high-profile examples in finance on a daily basis.
Max, your sense of fairness is well-calibrated. I don’t want to dismiss that.
Yet, you can’t let the injustice paralyze you. Instead, given what we know, how can we turn this situation to our advantage?
2) Diagnose the situation
What do we know if Max’s version is correct?
The money supply is larger than the teacher intended but the situation was left unaddressed.
If the money supply keeps growing, especially because of one kid who can easily be traced to as the source, it will break the classroom economy.
The teacher will need to intervene. Interventions would likely include better tracking of the money supply to get it under the desired control (I’ve spoken to the teacher in the past and know they regretted how loose the money supply was in the first year they did this).
In other words, money is temporarily oversupplied. It is “cheap”. You get a lot of it per good sold. If the money supply tightens, it becomes more valuable. How do you buy money while it’s cheap?
3) Give the market what it needs — stuff
Sell this kid what they want. Not Labubus, of course, since that would require arbing yourself but maybe 3-D print Labubu accessories. Or find out what else the kid is into. You gotta move fast because the money isn’t likely to stay this cheap.
Later, when taking the older kid to hoops I brought up his brother’s school drama. I set-up the situation and he immediately understood that you wanna just make this kid a customer while the getting’s good.
Being a bit older, I could explain to him that this was “inflation” or too much money chasing too few goods. That in the real-world, this is a signal to be an entrepreneur and create “supply”.
An excessively cheap cost of capital, the flipside of high valuation, also summons scammers and frauds. The market’s lack of fiscal discipline and TINA mentality was bidding for a story in the late 2010s, and there will always be unscrupulous opportunists eager to fill the order.
Some people will become crusaders against injustice. To do it well, you need fortitude and focus. The focus thing is key. Specialization even. A sign of a true crusader is what it costs them. You might disagree with Snowden, but the price was real. Getting rich under the banner of a justice crusade rightly puts the burden of “is this a grift?” on the crusader.
[“Keyboard” crusaders are everywhere. It’s human. They get the “likes” from people who already agree with them for free. For words. But this activity is amplification, not crusading, especially if they are on to the next crusade just as easily. I take it more seriously when the crusader is a specialist and not donning the “constitutional scholar” costume while their legs go numb on the toilet.]
The beauty of capitalism, notwithstanding its distortions and backdoors, is that it allows pro-sum, pro-consumer crusades without the temptation of weaponizing ethics.
We are in a strange place as a society where large swaths of people are sus of any profit while another swath is sus of do-gooding, but it’s because the well of profit and the well of do-gooding have both been poisoned by a minority who blend in.
Acknowledging that neither is ever perfectly pure is an adaptive act to rise above the numbing cynicism.
For Friday’s family pizza/movie night, we finished watching the 1978 Superman starring Christopher Reeve. It’s one of my favorite movies, so I was nervous it would feel too outdated to the kids, but phew, they approved!
My older kid likes rocks and crystals, so he loved the “programmable” sunstone that acts as a telecom, computer, and data storage in the Fortress of Solitude. My younger kid was pre-inclined to like the movie because he knows his middle name, Kalil, was derived from Superman’s Krypton name, Kal-el, with an Egyptian twist.
My love of the movie is not just nostalgia, but the myth. The struggle Superman lives with. The tension between power and restraint. He is explicitly told by his biological father, Jor-el, not to interfere with the human course of history. When Lois’ car is swallowed by the fissure, Superman, accepting that he cannot revive her, is torn. The wise father’s warning weighs heavily on the man of steel, but is ultimately overwhelmed by Superman’s mortal emotion — the pain and regret of allowing his Earth-native step-father to die of a heart attack within earshot of him on the farm.
Superman’s response is profoundly human. He rationalizes his step-father’s words, “you must be here for a reason”, to mean “I should save Lois”. A goal that’s hard to argue against as bad, yet conveniently flatters Superman’s romantic self-interest.
He’s not a god.
That’s the first moment in the film when he’s wearing the cape that he’s relatable to the rest of us messy creatures. (Clark’s dramatized bumbling makes him cringefully-relatable and Reeve’s portrayal of the awkwardness is, as the kids say, “S-tier”)
There’s more to love in this movie. Namely Gene Hackman’s Lex Luthor. He’s a magnetic mix of wry humor, brazen arrogance, flowery proclamations, and dapper style. From the ornate, booby-trapped Grand Central station lair, complete with an indoor pool, to the most elaborate master-villain plot to…make a killing on real estate.
Wait, what?!
The imbalance is breathtaking.
The feat of imagination required to subdue Superman with kryptonite, hijack 2 warheads, one as a backup plan to distract Superman in New Jersey, and the other to send CA into the Pacific by triggering the mother of earthquakes along the San Andreas Fault…so Luthor’s central valley land purchases would become valuable resorts on the new waterfront “Costa del Lex”. Really. This is the long game.
I mean are you even a supervillain if you don’t have a resort named after your gal’s boobs (screencaps via Reddit)
You have to laugh.
Have you ever seen Lex and Trump in the same room?
(Ok, calm down)
The self-proclaimed “greatest criminal mind of his time”, Lex mobilized earth and sea for something that barely rises above a CA political scandal.
[The plot echoes the early 1900s corruption and land speculation around CA water rights. The “water wars” were also the backdrop for another film I love, this one, 4 years earlier than Superman — Polanski’s Oscar darling, Chinatown, starring Jack Nicholson.]
Really, if Trump did nothing but use the presidency to make his family billions in crypto pumps and bribes, it would be quite Lex. You re-arranged humanity to…make a quick buck??
Ya know what, when I put it that way, it seems British historian Arnold Toynbee was almost right. “History is just one damn [real estate scheme] after another”.
In related news, we were shaken awake last Monday at 3 am by a 4.3 earthquake. The number betrays the experience. It was in Berkeley, less than 15 miles west of us. It was the strongest quake I’ve ever felt, although I’ve only been in CA for 13 years. [I couldn’t feel the large Napa quake from where I lived in SF shortly after moving West.]
The silver lining: doing math at breakfast before school. We talked about the Richter Scale. I explain the difference in relative strength by saying that the number represents the quantity of zeros. So a 7 has 3 more zeros than a 4 (1000x stronger).
This pic is from a tweet saying, “Honestly some of the best life advice I’ve ever heard.”
I’ll stop short of ranking life advice, but this one was timely because it was a not-so-subtle lesson in what I was trying to teach my 4th grader.
Here’s the backstory:
His class has an economy. Fake money you can earn for achieving certain goals. You can use the money to bid on monthly auction items which are provided by the students themselves. Your kid is now looking around the house for stuff they can sell.
You also have to make “rent” on your desk which is a way to force students to participate in the capitalism of the classroom economy. (The idea that a CA public school teacher might not be Marxist must be a narrative violation, but I’m reporting from the field that there’s more to reality than memes.)
So what happened?
Max came home upset and complaining about how the day’s auction went down. One of the kids paid a price far higher than anything has ever traded. (The auction item was a Labubu — I only know what that is because of South Park).
Max says it’s “unfair” because the other student apparently discovered the website that the teacher buys the fake money from and bought a bunch of it himself.
My immediate internal reaction was “great, this is an opportunity to talk about lots of important stuff” but first I had questions.
Did the teacher notice this increase in the money supply?
I got no satisfactory answer from Max on this, casting doubt on his allegation. But if the allegation is imagined, I’m probably raising a supervillain. The irony tracks.
Isn’t a Labubu worth more than the amount of classroom money it garnered at auction once you adjust for the price it costs to buy the classroom money online?
Almost certainly.
Whatever kid sold the Labubu might need an economics lesson. Or they stole a siblings’ toy and arbed the fact that the COGS were $0.
In any case, the inconclusivity of the answers don’t materially affect the conversation I had with my kids.
1) Address Max’s sense of justice
Look, if the kid really bought currency online, it is wrong because it’s not in the spirit of the rules. If the teacher thought fine print was necessary, this would have been covered. We’ve talked about values recently. Disagreements often come from the different weights people assign to certain values. In our household coat of arms honesty, in its many forms, is a chief value. Cheating a game that isn’t about winning but educational is poor form. It’s one thing to find disagreeable edges when that is part of the meta, but this is not the wild.
I don’t judge the alleged perp either because discerning between a clever gotcha and anti-social behavior is so clearly difficult that we can fill a daily Matt Levine column about high-profile examples in finance on a daily basis.
Max, your sense of fairness is well-calibrated. I don’t want to dismiss that.
Yet, you can’t let the injustice paralyze you. Instead, given what we know, how can we turn this situation to our advantage?
2) Diagnose the situation
What do we know if Max’s version is correct?
The money supply is larger than the teacher intended but the situation was left unaddressed.
If the money supply keeps growing, especially because of one kid who can easily be traced to as the source, it will break the classroom economy.
The teacher will need to intervene. Interventions would likely include better tracking of the money supply to get it under the desired control (I’ve spoken to the teacher in the past and know they regretted how loose the money supply was in the first year they did this).
In other words, money is temporarily oversupplied. It is “cheap”. You get a lot of it per good sold. If the money supply tightens, it becomes more valuable. How do you buy money while it’s cheap?
3) Give the market what it needs — stuff
Sell this kid what they want. Not Labubus, of course, since that would require arbing yourself but maybe 3-D print Labubu accessories. Or find out what else the kid is into. You gotta move fast because the money isn’t likely to stay this cheap.
Later, when taking the older kid to hoops I brought up his brother’s school drama. I set-up the situation and he immediately understood that you wanna just make this kid a customer while the getting’s good.
Being a bit older, I could explain to him that this was “inflation” or too much money chasing too few goods. That in the real-world, this is a signal to be an entrepreneur and create “supply”.
An excessively cheap cost of capital, the flipside of high valuation, also summons scammers and frauds. The market’s lack of fiscal discipline and TINA mentality was bidding for a story in the late 2010s, and there will always be unscrupulous opportunists eager to fill the order.
Some people will become crusaders against injustice. To do it well, you need fortitude and focus. The focus thing is key. Specialization even. A sign of a true crusader is what it costs them. You might disagree with Snowden, but the price was real. Getting rich under the banner of a justice crusade rightly puts the burden of “is this a grift?” on the crusader.
[“Keyboard” crusaders are everywhere. It’s human. They get the “likes” from people who already agree with them for free. For words. But this activity is amplification, not crusading, especially if they are on to the next crusade just as easily. I take it more seriously when the crusader is a specialist and not donning the “constitutional scholar” costume while their legs go numb on the toilet.]
The beauty of capitalism, notwithstanding its distortions and backdoors, is that it allows pro-sum, pro-consumer crusades without the temptation of weaponizing ethics.
We are in a strange place as a society where large swaths of people are sus of any profit while another swath is sus of do-gooding, but it’s because the well of profit and the well of do-gooding have both been poisoned by a minority who blend in.
Acknowledging that neither is ever perfectly pure is an adaptive act to rise above the numbing cynicism.
Even Superman was conflicted.
Money Angle For Masochists
I referenced one of Kevin’s articles about funding trades in Thursday’s letter. I have several of Kevin’s tweets saved. This one is a counterintuitive argument for why the stock’s left tail is probably smaller than you think. In a June 9th tweet, Kevin considers one of ASTS insider sales:
Scott W sold 50k shares today. Here are a few things to keep in mind:
This sale was NOT made under a 10b5-1 automatic trading plan.
Many insiders use 10b5-1 plans that pre-schedule sales based on price targets or preset dates. The benefit is that these plans are adopted well in advance and help shield the insider from allegations of trading on material nonpublic information (MNPI).
Since this was not a 10b5-1 sale, it appears Scott made a discretionary decision to sell, likely recently. He sold about 10% of his holdings, which is a very reasonable action for personal liquidity or diversification.
Importantly, if Scott were aware of materially negative, nonpublic information (e.g. major technical failure, regulatory issue, or business disruption), securities law and internal compliance would typically prevent him from selling. Doing so could expose him to legal risk and internal disciplinary actions.
So while insider sales are typically not a bullish signal, this one significantly reduces the probability of catastrophic near-term news…the idea is the left tail is less likely to occur due to the insider sale, so it makes the left tail worth less.
The thread caught my eye because it’s a neat example of an action that affects your opinion of the tail more than the heart of the distribution. The sale likely has no influence on general bullishness/bearishness but there’s a good chance an insider wouldn’t want to be seen selling shares off-cycle right before some terrible news came out and if they were willing to take that risk in possession of MNPI it doesn’t really make sense to do so with a token amount of shares.
For whatever it’s worth, ASTS is up about 41% since June 9th.
For a frame of reference:
ASTS is about a 100 vol name.
It’s been 76 biz days since June 9th or .30 of a 251-day year.
For a 100 vol name, 1 standard deviation is 100%*√.30 = 54% so the move is well within the range one might expect given its vol.
When I was trading trainee we used to play a put/call parity game to sharpen our mental arithmetic.
I used to get perfect accuracy in the 30-40 second range at my best. My friend Tina was the firm champ at about 18 seconds. Just over 1 second per question.
Being fast was a job requirement, but you knew who the aliens were. It’s often hard to appreciate just how steep the performance curve is at the right tail of any skill in a competitive domain. We tend to get a glimpse of it in sports where everyone knows someone who was extreme (a friend of mine who was top 50 soccer player in US college soccer, another friend whose sister is bottom half of the top 100 tennis players on the women’s tour) but readily concedes there is still a world of difference between them and anyone famous in the field.
The trading floor was a humbling place because it’s very obvious that not all synapses are created equal. The strategic inferences and therefore actions you make with this information is heavily modulated by how much self-awareness you have. Sometimes being overconfident comes from never being exposed to the right-tail (your local big fish in a small pond) but it also comes from not realizing how far apart 2 standard devs is from 3 standard devs is in probability space.
[I tried to teach my older kid this idea recently in the context of his math MAP score. He is 99.5 percentile for 7th grade fall testing. He has a friend that is 99.8. Sounds similar. But my kid’s score is 5 in 1000 or 1 in 200. His friend is 1 in 500. In the population of Bay Area burbs with a good public school ranking, my kid is more like 1 in 40 and doesn’t make the gifted and talented cut, but those extra .3 percentiles keep you in the 99th percentile of the local pool.
99.8 vs 99.5 is 2.5x more rare. Proportionally those .3 percentile points are as wide as being in the 50th percentile, or 1 in 2, vs the 80th or 1/5. That range covers 30 percentile points!
The extreme is yet steeper.
99.9 percentile is half as common as the 99.8…almost a similar jump in rarity from my son to his friend for just .1 percentile points.
💡See Tails Explained to see more application to everyday reasoning]
If you do Tina’s morning routine, you’re not gonna be Tina. It’s more obvious when the Tina’s of the world look like Lebron. But don’t be fooled when they don’t. Figure out the games you can win. Playing to your strengths is wisdom but first you must identify them. Self-awareness means stop wishcasting, see reality, and adapt to it.
You don’t want to just raw-dog the formula. You get faster if you can contextualize it because with practice your mind collapses multiple operations into just one or two. You need to try it for ahwile to appreciate what I mean.
But let me give the context.
First, note that (S-K) is just “intrinsic value”. If positive, the call is in-the-money, if negative, the put is.
The extrinsic portion of the ITM [call/put] is the value of the OTM [put/call]
For calls, we add the rev/con (ie cost of carry) for puts we subtract it
Contextualizing the game
The game spread quickly when I shared the link on X. I even had some more recent alum of SIG and one from another MM tell me even in recent years they use a game like this in training.
When I started in 2000, this game was actually in fractions (“steenths”) but decimalization pilots were happening in my clerking months. Even though I started on fractions, I was doing decimals about halfway through assistant year. As clerks we were supposed to play this game when things were slow so you could be fast in mock-trading in class after work so you could actually get selected for the bootcamp (which alone got you a raise) and get on with a trading account.
Speedy mental math was more important back then. Different era obviously, but interesting that they still find use in it. I could speculate as to why but maybe someone reading this will give me the official reason. I would admit that even when I’d get a broker look at an outright option when I was at Parallax I’d automatically do the calc in my head to compare to the same strike option on the chain. Being facile with the calculation was also a requirement on the rare occasion that a broker asked for a synthetic (a topic I discussed in the art of paranoia as well).
It only took about 20 minutes of iteration to make the game with Claude. Which is not much longer than it takes me to play 🙁
My friend Khe has been working with hedge funds and Wall Street firms to help their teams get more out of LLMs (his weekly letter How To Future-Proof Your Career with AI is consistently practical. On a personal note I feel like Khe’s cadence is about 1-month ahead of my own LLM-discovery arc. I’m just getting started with Claude Code this week).
Khe’s is running an AI Accelerator program in October.
I feel compelled to volunteer that while I will host ads in Moontower this is not an ad. I asked Khe if I could tell my readers about this because I hear the same thing he hears from many people in finance and heck, even in my extended family: “Everyone talks about AI, but I still don’t know how to use it effectively in my day-to-day work. I feel like I’m missing out on something that could make me 10x more productive.”
Let’s talk about this a bit broadly.
I don’t consider myself a power user of LLMs compared to say devs or Khe who are building agents over their entire file systems (I’m not there YET, but Emi is giving me a tutorial soon!) but you can probably notice how much use I’m getting out of them in the work I have been sharing here.
I’m not comfortable saying it because it sounds like bragging, but I’ve had more people ask me how I’m able to produce “so much” especially this year and part of it is just the natural leverage embedded in these tools. I’m using them as tutors, research aids, sparring partners, summarizers, and the “connective tissue” of writing ideas not too mention all the vibe-code projects.
A few other examples:
My 12-year-old and I are collaborating with Claude to prototype a physical game I want to publish.
This week my 9-year-old is using ChatGPT in a loop to give it pictures that he draws, asks for feedback on how to improve the shading and lighting by words and example and then he goes back and tries to mimic it.
I have a Claude project where the LLM knows all my guitar gear and I can ask it how I can replicate the sound of particular songs. It provides the signal chain and suggestions for what effects I should get to make my set-up more versatile.
ChatGPT is helping not just with decorating but home maintenance crap. Well, while it did help me change the cartridge that blends the hot/cold in my sink faucet, it wasn’t until a simple Google search revealed that my problem was that my Delta 20 faucet batteries were dead. New house, new times. I never considered that a faucet takes AA batteries. I figured the LED & touch functions were powered by a plug.
While on the topic of AI, I’ll eagerly admit that it feels like every time I use it I’m training my replacement. I’m also rewarding companies that are so flush with funding that they can brazenly play the “ask for forgiveness, not for permission” game and account for IP lawsuits as COGS.
But I’m what Huxley warned of. The citizen who invites his colonization by embracing the products. I want certain things to exist. These tools lower the cost of making them. I suppose my revealed discount factor to the specter of being replaced is extremely high.
Something that might sound a bit weirder, which I’ve admit in a few private convos: I look forward to “replacing myself”. I make the stuff I do because I want it to exist but doesn’t to my satisfaction. If it did, I’d do something else.
I was just talking to a friend who has no background in robotics but is working with an engineering team at the intersection of AI + robotics on the business side. I felt kinda jealous. I probably get that feeling a few times a month. There is so much work that sounds fun that if I weren’t doing the things I prioritize now, it wouldn’t be hard to find something else to do. I wish I could copy myself. If everything on my current strand of thought were created, I could feel liberated to move on to something else. Be a beginner elsewhere.
Like if you’re a radiologist and you saw a path where technology could make radiologists unnecessary, would you root for it or would you protect your job? Of course, the necessity of making a living compels you to protect. I’m not judging that. The priority for anyone is survival. But if you removed the constraint, you’d likely conclude that there are many ways to use your humanity; why be attached to one that overlaps with a machine? The radiologists who “defect” and go train the machines are like the market-makers who tightened the spreads (the game theory bit towards the end of the art of paranoia applies far beyond trading).
Your own value will be maximized where the machine can’t compete yet. Protection is ultimately delaying your own growth unless you plan to have your career outrun adoption. That’s probably fine if you’re 55, but if you’re 40, it’s a tougher question. It’s impossible to hand-wave the constraint of making a living. But here’s food for thought (food that is probably not going to nourish anyone whose already mid-career or older but might timely for college-aged or 20-somethings):
Living below your means, or having cheap tastes (which is easier to do before lifestyle-creep moves in) is a valuable option. And what maximizes the value of an option?
Variance.
Look at the world. The internet is a volatility pump. Connectedness, the reduction of communication/info friction led to acceleration. Having a buffer makes you less fragile. More mobile. Closer to just-in-time adaptability to where opportunity is. Less protectionist. Less defensive. Less calcified.
As we learned from Wednesday’s making the most of your time on earth, everyone has different values. You may not value any of the things I’m referring to above*. Totally fine. One of the things I got from a Straussian reading of the Welch stuff is how so much of our disagreements come from different starting values. Given that the source of values is probably more random than anyone wants to acknowledge (birth lottery and who you happen to hang out with in formative years), we are really left with different guidebooks for everyone. The best I can hope for is my perspectives landed for some of you.
*I didn’t share it in that post but my top 4 values on the values bridge assessment are below. Belovedness is about the primacy of your partner relationship and family-centrism were high — it feels horoscopic, I personally think the exercise of doing the questions is better than the output. The “voice” and “non-sibi” explain the newsletter, I guess.
My friend Khe has been working with hedge funds and Wall Street firms to help their teams get more out of LLMs (his weekly letter How To Future-Proof Your Career with AI is consistently practical. On a personal note I feel like Khe’s cadence is about 1-month ahead of my own LLM-discovery arc. I’m just getting started with Claude Code this week).
Khe’s is running an AI Accelerator program in October.
I feel compelled to volunteer that while I will host ads in Moontower this is not an ad. I asked Khe if I could tell my readers about this because I hear the same thing he hears from many people in finance and heck, even in my extended family: “Everyone talks about AI, but I still don’t know how to use it effectively in my day-to-day work. I feel like I’m missing out on something that could make me 10x more productive.”
Let’s talk about this a bit broadly.
I don’t consider myself a power user of LLMs compared to say devs or Khe who are building agents over their entire file systems (I’m not there YET, but Emi is giving me a tutorial soon!) but you can probably notice how much use I’m getting out of them in the work I have been sharing here.
I’m not comfortable saying it because it sounds like bragging, but I’ve had more people ask me how I’m able to produce “so much” especially this year and part of it is just the natural leverage embedded in these tools. I’m using them as tutors, research aids, sparring partners, summarizers, and the “connective tissue” of writing ideas not too mention all the vibe-code projects.
A few other examples:
My 12-year-old and I are collaborating with Claude to prototype a physical game I want to publish.
This week my 9-year-old is using ChatGPT in a loop to give it pictures that he draws, asks for feedback on how to improve the shading and lighting by words and example and then he goes back and tries to mimic it.
I have a Claude project where the LLM knows all my guitar gear and I can ask it how I can replicate the sound of particular songs. It provides the signal chain and suggestions for what effects I should get to make my set-up more versatile.
ChatGPT is helping not just with decorating but home maintenance crap. Well, while it did help me change the cartridge that blends the hot/cold in my sink faucet, it wasn’t until a simple Google search revealed that my problem was that my Delta 20 faucet batteries were dead. New house, new times. I never considered that a faucet takes AA batteries. I figured the LED & touch functions were powered by a plug.
While on the topic of AI, I’ll eagerly admit that it feels like every time I use it I’m training my replacement. I’m also rewarding companies that are so flush with funding that they can brazenly play the “ask for forgiveness, not for permission” game and account for IP lawsuits as COGS.
But I’m what Huxley warned of. The citizen who invites his colonization by embracing the products. I want certain things to exist. These tools lower the cost of making them. I suppose my revealed discount factor to the specter of being replaced is extremely high.
Something that might sound a bit weirder, which I’ve admit in a few private convos: I look forward to “replacing myself”. I make the stuff I do because I want it to exist but doesn’t to my satisfaction. If it did, I’d do something else.
I was just talking to a friend who has no background in robotics but is working with an engineering team at the intersection of AI + robotics on the business side. I felt kinda jealous. I probably get that feeling a few times a month. There is so much work that sounds fun that if I weren’t doing the things I prioritize now, it wouldn’t be hard to find something else to do. I wish I could copy myself. If everything on my current strand of thought were created, I could feel liberated to move on to something else. Be a beginner elsewhere.
Like if you’re a radiologist and you saw a path where technology could make radiologists unnecessary, would you root for it or would you protect your job? Of course, the necessity of making a living compels you to protect. I’m not judging that. The priority for anyone is survival. But if you removed the constraint, you’d likely conclude that there are many ways to use your humanity; why be attached to one that overlaps with a machine? The radiologists who “defect” and go train the machines are like the market-makers who tightened the spreads (the game theory bit towards the end of the art of paranoia applies far beyond trading).
Your own value will be maximized where the machine can’t compete yet. Protection is ultimately delaying your own growth unless you plan to have your career outrun adoption. That’s probably fine if you’re 55, but if you’re 40, it’s a tougher question. It’s impossible to hand-wave the constraint of making a living. But here’s food for thought (food that is probably not going to nourish anyone whose already mid-career or older but might timely for college-aged or 20-somethings):
Living below your means, or having cheap tastes (which is easier to do before lifestyle-creep moves in) is a valuable option. And what maximizes the value of an option?
Variance.
Look at the world. The internet is a volatility pump. Connectedness, the reduction of communication/info friction led to acceleration. Having a buffer makes you less fragile. More mobile. Closer to just-in-time adaptability to where opportunity is. Less protectionist. Less defensive. Less calcified.
As we learned from Wednesday’s making the most of your time on earth, everyone has different values. You may not value any of the things I’m referring to above*. Totally fine. One of the things I got from a Straussian reading of the Welch stuff is how so much of our disagreements come from different starting values. Given that the source of values is probably more random than anyone wants to acknowledge (birth lottery and who you happen to hang out with in formative years), we are really left with different guidebooks for everyone. The best I can hope for is my perspectives landed for some of you.
*I didn’t share it in that post but my top 4 values on the values bridge assessment are below. Belovedness is about the primacy of your partner relationship and family-centrism were high — it feels horoscopic, I personally think the exercise of doing the questions is better than the output. The “voice” and “non-sibi” explain the newsletter, I guess.
Money Angle
Speaking of partner, this week was a rare public glimpse of the investment manager my wife works for — Eagle Capital. They are private manager but in 2024 they launched a public version of their portfolio, EAGL. I believe it was the largest ETF conversion to date when it launched. Of course this is where we get most of our beta and it’s the only ticker my kids probably know.
One of the heads of the investment team, Adrian Meli, went on Ted Seides show and I hear it was one of the most listened to episodes despite the vanilla category of “long only” investment manager.
They fly under the radar but I know many on the team. Very clever cats. When you hear Adrian you’ll understand.
When Yinh asked me how I thought it sounded, I said “it confirms what I suspected — I wanna work there. Glad you do.”
Gamma: one rung at a time
Last weekend I shared a delta hedging simulation tool where anyone can learn exactly how long gamma mechanically lets you “buy low and sell high” for the cost of theta. I made this video Monday to step through 30 days of simulation to break it down as much as humanly possible.
Money Angle For Masochists
Yet another vibe-code project. This one went viral because…it’s a game!
It’s a replica of the one we trained on an eon ago at SIG. It’s a put-call parity game.
The formula for put/call parity is:
C = (S - K) + P + RC
where:
C = call value
P = put value
S = stock price
K = strike price
RC = cost of carry til expiry (ie “reversal/conversion” value)
In the game you are given the strike price and 3 out of 4 of the remaining variables. Solve for the 4th. The game is timed.
You don’t want to just raw-dog the formula. You get faster if you can contextualize it because with practice your mind collapses multiple operations into just one or two. You need to try it for ahwile to appreciate what I mean.
But let me give the context.
First, note that (S-K) is just “intrinsic value”. If positive, the call is in-the-money, if negative, the put is.
The extrinsic portion of the ITM [call/put] is the value of the OTM [put/call]
For calls, we add the rev/con (ie cost of carry) for puts we subtract it
Contextualizing the game
The game spread quickly when I shared the link on X. I even had some more recent alum of SIG and one from another MM tell me even in recent years they use a game like this in training.
When I started in 2000, this game was actually in fractions (“steenths”) but decimalization pilots were happening in my clerking months. Even though I started on fractions, I was doing decimals about halfway through assistant year. As clerks we were supposed to play this game when things were slow so you could be fast in mock-trading in class after work so you could actually get selected for the bootcamp (which alone got you a raise) and get on with a trading account.
Speedy mental math was more important back then. Different era obviously, but interesting that they still find use in it. I could speculate as to why but maybe someone reading this will give me the official reason. I would admit that even when I’d get a broker look at an outright option when I was at Parallax I’d automatically do the calc in my head to compare to the same strike option on the chain. Being facile with the calculation was also a requirement on the rare occasion that a broker asked for a synthetic (a topic I discussed in the art of paranoia as well).
It only took about 20 minutes of iteration to make the game with Claude. Which is not much longer than it takes me to play 🙁
I used to get perfect accuracy in the 30-40 second range at my best. My friend Tina was the firm champ at about 18 seconds. Just over 1 second per question.
Being fast was a job requirement, but you knew who the aliens were. It’s often hard to appreciate just how steep the performance curve is at the right tail of any skill in a competitive domain. We tend to get a glimpse of it in sports where everyone knows someone who was extreme (a friend of mine who was top 50 soccer player in US college soccer, another friend whose sister is bottom half of the top 100 tennis players on the women’s tour) but readily concedes there is still a world of difference between them and anyone famous in the field.
The trading floor was a humbling place because it’s very obvious that not all synapses are created equal. The strategic inferences and therefore actions you make with this information is heavily modulated by how much self-awareness you have. Sometimes being overconfident comes from never being exposed to the right-tail (your local big fish in a small pond) but it also comes from not realizing how far apart 2 standard devs is from 3 standard devs is in probability space.
[I tried to teach my older kid this idea recently in the context of his math MAP score. He is 99.5 percentile for 7th grade fall testing. He has a friend that is 99.8. Sounds similar. But my kid’s score is 5 in 1000 or 1 in 200. His friend is 1 in 500. In the population of Bay Area burbs with a good public school ranking, my kid is more like 1 in 40 and doesn’t make the gifted and talented cut, but those extra .3 percentiles keep you in the 99th percentile of the local pool.
99.8 vs 99.5 is 2.5x more rare. Proportionally, those .3 percentile points are as wide as being in the 50th percentile, or 1 in 2, vs the 80th or 1/5. That range covers 30 percentile points!
The extreme is yet steeper.
99.9 percentile is half as common as the 99.8…almost a similar jump in rarity from my son to his friend for just .1 percentile points.
💡See Tails Explained to see more application to everyday reasoning]
If you do Tina’s morning routine, you’re not gonna be Tina. It’s more obvious when the Tina’s of the world look like Lebron. But don’t be fooled when they don’t. Figure out the games you can win. Playing to your strengths is wisdom but first you must identify them. Self-awareness means stop wishcasting, see reality, and adapt to it.
A Moontower hobby-horse is the tension between the importance of “matching” to the work we should do and the dangers of premature optimization most recognizable in the 35-year-old doctor/dentist who realized a dumb 18-year-old chose their life path for them.
I muse on the topic frequently because I sense that spending 40 hours or more of your week in a vocation aligned with your likes, skills, and goals makes for a happier life, less defensiveness, and a better menu of compromises.
But career and life advice is often narrowly practical (“take the best paying job”) leading to local maxima or vacuous platitude (“follow your bliss”).
Chris Rock once said, “You can be anything you’re good at, as long as they’re hiring”
Real. But vaguely unsatisfying.
It would be nice to have some structure to approach the profoundly important question of “what do we do”.
Well, today we get something nice.
It’s author and NYU professor Suzy Welch’s framework to “becoming you”. I discovered it from her interview with Dan Harris as she promotes her new book.
Why this landed for me
“The limits of my language are the limits of my world. As soon as we get words for it then our world can start to write itself.” — Wittgenstein
We aren’t getting into a drawn-out debate of the Sapir-Whorf Hypothesis, but that quote captures the value of this discussion. We don’t have structure around this problem because a lot guidance counselor speak feels squishy.
Welch is refreshingly practical without losing any respect or appreciation for how this problem is innately philosophical. We will go deeper in a moment, but just to introduce the framework, Welch breaks the decision into three measurable, explorable dimensions that form the intersection of:
values
aptitudes
economic viability
Her definition of these terms is what pulled me in. It’s a major achievement, in my eyes, for the language of career advice.
I cover the major points in the summary below but if this topic is of interest to you either for yourself, your children, or your parents (seriously…just see the notes at the end!), I urge you to listen to it or share it with someone who needs it. [Welch says you probably need to be at least 16 for it to feel useful.]
Before going in I just want to highlight her thoughts on happiness versus purpose, because I strongly agree.
“Happiness is not a goal but a byproduct of living with purpose…Almost everybody who is living in their purpose has a kind of exquisite aliveness, which is pretty much joy.”
She jokes about “the happiness industrial complex” and believes “there’s just a lot more promise to trying to figure out what your purpose is” rather than chasing an often undefined and fleeting emotional state. Or as Denis Leary noted 40 years ago:
Happiness is a cigarette butt, or a chocolate chip cookie, or a five-second orgasm
The extreme situation is the proof. A survivor carrying on or helping others survive may not be happy, but sustains via purpose. I don’t care for sarcasm (etymology is fitting: “to tear flesh”) but there’s probably been a few books written about the importance of purpose. You might even look around at the senselessness around us and wonder if there is a crisis of purpose.
Personally, I don’t think there is a Meaning of life. I believe you create your own meaning. It probably has something to do with what you’d want your loved ones to say about you at your funeral.
I’ll mostly stick to summarizing, it stands great on its own, but there’s just a couple spots where I inject a thought.
[Fyi, I organized and re-factored the transcript with Claude]. The general format is topic and select quotes. It follows a sequential progression.
Core Framework Overview
The “Becoming You” Methodology: A systematic approach to finding your “area of transcendence” (purpose) through understanding three key components:
Values — Your deeply held beliefs that galvanize actions and decisions
Aptitudes — Your cognitive wiring and how the world experiences your personality
Economically Viable Interests — Work that can sustain you financially while engaging you
“It’s better to be the author of your life than the editor. There’s just so many editors around us. The world will edit us soon enough. Don’t edit yourself.”
“I’m not the police. I’m not coming to get you if you don’t live by your values, aptitudes, and economically viable interests. I’m just telling you that this is one way to think about how to live that might get you to your purpose which feels again exquisitely alive with less torment.”
The Three D’s of Living
Default Mode: Living in reactive mode, exhausting and discouraging
Deliberation: Starting to wrap your arms around life with some intention
Design: Living with a theory of yourself and your values, allowing for detours but with clear direction
“We never figure out who we are when we’re standing still. Most people do not figure out who they are standing still until they have to, like a crisis happens.”
Only 17% of people can identify what a value actually is
Values have been “hijacked by politics”
People confuse values with virtues
“Values are the deeply held beliefs that galvanize our actions and decisions. They’re what we believe.”
“You can’t just ask somebody [their values]. It’s not like asking somebody what’s your name. You have to ask from a lot of different angles.”
“You have a right to whatever values you want in whatever level you want. If you’re not hurting anybody, your values are your values. All you need to do is live them if you want to be authentic.”
[Kris: I found this approach profound in its practicality but what I find to be practical, you might find despicable. I’ll explain what I mean at the end of the list…]
The 15 Core Values
Scope — Stimulation, excitement, new experiences vs. predictability and routine
“I had a student describe scope as wanting to touch everybody’s brain. It’s sort of the Bianca Jagger on the back of a white horse going into Studio 54 dream of your life.”
Radius — How big a crater your life would leave on the world; desire to change the world
“Radius… this is if your life was a bomb and you dropped it on the earth how big a crater would it leave.”
Family Centrism — How much family is your first, second, and third priority
“Every decision and action you make is about family.”
Belonging — Connection, community, being in groups vs. smaller circles
“Somebody who goes to 16 weddings a year, you know, they probably got belonging off the charts.”
Cosmos — Faith as an organizing principle; religious/spiritual orientation
Agency — Self-determination, driving your own bus vs. collaboration
“They’ve got to be the author. No one is the boss of them.”
Beholderism — How much you care about how things look (spaces, stuff, yourself)
Non Sibi — “Not oneself”; motivation to help people
“I’ve had students say to me, ‘I don’t care what company I work at, what industry I work in, I don’t care about any of that. I’ve got to be helping people day in and day out.'”
Work Centrism — How much work is an organizing principle of life
“For me, work centrism is off the charts. I love my work…people who have high work centrism like me have been called workaholics our whole life. And I’ve always thought to myself, ‘aholic’ – it’s not a disease to me. It’s my value. I like working. I’m not hurting anybody.”
Affluence — Your relationship with money and financial security
“I’ve had people go through this process and say, ‘Look, my value is financial security. I just want to be able to rent an apartment near my store.’ And I’ve had other people say… they want a helipad per child. And they both would tell you that financial security is a value.”
Achievement — Being seen as successful in conventional terms
“I’ve also had MBA students for which it’s not a value at all. And when they see that result come back they’re like ‘yeah no wonder I feel like I’m wearing a suit that’s three sizes too small every day.'”
Luminance — Fame, celebrity, being known
“We’re in a generation where 75% of people have said that they want to be influencers as their job.”
Voice — Creative self-expression, authenticity, letting your “freak flag fly”
“I can’t tell you how often I get young women, typically women of color, very unfortunately, who have voice as a value of number one or number two, but how much they’re living it, the variance between how much they have it and how much they’re living it can be up to 98-99%.”
Eudaimonia — Self-care, pleasure, leisure, feeling good
“Many of my students – in some classes more than 60% of them have eudaimonia as their number one value. They do not want to postpone joy. They don’t want to postpone feeling good. You can’t blame them given what they’ve seen in this world.”
Place — Where you want to live, geographic preferences
“You’ve seen many people whose lives have been driven by just saying ‘look I’m not leaving Milwaukee.'”
[Kris: I’m back. Notice how Suzy doesn’t judge or speculate on the source or content of the values. Depending on your own values, you might find some of these values to be defects, moral failings, or insecurities.
That right there is my diagnosis of our general malaise. Social media has thrown everyone into the same room, amplified the tails, and now there’s no way out. We found out who exists. It doesn’t matter what alignments you have, you now can see the anti-world.
But any long-time reader who knows my zeroth commandment, will understand why I accept Suzy’s proposal. Getting riled up over others’ values is pushing a boulder uphill forever. You will never be satisfied with the range of human values. You must find a way to proceed even though others are “wrong” because that’s never going to change. For most of humanity, there is no perceived distance between their agenda and the truth. The faster you accept this, the more you will make of your time on earth.]
Values Stability and Recognition
“I’m going to lovingly and gently push back for a moment and say I actually think our values are very stable and my guess is that it was always a value of yours probably from when you were a young boy and you sublimated it and crushed it and denied it and finally when you started living it you felt authentic.”
“It’s very very important for us to find out how closely we’re living with each one of those values. You know what’s our variance on each one? This is all data that we need to know if we want to figure out what our purpose is.”
Discover your values with The Values Bridge assessment tool and how in harmony you are living with those values
Deep Dive: Aptitudes
Cognitive Wiring Examples
Generalist vs. Specialist
Brainstormer vs. Idea Contributor
Future Focuser vs. Present Focuser
“I really have a son who’s a specialist and he’s a classic specialist and he loves music and he knows absolutely every single thing about his type of music that he loves, every artist that’s ever been in it, every, you know, buys vinyl albums and yet, when you go out to dinner with him and you start saying like, ‘Wow, did you just hear about the new pope?’ He may not know about it.”
Personality as Aptitude
Critical Insight: Your personality is how the world experiences you, not how you think you are.
“Everybody tells you what their personality is. ‘Oh I’m a good listener. I’m compassionate. I’m very kind. I’m funny.’ Right? And that’s maybe true maybe but actually your personality is how the world experiences you.”
The Cost of Misalignment
“Sometimes you end up doing work for many more years and sometimes for your whole life long that is not – it’s not an aptitude… and you do it because of expedience or you do it because of expectations. It can cause a great deal of discomfort and self-doubt.”
The Dominant Hand Analogy
“When you sign your name with your dominant hand, it feels very natural. You could do it all day long, easy and fun. But if you put that pen in your non-dominant hand, you would eventually with practice be able to sign your name. It would never be natural. It would never be fun. It would never look exactly right…it’s usually a lot more comfortable, enjoyable, and successful just emotionally to be working in concert with your aptitudes rather than against them.”
Deep Dive: Economically Viable Interests
The Shrinking Aperture Problem
High school graduates know about 7 jobs on average
College students know 9-11 jobs
People in their 30s think there are only 3-4 viable jobs for them
Reality: 135 industries and 12 mega trends
“The idea is to make sure we haven’t shut our aperture prematurely or for no reason.”
“What ends up happening in life is our aperture gets smaller and smaller about what kind of work even exists.”
The Practical Reality
“People search for certain kinds of work that calls them intellectually or emotionally but it has to be able to pay you according to what your value around affluence is. So it’s both an understanding how big the economy is and also a listening to yourself about what is calling you.”
Why “Follow Your Passion” Fails
“If you’re good at your passion, do it. But the problem is a lot of people… You’re just not good at it. That’s why we got aptitudes in there. You got to be able to do it. Otherwise, you’re setting yourself up to fail.”
Assorted ideas
Relationships and Values
Most people spend their lives negotiating their values with partners, family, culture.
“Once you know your values, you want to talk about them with the person you’re in relationship with.”
“It’s very very interesting to take the world on where you can actually, for the first time, live my values and express my values without having to negotiate my values.”
The Awkward Dinner Party Revelation
“One member of the partnership would get a variance at the end of like 7% – you’re living very close to your values, you’re living an authentic life – and the other member of the couple would get like a 98% variance and there’d be this sort of stunned silence. They knew exactly what was going on.”
“The husband said, ‘Yes, that is correct. We are living Mary’s dream of a life.'”
[Kris: Suzy regretted giving the evaluation at a dinner party and never did it again]
Universal Applicability
Age Range: Successfully used with people ages 16-78
“I don’t think there’s any time not to be asking these questions.”
Demographics and Life Stages
Working Mothers:“They’re working mothers generally… who are like, ‘Okay, like I gave up this piece of myself because I’m going through that process. I’m in that period of my life where my kids need all of me and my work needs all of me and I can’t figure out who I am or what I should be doing.'”
Men in Their 40s: “I think 40 is sort of when they’re like ‘is this all there is? I did – I mean I just’ and so for some reason architects, product managers, sort of men in their 40s show up and do the workshop and say, ‘Yep, okay, it has to be a reset here.'”
Retirees:“Sometimes people love this – love going through this protocol… who are just retired and they go, ‘Okay, I’m going into my third half, if you will.’ And ‘I don’t want to blow it. I don’t want to blow it. What are my values? What are my aptitudes? What am I interested in?'”
People in Their 50s-60s:“This shit’s real – like it’s the clock is now ticking. I hear it. I may have 30 more years, but I don’t want to waste them because I have not been.”
Language and Transformation
“One of the reasons I like people doing the process in groups is because they need to have a language….I’ve seen though them come back once they get in and it’s particular – get the language of values because it’s sort of like the scales fall from their eyes and say, ‘Oh my god, all along this was about radius or all along this was about cosmos or agency and I just didn’t get it. But now I can.'”
Tools and Resources
The Values Bridge — Values assessment tool (thevaluesbridge.com)
Book: “Becoming You: The Proven Method for Crafting Your Authentic Life”
Matt Zeigler hosted myself and Mat Cashman to explain gamma. This is the 3rd episode I’ve done in this ELI5 series and I think it’s forced some of the better educational stuff I’ve done because I can’t assume too much knowledge.
🖼️These are the slides I used to bridge middle-school math to gamma.
One of the most common questions I get is about how “gamma scalping” actually works.
A few weeks ago I vibe-coded a simulation that I demo’d in the interview.
You can try it yourself. There’s probably no easier way to learn the concept than let this stock tick and then look at the chart/table to witness “scalping”.
Last Monday night, I taught a group of kids (and parents) from the neighborhood and social club a trading game as well as exercises to demonstrate how confirmation bias is always lurking even when a topic isn’t emotional. I also gave them some quizzes which never fail to demonstrate how overconfident we are.
My notes on what to talk about (I didn’t cover all of it because you take the temperature of the room to see what’ll be boring)
Everyone thinks they are a better driver than the average driver. We are structurally overconfident. I say structurally because it’s a conspiracy of how our minds are wired. We don’t look at evidence then form beliefs. We form beliefs easily and then filter our observations through these beliefs — facts that reinforce our beliefs are preserved and evidence against our priors are ignored or discounted.
[Beliefs are like the first sperm to get to the egg — it forms a shield shutting off new assailants. Regardless of the merit of the first idea you heard, dethroning it is difficult which is why a lot of learning as an adult feels like unlearning. You come to realize that many of the things you believe are legacies of childhood, from parents who often times were just muddling thru themselves as many of do today]
That leads to a discussion of…confirmation bias
Anyway, you’ve probably heard of this phenomenon— it’s called confirmation bias. You’ve probably heard of many so-called cognitive biases, thanks to the late Nobel laureate Danny Kahneman.
There’s a whole zoo of these biases but many of them can really be collapsed into confirmation bias. Notwithstanding Wu Tang’s objections, CREAM is “confirmation bias rules everything around me.”
Just think of survivorship bias — we look at some super successful person and suddenly everyone wants to know their morning routine or what they read. That 1000 other people who did what they did and didn’t get that outcome is easily ignored. We want to know the pattern, right? We are trying to confirm a belief that cause and effect are related by a string. The impulse is forgivable because that’s how the world works in common, tangible contexts — if I spill this drink, I will feel wet.
But complex contexts, like achieving outlier results, are governed by chaotic processes or what is more academically referred to as “complexity”. Jurassic Park is a great lesson in complexity science — it’s not an accident that Michael Crichton was a collaborator with the Santa Fe Institute (Cormac McCarthy was another), a research org devoted to the science of complexity and making sense of chaos. Great success, a complex outcome, is the result of long chains of serendipity, largely out of our control, resting on a foundation of sufficient conditions of which we have some control.
In making decisions, it’s not necessarily about being right or wrong — it’s about calibration
[In investing, it’s not about predicting the future which nobody can do it’s about getting odds that have positive expectancy compared to your confidence — but you need to be effective at understanding your confidence. Which takes practice! I did not discuss this with the kids and in fact there’s a whole part 2 of this presentation that would make sense for an older group.]
But it’s important to learn about what calibration is because the next level of understandinf confirmation bias is to know that itis insidious because it often comes dressed as rigor.
I’ll give you an example.
CIA’s Psychology of Intelligent Analysis cites an unpublished 1973 study by researcher Paul Slovic demonstrating how horse handicappers confidence grew faster than their accuracy as they get more information. [Tell the story]
Practice with quizzes and games
Give them the link to try to test their calibration at home:
I shared my results. If anything they show caution — which tracks…my biggest risk as a trader was not that I was gonna blow up, but I wouldn’t maximize because I was always paranoid about what I didn’t know. That’s no excuse of course, it’s just diagnosis.
Evergreen:
Targeting adults…
Why do I bring this up?
This is a hazard in a world that tempts you to lever yourself on confidence as asset returns from stocks to housing to gold to crypto all sit near all-time highs at the same time trading & gambling, including the recent developments in prediction markets (Robinhood/Kalshi CFTC going around states rights to regulate gambling) is shoved down our throats.
One of the most helpful things I can do is offer some perspective on the nature of markets. My goal, as you’ll see, will actually be to have you viscerally feel their nature through a game we will play.
Bonus Section inspired by the confirmation bias riddle…
I’ve long thought that a good barometer of intelligence was asking good questions. I think this will be more obvious in the age of AI where people who are skilled at prompting, ie asking questions to LLMs, will get a lot more mileage out of the technology as opposed to using it as a glorified dictionary.
So I posed the famous fork in the road riddle:
You reach a fork in the road. A sign explains that in one direction is Heaven and the other is Hell. Each path is blocked by a Guard. The sign goes on to say that one of the guards will always lie and the other will always tell the truth, it does not say which guard is which. We assume that the guards do know which path leads to where.
You may ask one question of only one guard in order that you can determine, with certainty, the way to Heaven. What is that question?
You can see the solution here. I always think of it as an electric circuit question because it’s positive (truth-teller) x negative (liar) or vice versa which always means the response is a “Not”.
An IRL friend who happens to be one of the best long/short pod shop folks in the world (no exaggeration — one of the people that gets offered those 9-figure guarantees you hear about) once described his craft as asking the right questions. Getting someone to tell you something you care about with a question that seems to have nothing to do with what it seems you asked about. Layered on top of the whole quant alpha-isolation architecture that these firms sit on, it’s always stuck with me as sounding so interesting. But it also makes me think of this riddle.
I’m gonna re-do the event for another group in town on the recommendation of one of the attendees. If that group skews more towards adults, I’ll bridge it into a discussion of markets and what it means for investing, which is what the unused notes were about. Like a comedian testing nerd shit instead of jokes I guess. Whatever lands can find its way back here. You notice a lot of blindspots in your understanding when you try to explain something to laypeople, making the the effort conveniently self-rewarding.
Related: 
Open with Confidence Interval Tests
That leads to a discussion of…confirmation bias
Give this 
In making decisions, it’s not necessarily about being right or wrong — it’s about calibration
Practice with quizzes and games
Bonus Section inspired by the confirmation bias riddle…