Moontower #110

Friends,

I wrote 2 long posts this week. They are both about investing and I will be following them up with a 3rd that I hope to finish this week. The trio work together as a series about the meta of investing and how personal it is. You will find a description of the one I released earlier this week in today’s Money Angle.

Here I will release the second post without introduction:

How I Misapplied My Trader Mindset To Investing

Excerpt:

The four-letter version of culture is cult. You see, Susquehanna had (I’d say “has” but I am a generation removed from the firm and this post is really about me not them) a tangible culture. Today, living near Silicon Valley, culture is discussed a lot. I’ve heard it described as “what you reward and what you punish”. Susq had a distinctly strong culture, but since I was young and impressionable, I had a cultish adherence to it. The downside of a strong culture, is a weaker mind will overinternalize it. That was me. Plenty of traders were able to take the best of the culture without overgeneralizing it to life. I missed the memo to not take it too seriously.

This post is about how I misapplied the lessons of my trading career to my investing life.

he Money Angle

I published this long piece earlier this week. It’s a meta-model that wrestles with the bizarre behavior we are seeing in markets. My conclusion: markets are not absurd. Our belief in the tidiness of how markets work is absurd.

This post is superficially about the danger of believing the textbook-style investing delusion. But it offers a framework that extends the textbook views in ways that better align the objective (investing effectively) with what is required (focus on the correct inputs which are, sometimes, but rarely fundamental).

Regular readers know the tyranny of my trading experience means everything looks like an options nail.

No judgment if you turn back, but I promise no math.

If you want to discover…

• What I call the intrinsic and extrinsic “elements of value”
• The “bid stack” model of what element of value the marginal investor is focused on
• Why prices responses are surprising when the marginal buyer comes from a new tranche in the stack
• Why ignoring this framework means your betting outcomes are divorced from your rationale
• Why textbook investing education might as well be horoscopes

…continue to Why Investing Feels Like Astrology

By the way, I have been totally flattered by the feedback for this piece, which is encouraging since it’s the longest one I’ve written since January 2020.

I won’t say who they were but 2 esteemed fund managers wrote to me and compliments are my love language so I’ll take these as a sign to keep publishing.

Testimonial 1: I have to say this was the single best thing I’ve read in *years* on the subject of markets. I’ve never seen valuation described with such a tidy bow (and humor to match). Spot On.

Testimonial 2: God damn Kris, that astrology piece was absolutely tremendous. Love how you laid it all out. The skill is putting together the mosaic, and you did that quite well. Weaved wonderfully. I’ve even sent the link to some of my PM buddies who aren’t on twitter. Was just a very fresh, and as I said, lucid, perspective on the game.

Last Call

• Reflections On Being Asian (More To That)
  Lawrence Yeo

  I realized I was different than American kids around the same age Lawrence did and in the exact same context. For me it was pita bread. I told my mom to never pack that in my lunch again. I wanted PB&J or ham and cheese on Wonder bread.

  My favorite line in the post: “But perhaps the greatest lesson I’ve learned is that hate thrives when you do not know what people are thinking, so you assume their thoughts for them.”

• The Hard Thing About Learning Hard Things (Link)
  Haseeb Qureshi

  Haseeb reminds us of Naval’s quote: “The world rewards you for creating things it doesn’t know how to get for itself.”

  He expands on Naval’s fortune cookie.

  In the real world, there’s no textbook or curriculum. There’s no way to practice. There’s no source of continuous feedback. There are no teachers—it’s just you and whoever you can convince to help you.So how do you learn something no one can teach you? How do you become a world-class expert on something few people understand?

  Unstructured learning requires wandering. You must poke around on your own, use trial and error, search, explore, stumble, and discover. The usual Gladwellian prescription of “10,000 hours and deliberate practice” isn’t actionable when trying to learn something that no one knows how to do.

  But this is the only kind of learning that the world cares about.

  Haseeb is a master learner and gives you 5 methods so you can be too.

  By the way, I have no idea what’s up with people named Qureshi and learning but my post We Don’t Need No Education was inspired by another Qureshi.

  Thinking of changing my kids’ names now.

• An online marketplace for tutors that a friend recommended: Wyzant

From my actual life