Friends,
A message for the 6th year in a row:
As always around the holidays, Moontower is taking the next few weeks off and returning in January. We can all use a bit less stimulation at the end of the year. Play boardgames, go to sleep late, binge some shows, gain a few pounds. Laugh so hard bourbon eggnog comes out your nose. Shower your loved ones with attention. You’re not missing anything, including Moontower.
🎙️98 Years of Economic Wisdom (People I (Mostly) Admire Podcast)
Gappy recommended this one. Steven Levitt (Freakonomics) interviewed the late Nobel Laureate, Robert Solow, months before he passed. There are great individual sections of the interview. Like Solow’s take on the modern state of academic economics. Or his service in WWII. My god, that whole section is amazing — Solow is such a mench. Which brings me to what I said to Gappy thanking him for the rec…
Listen to how Solow takes a question, appreciates its facets and breaks it down. Someone so wise whose able to rattle off enlightening answers at the same time conveying sincere humility at the limits of his knowledge. And he’s 98 when he does this interview! Then try listening to anyone in public leadership. Every single word that comes out of politicians’ mouths is self-interested propaganda. It’s exhausting for every public appeal to be to the lowest common denominator.
Meanwhile, I’m watching the Ken Burns documentary on the American Revolution and they just covered the part about how viral Thomas Paine’s pamphlet Common Sense went. It was deeply influential document at a critical time in the conflict. And it’s not an easy read!
Neil Postman’s Amusing Ourselves to Death covers this idea head-on. When we were at our most literate, we were capable of more nuanced thoughts. The discourse was on a much higher level hundreds of years ago. (That book is like 100 pages — that’s the best stocking stuffer out there. Stuff your own stocking with it.)
Anyway, listening to Solow was so delightful. It’s lucid. It’s kinda special in that it quiets the mind while activating it. But then it’s over, I turn on a screen, and my head’s in the dryer again.
Money Angle
🎙️Acquired’s Google: The AI Company
I just finished listening to this after taking it snippets while shuttling the kids around in the car during the past month. It’s 4 hours long. Khe Hy texted it to me with “this is the best podcast I’ve ever listened to”. My wife also recommended it. And then I was at my monthly dinner with guys I worked with for over 20 years and one of them told the rest of this episode pushed him over the edge — he made GOOG the biggest position in his investment portfolio. “10x bigger than the next position”.
I almost never trade single stocks myself and I bought GOOG during the Liberation Day melee. Although not nearly enough. I sold it for $100 a share profit…in other words 1/3 LOWER than where we are today. If I heard that episode earlier I never would have sold. (I’m about to buy it again fthough — for my son’s account).
Putting the stock aside, the podcast is an amazing history of AI and filled with so many stories that are both fascinating and flat-out unsettling, especially when you realize how small the room is “where it happens”. I feel very much like a pawn.
It’s also a glimpse into how much leverage there is in being really, really smart in the modern era. The difference between being 99.99% and 99.5% seems to be billions of dollars. It made think that while trading firms are not operating on the same scale as GOOG, the growth in profits at the smartest firms like Jane and HRT suggests breakthroughs in money glitches that I’d expect if GOOG bothered with a subsidiary to apply their intelligence to slumming over zero-sum alpha.
In any case, I could go on and on about specific parts of the episode, but just give it a listen. Fair warning — you will feel tiny afterwards.
Money Angle For Masochists
SIG’s Todd Simkin interview with Ethan came out before mine. I just watched it. These are always good.
I’ll just excerpt the section about prediction markets below. You are going to keep hearing about them. You are going to see them in your brokerage accounts. Godspeed.
On prediction markets as risk transfer
“The world is a richer place when people can freely transfer risk from those that are less able to stomach it to those that are more able to stomach it.”
“Every trade makes both parties better off because they have another option which is not to enter the trade.”
On why market size reflects real-world exposure
“Everything finds its appropriate level. There shouldn’t be billions of dollars exchanging hands on whether or not Taylor Swift holds the top 10 spots on Spotify. People don’t have a billion dollars worth of risk on her performance as an artist in a certain time period… There are real implications to businesses about things like tax rates or tariff rates. You can hedge this sometimes imperfectly, but you can hedge it by using prediction markets.”
On tailoring contracts to real business risk
“What I really like about the prediction markets is that the contracts can be tailored to the specific risk that you’re looking to transfer.
If you can dial in exactly the risk that you want and have a market listed on it…If the true probability is 20% and they charge 21%, you’re probably happy to pay it because you don’t want the one-in-five chance of it going to 100%.
If they said they’re going to charge you 50% for it then you don’t trade it.
On liquidity as information
“Not enough liquidity comes in, which is also information. That’s information you can use to figure out whether this is the right time to be talking to somebody in Mexico about a different source of product.”
2025 Money Masochist Writing
In case you haven’t noticed the pattern…Thursday’s posts, the only ones I paywall, are almost all about trading, options, or quant topics
[although I’m not a quant so it’s more like you get a (hopefully) tasteful quant-curious perspective from someone who’s squeezed a lot of mileage out of grade-school arithmetic].
I’m better at predicting how popular a Thursday post will be than a regular post.
[Long meta aside:
This is probably because I have a decent map of how well people understand and don’t understand some of those topics based on questions I receive, but also because experience grasps subtle concepts that elude the amateur’s eye. There are some things you’d never look for until you lost money on them. You update your mind’s custom instructions to consider them in the future. This is an intrinsically advantageous place to be able to write from because it’s easy to reach into your bag to pull out a surprise-resolution trick.
This letter is popular in the trading world not because I’ve had rare experiences. In fact, it’s just the opposite. The inbound I get is that I’ve put words to exactly what traders have noticed. The success of this letter is not in what I know. It’s in the willingness to write them down.
Since the typical trader is an EV maximizer, writing does not screen as something worth doing. They are correct. I doubt I’ve earned a babysitter’s wage if you consider that I’m well past halfway to my 10,000 hours in this no-longer-new writing endeavor.]
Again, pretty good at predicting which masochist posts will be popular. But occasionally I’m wrong. And there’s one particular form of wrong I find unsettling. When I learn a lot from writing a post which means even I get to experience some surprise, but then that doesn’t carry over to the reader. I write something I find very pleasing because I got to upgrade my thinking, I put it into the world, and I’m left to interpret the readers’ indifference as “duh, we already knew that”. I’m like the last kid in this video meme…
The post that had the largest gap between what I find fascinating and what readers found resonant was a recent one:
The Coastline Paradox in Financial Markets
So I removed the paywall. Maybe I’m miscalibrated on how neat I thought that one was or because my math skills are less than the readership* so it was naturally more enlightening to me.
Anyway, have at it.
*The survey results point to the royal YOU being more educated than I. The survey also was interesting regarding the next section. It’s a primary draw for a set of readers but also the most likely to be skipped (along with the Masochists) section. Feels like an opportunity for some “bundling economics” expert to optimize my revenue, but even saying that feels exhausting in that way that only modernity can make you feel.
For the folks who want to follow more of the actual life stuff you can follow my Insta. I lately have been reposting from my wife’s stories (her IG stories are popular with a wide group of friends and associates — her finance job requires a lot of “peopling” — which is funny because I’m more of the extrovert but definitely less skilled and all the distinctions within that are things I wouldn’t even be aware of if it wasn’t for her). My favorite social media is her stories because it’s often a different perspective or focus of attention on the experiences we share (I don’t think about the Roman Empire, but that meme still hits hard). But also because IG stories is one of her art forms — she’s like good at all the animations, music, and stuff.
If you wanna follow:
Just fyi…there’s almost no regular posts, it’s all IG Stories.
One more useful life-hack. The Meta algorithms can be weaponized to your advantage. With the move we have been buying furniture, redecorating, etc. We have bought lots of stuff from Facebook Marketplace. Designer furnishings (and music equipment), like nice cars, depreciate as soon as you buy them but also stop decaying at transparent levels when you look at the used market. So if you buy them used you are basically renting them for free or just getting a good deal.
Anyway, the IG and FB marketplaces are amazing at putting the things you actually would be interested in buying in front of your face. IG has become a primary search engine for things like “desk”. For better or worse, META products have little to do with connecting with people in my life and far more to do with outright consumerism but it is solving a pain point and surfacing some niche brands. I should compile a list of these. Something for the new year maybe.
From My Actual Life
I look forward to some downtime. On the professional front, 2025 had good growth at moontower.ai, a lot of writing right here in the Substack, interesting consulting and teaching opportunities, an increasing amount of feedback that this project has turned into “the most read letter at trading firms”, a small but growing YouTube channel, and so much more proficiency in the AI-code loop (although still scratching the surface at the same time!). Of course, all the time I spent in generation mode had a cost. I only read 2 books. An adult low. I even listened to much less music and podcasts, according to Spotify Wrapped minutes. On the investing front, avoided landmines, had a nice score in silver (thanks to Alexander Campbell I bought silver futures at the start of the year) and got a nice exit on my private shares in Ezra (acquired by Function). I’m underweight risky assets in general, so these pointy scores really just helped me get a market-like return. I don’t explicitly think in “barbell” terms but I guess this is how this year turned out.
On to a few activities that occupied my non-working, and clearly non-exciting (not a complaint — I’m no adrenaline junkie) life:
- Continuing to play bass with my band at the music school
- Coaching both my boys’ basketball teams
- Getting on to a functional health program this summer. Been meaning to write or possibly do a webinar about this. I do the preventative MRIs (not just an Ezra investor but a client), but now keeping better tabs on bloodwork and disentangling myself from what feels like an increasingly stodgy PCP system. “Your booking physcials 4 months out?” Pass. I’m a 47-year-old hypochondriac. I don’t have patience for that.
- Visiting Austin a couple times and even having the little guy shadow at Alpha School.
- 25-year Cornell Reunion weekend. Ithaca in the summer is undefeated.
- Participation and contribution at the social club we started in town that is 3 years old now
But the most memorable occasions, both good and bad, were major family events.
My father passed away on May 19th, ending 2 years of profound suffering. The weight I was carrying did not show how heavy it was until I found peace on the other side. Dreams of giving his eulogy would intrude on my daily life at strange times. I believe it was a pull to confront a lot of conflict I carried within me. The mind and body are intricate machines. I was being “prepared”. I am grateful for the love, light, and learning he is within me. I didn’t always see it that way. But all of the feelings serve me in ways that (I hope) make me better.
About a week after the funeral, on a Tuesday, just before we left for SFO to go to NY for my Cornell Reunion we swung by an open house that was around the corner from our rental. We needed to get to the plane, so we had to sprint through it. A month later we closed on that home. And it feels like home. We love it. The boys have their own room, the formal living room is a soundproofed rock & roll room because we ain’t formal, and we are building Yinh’s mom a beautiful ADU (architect’s rendering):
Finally, 2 of my cousins’ had weddings that brought the extended family together multiple times this year, including a giant reunion in Sicily this summer. When Egyptians and Italians have a reception:
I share the good things because I need to. Inside my brain there’s nothing but flaws. I just see the gaps between where I want things to be and where I am. To be a bit harsh, I think any good work requires this, but the side effect is unhealthy anxieties. I don’t know if it can be any other way.
But life is fragile. The volume on everything I pay attention to now can be turned way down if life transmits a “We interrupt this broadcast because…” message. That’s clearer as you age (if you’re lucky by the way — this is a brutal lesson to learn when you are young). So when it’s your time, people will remember the moments together.
If you are fortunate enough to be with loved ones this holiday season, savor it. Invite magic by delighting someone. Be present. Scrap the politics and bond over personal stories, not some grand worldview philosophizing. Retreat into your cozy couch chats at 1 am with cocoa or wine, play Taboo or Codenames, and for heaven’s sake, strum some chords fam.
I’ll be back in January. I gotta go beg my son to wrap some gifts for me now. My handiwork looks like a wolverine got into the tape.
Stay groovy
☮️
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