Just gonna speak freely here.
This cycle of memecoins pumping feels different than the post-covid mania.
The masks are totally off. There is no pretense of value. No attempt to justify the price of anything.
It’s not a ZIRP thing, there’s positive real rates out there. And frankly, you could crank positive real rates up a few percent — the meme coins shouldn’t care. If your taking coin-flip type risks, an extra 2% on your savings still leaves you flaccid. Blue meth and viagra or bust.
All of this feels inevitable.
On gambling culture
LeBron James and Roger Goodell are in bed with Phillip Morris Draft Kings. The biggest baseball star in the world made his bookie famous (the bookie is a former commodities trader because sometimes life makes sense).
Gambling culture is corralling Americans into a holding pen in preparation for the ultimate neoliberal wet dream — put a price on everything. Abstract everything into numbers in an order book.
Here, I’ll glimpse you one of my cards — this is a bummer. They’ll beat you down for saying that because FREEDOM you commie. But it’s not actually freedom. It’s a monopolistic rigged game. But the devil is in the nuanced details. I’m not the messenger for that — instead browse Voulgaris’ recent timeline:
Voulgaris is the NBA sharp (now retired and cruising the Mediterranean on his yacht) featured in Nate Silver’s book and a legend in the gambling world. He’s got lots of haters to be sure (he was quite up front about his dog living a better life than 99.99% of humans in the world), but this podcast interview is a down-in-the-dirt look at his career and the betting world. You’ll also pickup colorful lingo (“beards” “getting down”), insightful discussion of discretionary vs systematic betting, and lessons in niche sources of edge.
As gambling and financial nihilism spread, it becomes risky to sell. I sold my house in November of 2020 — I’m scared to sell anything ever again (not without immediately buying something else). Who knows when the pump is coming to something you own?!
And the more ridiculous the thing you own, the fewer justifications you need to make up for it “mooning”. Worthlessness is now an alibi.
But it’s not just the gambling culture. This feels like a natural albeit non-obvious step in progression of efficient markets. This is where I sound crazy (and if I’m wrong hopefully it’s in a way that doesn’t make you feel dumber for having heard it).
The efficient markets angle
I’m no EMH maxi. I’m more in the “efficiently inefficient” camp is you had to place me in a traditional bucket. But I haven’t studied the academic arguments deeply anyway. My street version — “the no easy trades principle”.
A major difference in mine compared to EMH, is today’s weirdness is actually an expression of efficiency because it goes back to something my closest trading homie says “the leg that makes money is the hard one”.
The sign that the market is efficient is anything that you can pencil out is not an opportunity because everyone else can too do that too. All that’s left is, well, whatever the heck this is.
The Jacked Quant asked:
Why is the noise to signal ratio is exponentially higher in quant finance compared to other realms (AI Twit, Math twit, etc)?
I answered:
Because prices are adversarial. Endless predator/prey dynamic that competes signal away with a half-life that’s a function of transparency and scalability.
Daryl Morey said when finance quants see the signal strength in sports analytics their mouths water but he talks about the flip side of the coin as being “we don’t win by beating the SP500 — we have to be the best of 30 teams.”
We’re not there yet, but you might as well choose now:
- Have fun, all this machinery that allocates resources is but a game now. If you like the game and do what’s required to be good at it seems like a sweet time to be puzzle solving and making loot.
- Get out of the abstraction of it all and ground yourself in tangible links between inputs and outputs. This is the antidote to nihilism. Look at the people you serve in the eye.
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