Moontower #27

Friends,

I am in Japan this week so these 2 issues will be a change of pace.

I want to share a recent conversation with a millennial friend whose young career intersects with many possible paths since he writes, invests, and sells. He asked how I thought about my own endeavors. It’s not something you’re asked every day. It’s like being asked how a thermostat works.

My full response:

A meandering thought here…Writing and communicating better are explicit goals [of mine]. They self reinforce firstly. But also the writing part also serves as a test and a mirror for your thinking. I want to always be tightening that since reasoning better is important to improving decisions and bets. Which means it’s the highest leverage channel for improvement of your personal or professional investing process. But it’s also its own reward. The way learning an instrument makes you appreciate listening to music more. You become an active listener. You try to reverse engineer what the artist was doing. I personally find that this makes life richer because you can find stimulation everywhere.

If you can get your kicks from art, you are richer because you are intrinsically over-stimulated. Take that to its extreme. A person who is intrinsically overstimulated could be content living in a log cabin with a pile of books. That person is more free from material trappings. Hence being richer. You can probably think of people who are understimulated. They can’t sit in a room by themselves. They are always chasing some high. They usually spend all their money. I’m painting a picture of extremes but all of this lies on a spectrum.

I’ve heard of the concept of stimulation in the context of introversion. As in introverts are naturally overstimulated. Introversion/extraversion is probably thought of in far too binary terms. I think I’m pretty middle of the road. I’m using the model of introversion/extraversion defined by “where you get your energy from”.

I’m trying to be aware of where my social, intellectual axes intersect because that will be the foundation of where I am the most useful. If you can be useful in ways which are in commercial demand even better. I happened into my field when I was young and survived. But today I’m more concerned with questions as to where I can be the most useful and having faith that commercial opportunity will fall out of that. My smarter friends realized the value of that introspection earlier so that they can put themselves on long term rewarding paths. This allows you to compound cycles for longer. Rather than compromising for money, only to find yourself on a less personally aligned path later. Especially since there was no guarantee you were going to make money. Either way, you are likely best off going where your alignment is earlier.

Again this is all meandering and I think there’s some oblique advice (or warning) in there somewhere that is hopefully not didactic but just a byproduct of my actual experience.

In short

1. Understand what type of work allows you to be the best version of yourself. This makes you useful
2. Hunt down the matching opportunity that needs your form of usefulness

From there you are traveling downhill which means progress comes easier which means you go farther. And if you were thus aligned, the people around you will all be lifted and that will fulfill you more than anything. And you will feel rich regardless of whether your numbers get called in the game of capitalist bingo.

A post-script for finance people

For fellow finance people, this deserves a few more words. Whether or not the field has been very lucrative for you, I’ve noticed finance folk often struggle with dissonance. Maybe you think every time a private equity suit quits to start a lifestyle biz in a LCOL state an angel gets its wings. It’s true, finance as a matter of daily agendas can be soulless. And making lots of money may just delay the questions that those with unlucky careers would have faced earlier. Compounding matters more, finance attracts its share of grifters. The Wolf of Wall Street is a great movie but a bad boss. Stir in a heap of leverage and finance collides with the physical world in numerically unnatural ways. Glistening wealth. Nation-state sized corporations. It can look a bit disfigured.

That said, I would push back strongly against judging finance by its worst. If it’s dry and brutal it’s because finance thinking ultimately boils down to efficiency. On a macro aggregate level it is nothing more than reducing transaction costs. Transaction costs between the present and future. Transaction costs between people who do not know each other. Matching lenders with borrowers. Savers with risk-takers.

Its cold bean-counter logic is a feature. Viewed over decades, the rent it extracts is a sliver of the value it facilitates. If it looks large it’s because the value is large. Every incremental squeeze in margins boosts consumer surplus whether or not a journalist thinks that’s a story that will get clicks. Yes the progress is uneven and there are unsightly moments (cough Goldman Sachs basically being made whole by US taxpayers after 2008).  But when people in finance start talking about missions and visions well that’s when you should reach for your wallet. I mean just imagine if a Wall Street brokerage were named Robinhood. For most of finance folk the job says “look I’m just here for the money”. It may not exude cool but it is honest. The dissonance only creeps in when you dress up the job or need it to be cool.

My email’s implied dissatisfaction with finance has nothing to do with finance as a villain or its perceived societal value. It has to do with how I personally absorbed its cold logic. Working in finance requires mental lenses. These lenses are not just effective but useful in so many contexts. Being somewhat prone to getting carried away, the seduction of optimization crowded out some of my pre-existing lenses many which had still not matured. As we always discover in these letters, every strength has a trade-off. If you lift but forget to stretch you get tight. The histamines you detect in my email, are a reaction to some personal Randian remorse.

So if you are going to be a relentless optimizer, make sure you check in every now and then on what you are optimizing for. The friend I wrote to knows to get anything done he’s gotta put his head down and grind. But in the moment he paused for a breath, I hope he found my email to be fresh air.

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Climb Higher

• Kidnapping is relatively common in parts of the world where government authority is weak. Shortland explores this strange, frightening, but surprisingly orderly world.
• My summary and podcast link here

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Last Call

• Expanding on last week’s Law of Rent, check out Alex Danco’s Positional Scarcity model.  I’d guess the Law of Rent fits within the “extortion bubble”.
• The crazy story of the Special Forces soldier who was kicked out of Soundgarden AND Nirvana. A very resilient character. What he’s up to today confirms a serious growth mindset that his life has exemplified since a turning point in his youth.
• Speaking of crazy life stories you should check out Supermensch: The Legend of Shep Gordon. He could be the most famous unfamous person, being responsible for the promotion of so many music artists and creating the entire concept of a “celebrity chef”.
• Have you tried Oatley yet? It’s the oat milk that is all the rage and I just discovered it in our own office. Here’s 2000 words looking at the rise of alt “milks”. It describes the debates around milk politics, economics, health and environmental impacts.
• I just finished reading Pynchon’s Inherent Vice. It’s a drug-fueled, noir detective story set in LA right around the time of the Manson murders. Pynchon is considered one of the greatest if not the greatest American novelist since the mid 20th century by people who rate these things. I really enjoyed the novel but with over 130 characters and 5 extremely convoluted Lebowskian-type plots you will need this companion of diagrams and summaries.

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From my actual life 

I’m hitting send Monday morning as our high speed shinkansen train starts on its 4 hour journey to Hiroshima. We just spent the past 3 days eating and drinking our way through Tokyo. If my Fitbit knew what day it was, it would probably do a better job summing my steps, but I think we are walking enough to burn off the ramen, sushi, tonkatsu, and sake we are choking down like ugly Americans.

A notable highlight was seeing sumo wrestling live. There are 6 major tournaments a year and we happened to catch day 7 of the current one. Wrestlers will each have one match a day for a total of 15 days. Half the wrestlers will be promoted and the other half demoted based on their records.

To become a yokozuna, or top rank, you must have a winning record in 2 tourneys in a row once you have achieved the second-highest rank of ozeki. If a yokozuna loses more than half their matches in a tourney they must retire. Talk about pressure.

Some fun facts and observations:

• Before a match, wrestlers rituals include stare downs, stomping and salt throwing to ward evil spirits, and slapping themselves to get psyched up.
• The pre-match rituals can usually last up to 4 minutes.
• Matches themselves are less than 20 seconds.
• To lose match a wrestler is forced out of bounds or touches the ground with any part of their body other than their feet. Even a fingertip means a loss.
• Wrestler range from the early 20s to mid 30s.
• Weights range from about 220 pounds to over 450 pounds. There are no weight classes but we noticed that smaller wrestlers tended to win (we watched about 30 matches).
• Wrestlers earn about $125k per year, while the yokozunas can earn about 3x.
• The start of the match is very similar to the snap in football. The wrestlers get set and then explode into one another but false starts are common which cause a reset. Likewise, a wrestler can “step out of the batter’s box” as I refer to it, delaying the start of the match perhaps looking for an advantage or clue. There seems to be a lot of gamesmanship around the initial move.
• Many of the wrestlers are actually Mongolian. There’s even some white dudes. We saw one from Georgia. I referred to him as Zangief.