meme

If you google “origin of the term meme”, you are served a snippet from Wikipedia:

The word meme was coined by Richard Dawkins in his 1976 book The Selfish Gene as an attempt to explain how aspects of culture replicate, mutate, and evolve (memetics). Emoticons are among the earliest examples of internet memes, specifically the smiley emoticon “:-)”, introduced by Scott Fahlman in 1982.

A meme, like a gene, compresses information. A killer headline can be a powerful meme. You might even parrot it, participating in a culture-wide game of telephone where nobody actually reads the article they just re-post, re-share, re-tweet.

We’ve substituted virality for nuance. You can probably feel the effects but naming them takes work.

With that in mind, I point you to Kyla’s outstanding post:

What Happens When Everything Becomes a Meme? (8 min read)

She doesn’t need an introduction from me, but just in case, you should know she’s a very smart writer who happens to be an influencer. A highly self-aware one. She brings Bane’s weight to the discussion — she didn’t merely adopt the meme she was born in it.

Her latest writings on this topic have all been fantastic but that post is the one you should start with.

I’m no fan of treating ideas like people. That’s what ideology feels like to me. I’ve expressed this many times (Antidote to Abstraction, How the need for coherence drives us mad)

I just wrapped James C. Scott’s Three Cheers for Anarchism. I have seen Scott’s work referenced in many places, usually Seeing Like A State, but this is the first time I’ve read him directly. I did a lot of nodding which is probably not an accident since I picked up the book in the first place.

But this Fragment 27 [the book is a collection of essays or fragments as he make no attempt to force them into a single song . I not only appreciate that but sensed he did, it would be off-key irony given his resistance to exactly the type of just-so reasoning that successfully sells books in terminal 3] amplifies my sense that abstraction is ethically expensive. I reprint it here with my emphasis.

Fragment 27: Retail Goodness and Sympathy

The heroism of the French town of Le Chambon-sur-Lignon, in the Haute-Loire, which managed to shelter, feed, and speed to safety more than five thousand refugees in Vichy France, many of them Jewish children, is by now enshrined in the annals of resistance to Nazism. Books and films have celebrated the many acts of quiet bravery that made this uncommon rescue possible.

Here I want to emphasize the particularity of these acts in a way that, though it may diminish the grand narrative of religious resistance to anti-Semitism, at the same time enlarges our understanding of the specificity of humanitarian gestures.

Many Le Chambon villagers were Huguenot, and their two pastors were perhaps the most influential and respected voices in the community. As Huguenots, they had their own collective memory, from at least the St. Bartholomew’s Day Massacre forward, of religious persecution and flight. Well before the Occupation, they had manifested their sympathy for the victims of fascism by sheltering refugees from Franco’s Spain and Mussolini’s Italy. That is, they were well disposed both by conviction and experience to sympathize with the plight of refugees from authoritarian states, and with Jews in particular as a biblical people. Translating that sympathy into practical and, under Vichy, far more dangerous acts of assistance, however, was not so simple.

Anticipating the arrival of Jews, the Huguenot pastors began trying to mobilize the clandestine shelter and food they knew would be required of their parishioners. With the abolition of the Free Zone in southern France, both pastors were arrested and taken off to concentration camps. In this menacing setting, the wives of the two pastors took up their husbands’ work and set about lining up food and shelter for Jews within their community. They asked their neighbors, both farmers and villagers, if they would be willing to help when the time came. The answers often were not encouraging. Typically, those they asked expressed sympathy for the refugees but were unwilling to run the risk of taking them in and feeding them. They pointed out that they also had a duty to protect their own immediate family and were fearful that if they sheltered Jews, they would be denounced to the local Gestapo, who would put them and their entire family at grave risk. Weighing their obligations to their immediate family and their more abstract sympathy for helping Jewish victims, family ties prevailed, and the pastor’s wives despaired of organizing a network of refuge.

Whether they were ready or not, however, the Jews began to arrive, and to seek help. What happened next is important, and diagnostic for understanding the particularity of social (in this case, humanitarian) action. The pastors’ wives found themselves with real, existing Jews on their hands, and they tried again. They would, for example, take an elderly Jew, thin and shivering in the cold, to the door of a farmer who had declined to commit himself earlier, and ask, “Would you give our friend here a meal and a warm coat, and show him the way to the next village?” The farmer now had a living, breathing victim in front of him, looking him in the eye, perhaps imploringly, and would have to turn him away. Or the women would arrive at the farmhouse door with a small family and ask, “Would you give this family a blanket, a bowl of soup, and let them sleep in your barn for a day or two before they head for the Swiss border?” Face-to-face with real victims, whose fate depended palpably on their assistance, few were willing to refuse them help, though the risks had not changed.

Once the individual villagers had made such a gesture, they typically became committed to helping the refugees for the duration. They were, in other words, able to draw the conclusions of their own practical gesture of solidarity—their actual line of conduct—and see it as the ethical thing to do. They did not enunciate a principle and then act on it. Rather, they acted, and then drew out the logic of that act. Abstract principle was the child of practical action, not its parent.

François Rochat, contrasting this pattern with Hannah Arendt’s “banality of evil,” calls it “the banality of goodness.” We might at least as accurately call it the “particularity of goodness,” or, to appropriate the Torah, an example of the heart following the hand.

People don’t easily identify with or open their hearts or wallets for large abstractions: the Unemployed, the Hungry, the Persecuted, the Jews. But portray in gripping detail, with photographs, a woman who has lost her job and is living in her car, or a refugee family on the run through the forest living on roots and tubers, and you are likely to engage the sympathy of strangers. All victims cannot easily represent one victim, but one victim can often stand for a whole class of victims.

We trample over each other in the name of some contrived ideal of consistency…which we don’t ever achieve anyway. And thankfully. Because that is the cover for history’s greatest butchers.

[If interested…my Zeroth Commandment]

Moontower #268

Friends,

If you google “origin of the term meme”, you are served a snippet from Wikipedia:

We’ve substituted virality for nuance. You can probably feel the effects but naming them takes work.

With that in mind, I point you to Kyla’s outstanding post:

What Happens When Everything Becomes a Meme? (8 min read)

Her latest writings on this topic have all been fantastic but that post is the one you should start with.

I’m no fan of treating ideas like people. That’s what ideology feels like to me. I’ve expressed this many times (Antidote to Abstraction, How the need for coherence drives us mad)

Fragment 27: Retail Goodness and Sympathy

The heroism of the French town of Le Chambon-sur-Lignon, in the Haute-Loire, which managed to shelter, feed, and speed to safety more than five thousand refugees in Vichy France, many of them Jewish children, is by now enshrined in the annals of resistance to Nazism. Books and films have celebrated the many acts of quiet bravery that made this uncommon rescue possible.

Here I want to emphasize the particularity of these acts in a way that, though it may diminish the grand narrative of religious resistance to anti-Semitism, at the same time enlarges our understanding of the specificity of humanitarian gestures.

Many Le Chambon villagers were Huguenot, and their two pastors were perhaps the most influential and respected voices in the community. As Huguenots, they had their own collective memory, from at least the St. Bartholomew’s Day Massacre forward, of religious persecution and flight. Well before the Occupation, they had manifested their sympathy for the victims of fascism by sheltering refugees from Franco’s Spain and Mussolini’s Italy. That is, they were well disposed both by conviction and experience to sympathize with the plight of refugees from authoritarian states, and with Jews in particular as a biblical people. Translating that sympathy into practical and, under Vichy, far more dangerous acts of assistance, however, was not so simple.

Anticipating the arrival of Jews, the Huguenot pastors began trying to mobilize the clandestine shelter and food they knew would be required of their parishioners. With the abolition of the Free Zone in southern France, both pastors were arrested and taken off to concentration camps. In this menacing setting, the wives of the two pastors took up their husbands’ work and set about lining up food and shelter for Jews within their community. They asked their neighbors, both farmers and villagers, if they would be willing to help when the time came. The answers often were not encouraging. Typically, those they asked expressed sympathy for the refugees but were unwilling to run the risk of taking them in and feeding them. They pointed out that they also had a duty to protect their own immediate family and were fearful that if they sheltered Jews, they would be denounced to the local Gestapo, who would put them and their entire family at grave risk. Weighing their obligations to their immediate family and their more abstract sympathy for helping Jewish victims, family ties prevailed, and the pastor’s wives despaired of organizing a network of refuge.

Whether they were ready or not, however, the Jews began to arrive, and to seek help. What happened next is important, and diagnostic for understanding the particularity of social (in this case, humanitarian) action. The pastors’ wives found themselves with real, existing Jews on their hands, and they tried again. They would, for example, take an elderly Jew, thin and shivering in the cold, to the door of a farmer who had declined to commit himself earlier, and ask, “Would you give our friend here a meal and a warm coat, and show him the way to the next village?” The farmer now had a living, breathing victim in front of him, looking him in the eye, perhaps imploringly, and would have to turn him away. Or the women would arrive at the farmhouse door with a small family and ask, “Would you give this family a blanket, a bowl of soup, and let them sleep in your barn for a day or two before they head for the Swiss border?” Face-to-face with real victims, whose fate depended palpably on their assistance, few were willing to refuse them help, though the risks had not changed.

Once the individual villagers had made such a gesture, they typically became committed to helping the refugees for the duration. They were, in other words, able to draw the conclusions of their own practical gesture of solidarity—their actual line of conduct—and see it as the ethical thing to do. They did not enunciate a principle and then act on it. Rather, they acted, and then drew out the logic of that act. Abstract principle was the child of practical action, not its parent.

François Rochat, contrasting this pattern with Hannah Arendt’s “banality of evil,” calls it “the banality of goodness.” We might at least as accurately call it the “particularity of goodness,” or, to appropriate the Torah, an example of the heart following the hand.

People don’t easily identify with or open their hearts or wallets for large abstractions: the Unemployed, the Hungry, the Persecuted, the Jews. But portray in gripping detail, with photographs, a woman who has lost her job and is living in her car, or a refugee family on the run through the forest living on roots and tubers, and you are likely to engage the sympathy of strangers. All victims cannot easily represent one victim, but one victim can often stand for a whole class of victims.

We trample over each other in the name of some contrived ideal of consistency…which we don’t ever achieve anyway. And thankfully. Because that is the cover for history’s greatest butchers.

[If interested…my Zeroth Commandment]

Money Angle

I impulsively tweeted this on Wednesday while ~~procrastinating~~ taking a break.

The trading version of not being in on the joke is to not know which side of the market is fake on the lean. How many times do you have to watch someone hit their own bid to learn?

Offer it to buy it. Bid it to sell it. It’s always the game. Everywhere. Yes in SEC markets you can’t spoof but that’s only one way to do this. And man outside SEC markets, this game is on full display everywhere. I’m more convinced that spending a week in an open outcry pit could teach quite a bit about bottlenecks, the hierarchy of information flows, second-order knowledge You can get all these lessons elsewhere, but the pit speedruns it.

I decided it was needlessly esoteric so I indulged the procrastination for 30 more minutes and explained it on camera. There’s nothing technical here, it’s more about tradecraft and being a bit less naive.

If you’re looking for something meatier this morning, grab a coffee, a cozy chair, and your spectacles:

A Tale of Two Tariffs (27 min read)

Citrini writes terrific investment pieces. But this one is a departure from his typical posts (and unlike the others…free).

It’s been more than two years since I’ve published a history piece to CitriniResearch. After all, our tagline is “you’ll never have to ask ‘what’s the trade?’”, and these pieces are not necessarily actionable. However, the last one I wrote – an examination of how markets have failed to price in geopolitical risks through the lens of WWI (similar to the one we’ve just seen that was…not priced in) – has aged relatively well.

It’s a history lesson and an inquiry into what might be relevant or not from prior tariff expeditions. While I enjoyed the history lesson, my favorite part of the piece was Citrini’s discussion of the current moment.

Money Angle for Masochists

I replaced my IBIT shares into long calls when BTC vol got crushed this week while selling my VIX futures which held up quite well on the equity rally, a possibility I suggested when I explained that the elevated but also flat term structure of VIX suggested vol was here to stay in 2025. From vol speed round:

As I was looking at IBIT I thought I’d share a habit I picked up from distant past of ETF arbitrage — estimating the prem/discount baked into the ETF price I’m about to trade:

Go to the IShares web page to grab 3 values (highlighted)

Enter them in my spreadsheet to compute the ratio of NAV to BTC price. The cells with the box around them are via the previous close values. I then apply the fair ratio to the live BTC price compute IBIT’s live premium or discount.

Stay Groovy

☮️

Moontower Weekly Recap

Posts:

“not dead yet”
hedge ratios

YouTube:

hedge ratios

Net of last week’s April expiry the flurry of trading from the last few weeks has left me net long delta. That’s not accidental. I had plenty of room to be a buyer on balance in the turmoil since cutting lots of portfolio delta heading into the election.

[If interested…I rebalanced much of stock delta into t-bills bills then re-deployed into bonds, TIPs and silver in late January.]

Coming out of the April expiry last week, my position gained ES futures, VIX futures, IBIT, with my only outright option position being some May AAPL put spreads.

Back in November I published this video which show how I look at the risk of our household portfolio.

But in the flurry of trading while I’m mentally separating what I’m doing for edge and my total portfolio, I do have some delta bias under the hood to effectively dollar cost average since I de-risked in October.

But I want to keep close tabs on how much I’m adding which means summing positions in a vol or even better beta-aware fashion. NVDA is far more volatile than SPY so just as traders combine all their deltas into SPX or some other benchmark terms I like to also normalize back to SPY equivalent risk.

This is a doorway into hedge ratios and beta-weighting. Beta-weighting is not just vol weighting but includes correlation.

I’ve written extensively about how to do this in:

🔗From CAPM To Hedging (17 min read)

That post steps through derivations and the basics of correlation math but in my personal portfolio spreadsheet I needed to make a little widget where I could just put 2 symbols and get a hedge ratio.

We actually have a calculator in the app but you need to supply the inputs.

However I realized with Excel’s built-in =stockhistory I could not only get the inputs, but easily plot time series and scatterplots to understand the shape of the “idio” risk and variation in the beta over time.

🚀We are going to add this functionality to the moontower.ai app. We already have the data, just need to extend the UI.

In the recent month, I wanted to understand how many SPX delta equivalent I had in VIX futures. I used VXX as a proxy put it into Excel and voila got some idea of how much “less” long SPX I am with the VIX futures incorporated.

So….

I made a video walking through the Excel tool. It’s some of the most practical traders-use-this-everyday-type knowledge. We skip the derivations and jump to how do I actually use this data to size hedge ratios or estimate my book’s beta.

I hope you find it as useful as I think it is. (If not, I’ve got more work to do on the explanation side so let me know!)

Paid subs get the spreadsheet. If you have the stockhistory function in Excel this will work seamlessly for you. It’s addicting to toggle thru pairs so fair warning!

The spreadsheet link below has 2 bonus items not shown in the video:

1) A widget for spitting out the hedge ratio not just running data

2) A little position radar template on a separate tab to keep your gameplan organized

Before getting to the sheet, tomorrow night is Ricki Heicklen’s Trade Gala party in SF. I mean yesterday we learned that Jane Street made $20B in 2024 which doubled what they made in 2023 which shattered their record from the prior year. I think they are the most profitable firm in the world per employee (they have about 3k employees).

I think it was Morgan Housel who once wrote that very few orgs in the world could say their edge is just flat out “we’re smarter than you”. There’s usually some other sauce. He gave the example of RenTec. Jane Street is another that can boast the same. This is a cool opportunity to see how that crowd thinks.

This is a special moontower invite that Ricki sent me. She’s repeatedly acknowledged that anyone she meets that comes out of this community is a breath of fresh air which she poses as a compliment. I’m not one to insult a compliment but it’s a testament to y’all. I don’t control how you act.

Anyway the party starts at 8pm and runs thru 6am…well I’ll let you click on this yourself. This is actually a custom invite for Moontower readers:

Trade Gala Party

A quick description..Trade Gala is a limited-access costume party with markets, a puzzlehunt, and demo-ing a new trading game.

If you want to attend the trading BootCamp the rest of the weekend sign up below. It’s truly ridiculous. If you are a novice it will open your mind to what trading looks like thru the eyes of sharps. It is hard to come by this in the level of detail you’ll see here.

If you are a pro, well, you might want to know you might notice some things that you are up against. There’s a lot to learn for everyone.

trading.camp

It’s view only but you can save a copy for yourself and do what you like from there.

When you click the link it the link will open in your browser.
Download a Copy. (see pic)

For the spreadsheet continue to moontower.substack

not dead yet

Friends,

Rich Roll interviewed Alex Honnold last year while he was promoting the Nat Geo film The Devil’s Climb. The film chronicles Alex and his good friend and inspiration Tommy Caldwell’s 2,600 bike ride from CO to Alaska to summit the Devil’s Thumb.

The interview is awesome. Full stop. The film was also fantastic — beautifully shot, an amazing story. Watch with your kids. Great stuff.

But I want to share some bits from the interview that hit me:

🔨 On Endurance

Effort is effort—you have to try hard if you want to do hard things.

“Long runs and rides feel the same as mountain expeditions—you’re just grinding in a low gear all day. Whether that’s hiking uphill, bushwhacking through temperate rainforest, or pedaling a bike, it’s all just slowly pushing your body for 12 hours. These pursuits don’t help your rock climbing—it’s too different—but they keep you connected to how to stay uncomfortable for long periods without real risk. Big cardio efforts remind you that effort is always uncomfortable. Rock climbing is the same—your body hurts, it sucks, but you keep going.”

🧠 On Attribution and the Myth of the “Freak”

People want to call you a freak because it’s easier than admitting success comes from grinding it out.

Alex notes that his achievements come from 29 years of constant effort. He’s frustrated when people assume his amygdala (fear center) doesn’t function, as in the audience question: “Is there a support group you attend for people whose amygdala doesn’t fire?”

It’s obvious that if your amygdala doesn’t fire that is not a sufficient condition to do what Alex does. But he goes further into the amygdala story that everyone who saw Free Solo latched on to. He explains that his brain doesn’t experience a fight-or-flight response when shown images of fearful situations in contexts to which he is habituated. He says this shows that he has a healthy relationship with fear and his response is not being triggered by situations which are not threats. Looking at images is not threatening.

As an fyi he thinks horror movies are stupid. He says jump-scares work for good reason but hijacking your natural emotional response for a cheap thrill doesn’t make a lot of sense to him. You’re watching a movie, the situation is not actually dangerous. There’s plenty of ways to induce real fear you can grow from. Go do that.

😨 Fear Is Information

“Fear is just information. It tells you where to focus.”

He doesn’t conquer fear—he reads it like a signal. Honnold isn’t fearless—he just metabolizes fear differently. What sets athletes (Kris: and traders) apart is how they respond.

[Kris: preparation, visualizing scenarios in advance, having at least a simple if/then contingency plan is key to staying calm and preserving agency.]

🥾 Life Is a Series of Steps

A parenting insight disguised as life philosophy:

I had a thought while hiking with my daughter a couple days ago. I hiked her uphill in a backpack, and then she kind of staggered downhill as much as she wanted and I carried her home. It was lovely.

She was wandering down the trail, rock to rock, pretending to climb. At one point she got bored of the rocks and started going animal hole to animal hole, putting her hands in them. I tried to discourage her, but I loved how curious she was.

There were stretches where I couldn’t see her for a moment, and I felt totally fine—because I feel at home in the mountains. That’s when it hit me:

I think part of parenting is to be comfortable in enough places that you don’t project your own fears onto your children.

[Kris: Alex has a deep respect for how our relationship with fear and risk impact our ability to thrive. It’s elemental. It’s underappreciated. Improving our relationship to fear strikes me as perhaps the highest leverage objective in one’s quest for personal growth. I feel very deficient here so pardon the projecting.]

She was just taking steps. Playing. Wandering. Exploring.

And it totally hit me.

Life is just a series of steps. You just keep going.

For someone known for monumental, cinematic achievements, Honnold’s life philosophy is radically mundane. His world runs on consistency—not constant epicness.

For me, being a Matthew McConaughey fan, this is well-received. This insight is how he came to terms with his father’s death. It played prominently in his adlib at the end of Dazed and Confused…”just keep livin’. L-I-V-I-N”.

Sounds so simple it’s dumb right?

But he discovered that truth at about age 22. An age where we search for grand narratives. But to realize that moving one step forward is the whole game is something most people, if they ever even realize it, don’t realize until much later.

Last Friday morning on the way from Escondido to Pasadena, my family stopped at this monastery. We happened to meet an 86-year-old monk from Saigon who showed us around. At one point he answers his cell phone. A funny image already. It’s a friend.

Suddenly, my wife is laughing hysterically.

What happened? What he say?!

Apparently the friend asked, “hey what’s up” and our monk replied:

“not dead today!”

Alex, Matthew, the monk. They know what’s up.

It’s hard to be bitter when you sit in gratitude. Need even a small something to be grateful for? Use my line:

Any day I wake up is a good day.

If they ban short-selling derivatives become the underlying

A reminder in the spirit of being attuned to seemingly far-fetched risks:

If short selling were restricted in any way, the value of puts relative to calls on the same strike increases in a put-call parity framework.

Another way to say this is being long stock is more valuable since only long sellers can sell. If puts increase relative to calls on the same strike, as they do when borrow costs increase, that is like a synthetic future on the stock trading at a discount to the stock price.

Similarly, being short futures vs being long index or SPY expresses the same bet. If futures start trading at a sustained discount to the cash index value it could also reflect an implied probability of short-selling restrictions being imposed.

If futures are trading at full carry and you think such a ban is possible it’s an asymmetric bet to put on conversions (ie short futures, long stock or for options short combos long stock).

Broadly speaking, the derivatives market becomes the underlying market. When the underlying market becomes encumbered do to technical frictions, derivatives are no longer just “derivatives”. The arbitrage mechanism is severed. The derivatives market becomes the home for price discovery.

I’ve seen this happen throughout my career. Just a few examples in addition to hard or impossible to borrow/short situations:

HYG becoming a liquid referendum on illiquid high-yield bond market
Cotton option synthetics continuing to trade even when the underlying futures are locked limit up (my trading claim to fame is selling the all-time nominal high in cotton in late 2011…it was an option synthetic around $2.25)
When a stock is halted, the premium or discount to any ETFs holding that stock computed using the halted stock’s “last” price before the halt implies the price the stock will open when it resumes trading. These situations were common during the dot-com heydey when stocks would be halted intra-day on pending news announcements.

🔗Related

📽️Teaching Options Basics With Live Data (Moontower YouTube)

📔Synthetics: Alternate Realities (Market Jiujitisu)

Moontower #267

Friends,

It was a long week in southern CA.

I was pulling out of SAN in a rental car Monday am just as the earthquake hit. Feels like a lifetime ago.

I’m focused on getting back to routine this week. My version of back in black.

Let’s start with 2 education related links.

How to Help Parents and Teachers (12 min read)
Dominic Cummings

Cummings, known for his controversial role as Chief Adviser to Prime Minister Boris Johnson from July 2019 until November 2020, also writes a substack. (The thought of a Trump advisor having a substack is a comedic contrast that we’ll set aside.)

Cummings is an outspoken critic of the British education system especially in mathematics. This post opens with a summary that you can use to decide whether you want to continue. I enjoyed it.

What books and other materials to use to help children learn maths if your real goal is ‘they learn maths’ and ‘learn to think’ as well as they can — which is not at all the same as ‘follow the national curriculum’ or ‘succeed on government controlled tests’?
Why does the system generate huge numbers of rubbish material and suppress good material, so much so that many great books are hard to find (and whose judgement should you trust?) and have vanished from teacher training and institutional memories?
What is the Russian experience with Maths ‘Circles’, why are Circles so treasured by those who participated (an amazingly large number of western faculty), how do these differ from maths in normal English schools, what lessons can we be very confident in, how could these lessons be brought to Britain?
How much can such things scale, how much is limited by necessarily relatively few excellent teachers, what can/can’t (well) be scaled with the internet?
What can parents do given almost all schools (including almost all private schools, for complex reasons) are driven by *optimise to the national curriculum and government controlled tests* but this is bad for both those children more or less able than the median? How are these options affected by wealth? (NB. many teachers appreciate that optimising for the National Curriculum and government tests is not the best educational approach but most have no/little choice.)
What are the core beliefs about education among Westminster players across party allegiance and how do they undermine civilised education? Some of my ideas about this came from working in the DfE 2010-14, creating King’s Maths School and other projects, discussed below.

Yet Another Reason To Hate College Admissions Essays (11 min read)
Astral Codex Ten

Scott Alexander nails this one. It’s paywalled but piles on to a free post by Yascha Mounk’s The College Essay Is Everything That’s Wrong With America.

Yascha sets the scene (X addicts already know the backstory because these kinds of stories always make the poster the “main character” on the app):

A few days ago, an 18-year-old by the name of Zach Yadegari publicly shared his impressive accomplishments—and the disappointing outcome of his attempt to get into an elite college. Zach had a GPA of 4.0. He had a score of 34 (out of 36) on the ACT, a standardized test applicants sometimes take in lieu of the SAT. Perhaps most impressively, he is an accomplished coder who has built a genuinely successful business: an app that allows users to count calories by submitting photographs of their food, and which he claims already earns $30 million in annual recurring revenue.

Despite this impressive record, most schools weren’t interested in Zach. According to his post, he was roundly rejected by every Ivy League school (except for Dartmouth, to which he didn’t apply). Nor did he fare any better at other top colleges, such as MIT and Stanford. Even some comparatively less selective schools such as UVA and Washington University did not take any interest in him.

Scott Alexander starts his post:

His [the 18 year-old’s] essay is well-written on a stylistic level. It sort of, kind of, hits the right beats – “Now, I see that individuality and connection are not opposites, but complements” is approximately the sort of thing you’re supposed to say if you want to sound wise. I don’t feel like I really deeply understand what makes him want to go to college, but whatever, I would hire him for an entry-level writing job somewhere and expect him to pick it up quickly.

The reaction from people with college admissions experience was more negative. Aside from calling it “cocky”, they pointed out that it failed to list hurdles he had overcome, didn’t explain why the particular school he was applying for was a great match for him, and didn’t give the impression that admitting him to college would cause him to make some great contribution to the world.

These are reasonable things to ask from an essay. Why did I feel so uncomfortable with this response?

Writing, done honorably, is a good and valuable skill. Colleges would do well to select for it. Or at least it’s in my self-interest to say that.

But there’s nothing honorable about a college admissions essay. It resembles nothing so much as prostitution – not the fun sort of prostitution you read about in Aella blogposts, but the kind that appears in news stories on human trafficking. You have to twist your innermost self into a marketable commodity – smiling and telling your violators how much fun you’re having, while your soul screams the whole way through.

Five, maybe ten percent of applicants are some kind of special snowflake whose father was murdered when they were five years old. As he lay there bleeding out, he said “Daughter, my whole life, I dreamed of being the first LGBT person to get a PhD in the study of ancient Assyria. Now that dream has been taken from me. With my dying breath, I give you my trowel and hand-painted figurine of Tiglath-Pileser III, in the hopes that one day you will succeed where I failed”. She spent the next twelve years sweeping chimneys to support herself and her paraplegic mother, before one day – rotting in jail after protesting police brutality – she started talking to her cellmate and found he was Behnam Abu Alsoof, legendary expert on the ancient Near East. He offered to tutor her in cuneiform, and at age seventeen she published her first paper, a daring thesis claiming that the Elamite Kingdom, long thought a victim of foreign invaders, was actually destroyed by internalized misogyny. Now she wants to attend Dartmouth, the college her father always dreamed of making it to, with the top Assyriology program in the world, in order to continue her groundbreaking work on Bronze Age sexuality.

The rest of us are just some kid who wants to go to college because that’s where all the good jobs are. If you really press us, we’ll say something like “idk biology seems pretty cool”. We encountered an approximately average number of hardships. Once when we got our wisdom teeth taken out, the surgeon said we had the weirdest reaction to anaesthesia he’d ever seen – does that count as a hardship?

He expands his attack on the ritual of the college essay before ending by putting his finger on exactly the same feeling I have about the college essay (in bold):

While reading this, I fantasized about how I – now a professional essayist with more years of experience than the average college applicant has been alive – would address the college personal statement if I could do it all over again. The most damning thing I can say is that I would write it exactly the same. I don’t even remember what I wrote – I assume something about how I struggled with OCD as a child and that made me want to become a psychiatrist – but it was the world’s most boring prose, it used 1% of my talent and explained 0% of how I differ from every other would-be doctor, and every single incredibly clever thing I would write in my fantasies would have been much worse.

I don’t know how to destroy the college essay. But I do earnestly hope that someone destroys it.

Money Angle

Abraham Thomas doesn’t publish frequently but I always make time to read when he does.

This post is terrific:

Making Markets In Time (16 min read)

Abraham’s main point: Just as Wall Street profits from spatial arbitrage (trading across locations), Silicon Valley profits from temporal arbitrage — trading across time by financing different stages of a startup’s lifecycle.

This framing explains several familiar features of venture in terms of well-theorized risk tranfer mechanisms.

Just as futures allow risk and logistics to be unbundled across intermediaries — like producers and consumers — venture rounds aggregate liquidity allowing investors to “pass the baton” through stage-specific benchmarks and funding expectations. The stages make the startup ecosystem legible which in turn drives volume.
Consensus is a bug not a feature. VCs are mocked for being herd animals, but shared consensus is necessary to keep the financing assembly line moving. Startups don’t just need to be “good”; they need to be “fundable” to the next investor in the chain.

I found this provocative because Thomas is suggesting that VC is a Keynes Beauty Contest more than long-term investing. A successful early-stage investor reliably front-runs consensus. They are market-makers, less concerned with “value” and more with positioning deals to match future investor appetite — similar to how a trading desk connects buyers and sellers.

But Thomas’ framing becomes even more provocative since I’m so predisposed to utter cynicsm in large scale private asset management.

The [VC majors] are not really hunting alpha. Outperformance is not the point; rather, because of their increasing economies of scale, they just want to be part of every (material) deal. The result is, essentially, beta on the private tech market — it may not be a true ‘index’, but it offers highly-correlated directional exposure to the market as a whole, which is almost the same thing.

LPs love this. Most institutional investors want sector exposure first, and in-sector outperformance second. The venture majors provide precisely this.

And the incentives don’t stop there. Allocator capital scales better than allocator diligence — it’s so much easier to deploy $20M into one fund than $1M into each of 20 funds. And of course GPs are happy to make 2% of the biggest number possible.

Everybody points to the 2024 statistic that 50% of new LP dollars went to just 9 firms; nobody seems to have a theory of why rational LPs would do this. Market-maker concentration provides the answer!

There’s a clear parallel with history here. Many of today’s largest investment banks — Goldman, JP, Citi — got their start as prop lenders during a previous technological buildout: canals, railroads and coal in the 19th century. They then broadened their franchise into more beta-like businesses like brokerage, depository and market-making — less glamorous, but far more lindy. Prop traders come and go, but banks go on forever.

The goal of the venture majors is to become the investment banks of the technology world. And it certainly looks like they’re succeeding! They say venture doesn’t scale, but this is not venture; it’s a completely different product, with completely different risk-return and investor profiles.

Money Angle for Masochists

A reminder in the spirit of being attuned to seemingly far-fetched risks:

If short selling were restricted in any way, the value of puts relative to calls on the same strike increases in a put-call parity framework.

If futures are trading at full carry and you think such a ban is possible it’s an asymmetric bet to put on conversions (ie short futures, long stock or for options short combos long stock).

🔗Related

📽️Teaching Options Basics With Live Data (Moontower YouTube)

📔Synthetics: Alternate Realities (Market Jiujitisu)

From My Actual Life

On Friday night, we saw AC/DC at the Rose Bowl for nephews first concert and my boys second (they liked this one more than the Foo Fighters).

My 8-year old started playing the guitar in December. He has the spark of obsession. He performs his first song with a band next Sunday (7 Nation Army “including the solo” which he emphasizes). We have cute video of him dancing when he was 3 with a small Loog guitar mimicing Angus Young. He was especially psyched to see him. So I play it up a bit. “The band is in a bus behind the tunnel, keep your eyes out for them when the lights go out, maybe you’ll see them coming to the stage…”

But I also told him they have famous friends. He knows all about GnR so I told him that Axl is friends with the band and lives in LA. I said, “I think he’s gonna be here. Watch the area by the stage where people come from the tunnel area.”.

Within 3 minutes…jackpot:

Dad is an f’n wizard.

(People in surrounding seats were impressed by that call and since I totally believed it was possible I was looking for him and was the one who spotted him. I mean Appetite was the first cassette I ever bought — this is stupid lifelong preoccupation paying off on a guess.)

Stay Groovy

☮️

Moontower Weekly Recap

father

father

I’m in southern CA this week with much of my family. My father has had a sharp recent decline in his already poor health in a long battle with Parkinson’s. My kids arrive today to see their “gido”.

So many thoughts colliding, but nothing I feel like talking about that’s personal. But a few dads from pop culture are intruding. I’ll talk about them instead. If you can find the throughline, knock yourself out.

Archie

I think a lot about that Manning brothers documentary from a decade ago or so. There’s one part in particular — the brothers say that despite their dad , Archie, never having a winning season for the Saints, they never knew when he came home from work whether he won or lost. When I was at the fund, I’d sometimes have a tough run weigh on me back home. And I was a lowly finance dork. The QB of the friggin Saints didn’t let his losses affect his energy with the family. Some might say that’s unhealthy. I don’t know. I found it totally aspirational, and since the sons talked about it with admiration, I’m going with them on it. Me to the mirror — “get over yourself”.

Timothy Saxon

The dad in White Lotus Season 3 delivered a performance that made me grateful to live clean. His stress was so palpable I had thoughts I don’t think I ever considered before (to be clear, none involved harming others, least of all loved ones).

But there was a subtle theme about the expectations fathers internalize. He victimized himself when he alludes to the “pressures” he had on him. Even if those pressures were real (it’s hard to deny they weren’t), those pressures were still choices.

You are not just a bystander to the expectations you adopt. Tacit approval is still an active gesture. It’s just that it can be easier to agree to insane expectations only to lash out when you fall short, than accept the cost of rejecting them in the first place. This quandary is a hairline fracture in the foundation of the male psyche.

Eddie Miller

The father in the Netflix series Adolescence. I’m not going to re-hash this show. But this man’s characterization doesn’t come into full view until the last episode.

He’s dutiful. That is obvious throughout.

He’s humble. Watch the last episode as he searches for the “hows” while never shirking ownership of what happens.

He shows so much restraint. They mention his temper but it’s in sharp relief to his will to stay composed in circumstances that would angry outbursts if not a nervous breakdown.

He didn’t let his ego sabotage what he wanted. That’s what the scene in the van is about where he and his wife tell their daughter about the HS dance where he flails around to Take On Me to win her mother’s affection. It’s an act that flies in the face of the lie that incel culture victmizes itself with — that confidence and vulnerability don’t co-exist. In theory, his awkwardness doesn’t get the girl. In real life, she’s talking about that romantic moment 25 years later.

That dude is as man as you get. And his son doesn’t see it, because the cartoon version of manliness is on offer as soon as the algo serves the next YouTube short. To a child, the comparison is broccoli vs jawbreakers. Good luck with the vegetables, bruh. But to anyone who’s been forced to grow up, to see life’s imagination in doling out surprises, the definition of a man is a no-brainer in the opposite direction.

The last scene of this series, when he’s in his son’s room, hit me harder than any I can remember. My sister and I were talking about the scene on our father’s driveway yesterday. She said it hit her husband, my brother-in-law, extremely hard. A scene, perfect in its simple emotional brutality. A sledgehammer to a parent’s heart.

But making it a dad and a son? Just take my eyes next time.

the inverted term structure trap

A couple questions I answered in the moontower discord:

It started with Benn’s observation:

What do you think about crude with something like this? Would you be something like long vega vs long deltas rolling up the curve? idk what even would be optimal to exploit a term like that due to the gamma problem.

My response:

It all depends on context. For example, if you saw my post today, I actually thought April 11 vol was too cheap relative to expiries behind it.

The curves are useful because they allow you to compare across timeframes, but nothing about the curve itself necessarily indicates a trade. Optically, the fronts may look high—but as we’ve seen, they’ve been cheap. And part of the reason they might be cheap is that people naively think they’re too high and sell them.

So it’s less about the shape of the curve and more about reasoning through the assumptions that might be causing it to look that way.

Eventually, you’ll look back and say, “Selling the fronts would have been a good trade,” because in hindsight, the market calmed down. But that’s not a timeless lesson.

I think Benn is alluding to a great truth: there is no one thing that always works. Any strategy that consistently works gets discovered by sophisticated pattern seekers, and the very act of arbitraging that edge makes it disappear. So the things that work tend to be ephemeral, not evergreen.

Instead, it helps to think of prices as an adversary. What’s baked into this price? That’s a habit you develop over time.

For example, imagine the market hears that a tariff deadline gets pushed out 90 days. My reflex is: the market will likely bump that term vol higher. But maybe it’s overreacting— because if the volatility doesn’t settle down, the pressure to resolve the situation early increases, making the 90-day assumption less relevant. (Maybe selling that month as part of a calendar butterfly is better if you think the market is discounting other resolution periods too heavily).

So it becomes a habit. When you see a price that looks high or low, ask:

whether it’s justifiable (it usually is), and
whether you expect it to have overreacted or underreacted on balance.

I’m not surprised when optically high vols turn out to be cheap—people get anchored.

That’s why I try to look at everything relatively. I’m not just asking “Is this gamma going to underperform or outperform outright?”

The best time to trade an overreaction is when the overreactors are being forced—in other words, when the actions are non-economic. Knowing when that’s happening isn’t easy, but sometimes you can feel it—when markets go really wide, when there’s a ton of volume at insane prices, etc.

getting hired in trading

I gave a talk to a quant investment club at UNC this week. I did some riffs on what said at Berkeley back in 2023.

I find these things a bit tricky because when I project my 20-year-old self onto them all I’m thinking is “I wanna high-paying job so I can be rich…what do I do old man?”

To be fair, I find all young folks who reach out to me to be incredibly mature and thoughtful. Majorly.

The inter-generational condescension olds have for the youngs is bizarre. The kids are impressive. Like the young man from UNC who reached out to me in the first place to see if I’d give the presentation. I just never would have done anything like that at his age. I was skipping class to make sure when my roommates got home I had the top score in the house in Crazy Taxi on Dreamcast. I don’t know what I was thinking. It’s so dumb when I recount it. Maybe my bar for what kids should be able to do is so low because I didn’t care about anything but how am I gonna do the least work for the most money so I can just screw off.

(I wonder if this is a class thing. Where I grew up, ambition just wasn’t in the water. I remember a kid in our town who got hurt in an accident on purpose so he could get a settlement. And then he bought a 90s Mustang and drove around with “Fear Me” vanity plates on it. Peaking in HS is bad enough, but for THAT to be the peak…ouch.)

When I graduated, options trading was a relative backwater compared to banking. It wasn’t high status. SIG wasn’t even SIG. They were called Susquehanna and nobody knew what the heck a “Susquehanna” was. I made $37,500 for my starting pay.

Today, new hires make like 10x that. That’s 10% inflation per year. I talk about the forces that drove that. But the larger point is that trading and market-making are now high-status. There are trading competitions, interview brainteaser forums, and legible stages to getting hired. The competition is claws-out. In other words, all the conditions for massive disappointment. It’s hard to have the experience I had — getting into an industry that sounds pretty cool and needed bodies because it was quietly on the cusp of roofing. It was not in vogue. Susq’s recruiter asked me to come over as I wandered the career fair. “Hey kid, you like games?”

Today, the kids show up knowing the interview questions.

They all want career advice. What do I need to do to get hired? Because the show has moved from the 1pm side stage to the Sunday night headliner I don’t have great advice for getting hired beyond “crush the IMOs”.

But that feels a bit harsh and defeatist. So I crowdsourced:

Some help from the hive please. College students will reach out asking how to get into the investment or trading industry. I don’t have an answer other than on-campus recruiting.

The answers rolled in. Thread of advice for breaking into the industry.

Related topics

🌙Career Advice (moontowerquant.com)

🌙My advice to practitioners who ask how to handle stressful days — have other places in your life to get a W. Oil futures blew through a short strike on expo? Go get a new PR in the gym or prune a topiary. This short piece by David Epstein affirms the strategy: Why Hobbies Are An Advantage, Not a Distraction (2 min read)

🌙Ricki Heicklen is hosting a condensed version of her Quant Bootcamp. I’ve discussed this bootcamp many times so from now on I’ll just remind you that it’s so good it shouldn’t exist. It’s subsidized by Ricki’s joy of teaching.

🚀She is hosting another one April 25-27 in SF🚀

➡️Register at trading.camp

Moontower readers have been to prior bootcamps. It was heart-warming when she messaged me earlier this year to say:

I came here because I wanted to tell you how genuinely wholesome and kind your fanbase is. you have led to a ton of bootcamp signups and they are across the board…”

such high quality people. genuinely earnest, smart, dedicated thinkers who have also clearly learned a ton from reading your stuff

when I see that a bootcamp signup found me via moontower it’s an extremely positive signal about how much they’ll add for the cohort

This is a massive testament to YOU. I’ve said it before…attending Ricki’s bootcamp in Nov reminded me how lazy my own thinking can be. I literally feel dumb around her and the other instructors…

Not because they’re pompous, it’s just the rigor around details, logic, etc. It feels similar to being at SIG. Not surprising bc of the SIG/JS lineage. Anyway that’s all to say, Ricki isn’t easily impressed and then y’all go and her impress her.

This bootcamp is special because it also marks the launch of her company Arbor. In celebration, it kicks off with a Friday night gala.

➡️See the schedule at arbor.day