Moontower #40

The key here is that the historical volatility or standard deviation of single stocks is .33 which is about twice what it has been for U.S. stock indices. He makes the case that a .55% premium is much more in line with what economists would predict or just dismiss it as noise.

Enjoy the full post Solving the Equity Premium Puzzle, and Uncovering a Huge Flaw in Investment Theory. (Link)

As the year closes, I thought to indulge some observations about writing these weekly Moontower emails.

On Process

• Started in March. 40 weeks in a row
• Between the weekly email and my website I’ve written 100k words or the equivalent of a 400-page book (there’s an iceberg of notes under that)
• The email takes about 7 to 8 hours per week 2 of them have taken upwards of 12.
• About 1/3rd of that time would have been spent doing it anyway as I have been taking lots of notes over the years. The extra step of making it public, while intensive was still incremental, which is why I thought it would be a fun idea in the first place.
• I started with about 20 weeks worth of ideas in the queue. After writing 40 of these, I now have about 50 in the queue. There’s a lesson about feedback loops in there somewhere. I often don’t consult the queue and just tackle something that I noticed that week.  Usually, the topic occurs to me in a way that unifies some subset of my notes.
• The time to do this has come away from watching TV and movies, some Friday night activities, some workouts and strolls, and some sleep. Everything has a cost.

On Benefits

• The coolest benefit has been what one friend emailed me to say he’s enjoyed the “friendship renaissance”. We have many phases in life. A number of people from my days in NYC who I have fell out of touch with now regularly email with me. Sometimes sparked by a Moontower topic. But there’s another effect that I can relate to since I get a lot of letters myself. Reading somebody every week breeds familiarity as well as an implied (or in Moontower’s case, an explicit) invitation to chat. We all know great, thoughtful people who we just fall out of touch with. The letter was a beacon to invite them back into my life even if I didn’t realize that fully when I started this.
• I have gotten to meet many people both digitally and IRL. There’s a lot of cross-pollination with Twitter conversations so it’s hard to directly attribute, but this year has to, on average, I’ve met 1 in-person per week. And there are more connections online that I have regular chats with. I think the thought of that idea would have exhausted me in the past. Not that I’m shy, just not a social butterfly. But the meetings have been invigorating since they are rooted in a spirit of mutual open-mindedness and helpfulness. I suspect this might not even seem like something remarkable to many of you but for the few to which that may resonate, it’s worth mentioning.
• It has been a forcing function to get me to write. Something that I have been wanting to do for a long time but required a form of accountability to get started. Your attention is so so appreciated. I’d be privileged if I could help one of you as much you’ve collectively helped me.

On Growth

• I sent a welcome email to about 110 friends and family when I started in March. 40 people signed up for the first letter. Today, 375 people receive the email. This is an objectively tiny number but it punches so far above its weight. You are a smart, curious group of readers.
• The growth is partially from word of mouth but mostly from something I’ve written that gets boosted by a highly-followed person. The most popular letters have been the ones in which I explain something technical from my own non-academic point of view.
• On average, 2 people sign up per day even though it’s super spikey (about a month ago the readership grew by over 30% in a week).

On the Future

• You can expect more of the same. I see myself as a curator and gatherer who basically takes you with me on my own learning journey. If Moontower had a theme it’s that the world is messy and by sharpening our thinking we can not only get better but be more empathetic. I’d say my pet peeve is the rampant discourse which acts otherwise. Discourse that at its best is flat and stupid, but more often, willfully manipulative.
• You probably noticed I added the Money Angle section. This was natural since investment topics overlap with my professional domain and I thought it was useful to separate it a) for the benefit of those who find this via #fintwit and b) to spare those of you who might find those topics “too much”.
• I’ll continue to look to you for input as how I can be helpful or more lucid. I don’t have any proper training or qualification. And while my very first letter addressed pushing past “imposter syndrome”, my opinions about how I present material is pretty loosely held. So don’t feel like you can offend me with criticism.

On Twitter

You have seen my take on the benefits of Twitter before.

Bill Gurley puts it succinctly

“Twitter is the most amazing networking and learning network ever built.

For someone whose pursuing their dream job, or chasing a group of mentors or peers, it’s remarkable. In any given field, 50-80% of the top experts in that field are on Twitter and they’re sharing ideas, and you can connect to them or follow them in your personal feed.

If you get lucky enough and say something they find interesting, they might follow you, and the reason this becomes super interesting is that unlocks direct message, and now all of a sudden you can communicate directly or electronically with that individual. Very, very powerful.

If you’re not using Twitter, you’re missing out.”

The Ultimate Guide to Twitter

This week, Fadeke Adegbuyi, published the ultimate guide in a well-organized and well-written document. If Twitter is something you want to level up in the New Year the timing couldn’t be better.

Here’s the guide (Link)

Here’s a great example of a Twitter hack from the guide that people use to facilitate in-person connections:

If you attend a few conferences or events each year, you’ll meet interesting people that you can follow online. Often there will be a conference Slack group where everyone attending can chat. A link and instructions to join this group are typically provided in an email after event registration, generally weeks before an event is slated to start. Join it. Add folks to Twitter that you’re looking forward to meeting or you’ve had interesting conversations with. If you’re at a larger event, temporarily add it directly to your name on Twitter.

For example, if your Twitter name is normally “Alfred Lin,” change it to “Alfred Lin at Cool Eng Event Dec 6-10” so people know you’re going. You might also temporarily pin a tweet to your profile about being there.

#fintwit

Here’s a finance professor’s easter egg tweet reinforcing how #fintwit is a great learning tool.

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Last Call

Tom Whitwell’s annual post of 52 things he learned this year is always fun. Citations included.(Link).

Some of my favorites:

• Harbinger customers are customers who buy products that tend to fail. They group together, forming harbinger zip codes. If households in those zip codes buy a product, it is likely to fail. If they back a political candidate, they are likely to lose the election. 
• At least three private companies have fallen victim to ‘deep fake’ audio fraud. In each case, a computerised voice clone of the company CEO “called a senior financial officer to request an urgent money transfer.” 
• The Korean Police force includes five labradors who are clones of ‘Quinn’, a bomb-sniffing dog who found fame after finding a missing girl’s body in a 2007 kidnapping. 
• CD sales still make up 78% of music revenue in Japan (compared with less than 30% in the UK). Japanese pop fans have been encouraged to buy multiple copies of their favourite releases to win rewards (buy 2,000 copies, win a night at a hot spring with your favourite star). One 32-year-old fan was charged with illegally dumping 585 copies of a CD on the side of a mountain. 
• And because I used to do phone surveys as a PT job in H.S. this was interesting: “Polling by phone has become very expensive, as the number of Americans willing to respond to unexpected or unknown callers has dropped. In the mid-to-late-20th century response rates were as high as 70%… [falling to] a mere 6% of the people it tried to survey in 2018.” 

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Fun Music Appreciation

My favorite YouTube channels are about music appreciation

1. Ryan and George are Lost in Vegas. (Link)

These 2 guys are R&B and hip-hop enthusiasts who have discovered rock and metal. Their followers submit songs for them to do reaction videos and they have amassed a million followers who tune in to see their commentary. It’s like a play-by-play for songs you know. Despite not being musicians themselves, you only need to see a few videos to realize they have innate musicality and perceptive ears. But the best part of these videos is how enthusiastic and endearing they are. It’s easy to see why they have become popular enough to quit their day jobs. I’ve been watching them for a couple of years and it’s cool to watch their palette widen and see what songs they will give their highest honor…”playlist!”

While I dig so many of their videos, including their breakdowns of Rush, Rage Against the Machine, Van Halen, and Metallica songs their’s nothing like watching them lose their minds over a song that you also love. They do plenty of hip-hop and even country songs.

Here are some of my favorites:

• Alice in Chains: Rooster (Link)
• Chris Stapleton: Tennessee Whiskey (Link)
• Black Sabbath: War Pigs (Link)

And here’s a more recent one with their higher production backdrop…and is a great way to wade into the brilliance of Tool’s recent album which I’ve raved about before.:

• Tool: Pneuma (Link)

2. Rick Beato’s Everything Music channel (Link)

Rick is a producer and multi-instrumentalist who represents the opposite end of Ryan and George’s amateur appreciation. Rick will dive into music theory and teach you what makes certain songs great. Everything from ear training to detailed top 20 lists. If you are a big music fan, music nerd, or musician this channel could keep you busy enough to displace Netflix. His home studio is ridiculous and he can sidestep getting blocked by music labels since he can easily just demonstrate the music being discussed on his own.

A great place to start:  “What Makes This Song Great?” series (Link)

Here’s a look at his other playlists. His son Dylan has perfect pitch and gets his own playlist full of his own party tricks.

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From my actual life