Literary Version Of A Chart Crime

Last week, we talked about “chart crimes“. Often these are charts that poorly constructed because the authors have been fooled by correlations or invalid comparisons. These are naive but honest. Then there are charts that use sleight of hand to nudge a conclusion. This author has an axe to grind. 

This week, we will discover the literary version of chart crimes. It’s what Cedric Chin simply calls “sounding insightful”. It’s an approach honed in the internet tournament for attention. Since desire is the only barrier to publishing online we are witnessing “an arms race in writing. The best online writers are able to make something sound insightful — regardless of whether it’s true, or whether it’s useful.”

Ced continues:

This isn’t some evil conspiracy. ‘Writers optimizing to produce insight porn to grab attention’ sounds nefarious, but it’s really more like ‘writers responding to the incentives of the social internet’ — a simple side effect of the attention economy.

My own feeling is that the overlap between universally “good writing” and “optimizing for attention” is much higher than “good writing” and “being right about what you are writing about”. I’m sure there’s some mix of practice, talent, and writing ed that can make you a good writer. But I’m not sure how correlated any of that is with having accurate or well-reasoned thoughts.

A bad writer with bad takes is harmless. Nobody finds them. A bad writer with good takes needs an agent. A good writer with bad takes is hard to detect for 2 reasons:

1. Part of good writing is being effectively persuasive. A good writer has you in a spell. 
2. There are elements common to all good writing so you cannot distinguish good takes from bad takes based on style.

Ced refers to some of these common elements as “tricks”. 

Here’s 2 familiar ones:

  1. Use a story.

    I started this piece with a story. Preferably from a historical period that the reader isn’t familiar with.

  2. Repackage obvious truths and sprinkle them over the course of an essay

    Clichés can thus be repackaged to sound insightful. This is a useful trick because a) clichés are often truths the reader already agrees with, and b) whatever sounds insightful will keep the reader going.


Usefulness Separates Infotainment From Scholarship 

Ced warns that what sounds insightful isn’t always true or useful. Some excerpts:

  • [Venkat] Rao’s piece is not ok if your goal is to read for career reasons. But it’s ok if your goal is to read for entertainment. It’s ok because Rao’s goal is to attract eyeballs, not create better business leaders. And his writing is so good most people will forgive him for it.
  • As a writer, I admire what he’s done. But as a business person, nearly everything that [Dave] Perell says in the piece about business is subtly wrong — enough to make me treat his essay as entertainment, not education.
  • Writers are often seen as smarter because good writers today are trained to optimize for sounding insightful. This bleeds over into reader perception. I think that whether a writer sounds smart or a piece sounds sophisticated shouldn’t affect you if your goal is to put things you read to practice. The questions remain the same: “Is this person believable? How likely is this going to be useful? And what’s the cheapest way to find out?”

Clear Thoughts Do Not Equal Correct Thoughts

Ced concludes his post:

A year ago I wrote Writing Doesn’t Make You a Genius. I noticed that people tend to assume good writers are smarter than they actually are. I argued that this was mistaken — that writers sound smarter on paper because the act of writing forces them to clarify their ideas.

But now I have another reason. Writers are often seen as smarter because good writers today are trained to optimize for sounding insightful. This bleeds over into reader perception.

My Own Reconciliation My feeling is the usefulness of writing comes in 2 forms:

  • Form 1: The writing helps you make better decisions or predictions.
  • Form 2: The writing is useful for entertaining or provoking you. If a writer is wrong in interesting ways their work is still useful.

The most common failure is to incorrectly label a Form 2 piece as Form 1. If all you ever read is Malcolm Gladwell or self-help you might never know the difference. 

For a fuller discussion, please check out Ced’s Beware What Sounds Insightful (Link)

T’Challa Is A Real Leader

We all know a story of some actor whose real life personality is nothing like the role they play on TV. We are 2 degrees separated from the actress who plays “Darlene” on Ozarks. We hear she’s the sweetest lady ever in real life. On the show, she’d shoot your balls off. I remember once reading about the actress who plays “Suzy” on Curb Your Enthusiasm. She lives in Brooklyn and apparently whenever she gets recognized in public, fans just ask her to curse. Just say “Larry, you four-eyed f_ck!”. In reality, she couldn’t be any further from Jeff Garlin’s caustic wife on the show.

Well this weekend, we were pretty bummed about Chadwick Boseman’s passing. Covid season has meant a lot of Marvel movies on loop. Max was in a phase for awhile where he’d declare “Wakanda forever” before leaving the room. I’m not familiar with Boseman’s body of work other than Black Panther but his portrayal of T’Challa stands so tall. He’s magnetic, charming and inspiring. You cannot help but feel that Boseman’s real life character is bleeding through. You wouldn’t want to discover the negative version of the “Darlene” or “Suzy” surprises.

Fortunately, the man, Chadwick Boseman, would make T’Challa proud. Some of my favorite discoveries:

  • The “Black” Jeopardy SNL skit (Link)
  • Boseman talking about his relationship to kids with terminal cancer. He was quietly battling Stage 4 colon cancer during this interview. I’m not crying, you’re crying. (Link)
  • A 90 second clip from a commencement speech he gave. I’m sure you don’t need to be religious to hear the message. Last 30 seconds were especially resonant. (Link)

Public discourse, by its nature, promotes glory and underappreciates silent heroism. It’s why the Humans of New York project you see on social media is so special. It’s about the unheralded. Appreciating the day-to-day struggle that people privately deal with makes the world feel more relatable. It connects us in ways that we need more of. I’ve mentioned this in various ways in Antidote to Abstraction and my eyerolly take Avoid Boring People?.

Boseman was a celeb who provided a rare example of silent leadership.

Chart Crimes

A good friend shared this in one of our Whatsapp chats.

Tsk, tsk.

Classic #chartcrime. I don’t want to be too hard on my friend, after all, Bay Area real estate has certainly co-moved with the stock market. But this chart is intentionally heavy-handed. The axes don’t start at zero which should immediately cause you to wonder “what’s that smell?”

Look a little closer and you see the dual vertical axes are out of proportion. The blue axis goes from $400 to $1,100 while the red makes a much larger percent jump from $7,000 to $29,000.

Getting fooled by a chart is a forgivable offense. The friend who shared that chart has a grad degree in physics and extensive business and tech experience. It’s tiring and impractical to slow down at every chart we see. Fortunately, spotting chart crimes is just a matter of practice.

For financial #chartcrimes I recommend this thread by my buddy Jake who ruthlessly collects them.

Every chart you see was created by someone who was framing a story. Every chart has intent. Design choices are never accidental. This doesn’t mean every chart crime is nefarious. Often they just reveal how people have fooled themselves.

Here are 2 common failure modes:

  • Spurious Correlations

    These are best explained by simply looking at ridiculous examples. Call it lazy pattern-matching or uncritical data-mining. Correlation/causation errors are in our DNA. I’m convinced there’s no solution to this. And even when we think we isolate causation we are prone to being exactly wrong. A recurring theme in Moontower is we often say “because of” when we mean “in spite of”.

  • Invalid Comparisons

    What can cause 2 quantities to be non-comparable? One series might be “stationary” and the other “non-stationary”. These are technical words so I feel like an imposter even writing them. The ELI5 gist of a non-stationary series is one that does not have a stable mean. For example a stock price index or your age. These are quantities that trend (we can debate the stock one, but if you believe in inflation at the very least the price is subject to the trend of the denomination. All prices are relative to a denomination. I can compute the price of oil in USD but I could also compute in terms of eggs per barrel, diplomas per barrel, or Pokemon per barrel).

    Examples of stationary or stable quantities would be how many hours you sleep, how many times you go to the bathroom, or returns. So it would not make sense to compare the price level of the SP500 which has a mean which changes over time with the level of the VIX which is mean-reverting.

    So when making comparisons it’s important to consider what drives the measurables. If the drivers do not come from the same distribution or behavioral class you might be fooling yourself.

Just before I was set to blast out the newsletter I learned this is the “most liked” tweet of all-time. That’s informative but it does make you wonder what the most liked tweets of all time are normalized by number of active Twitter accounts. And even then you’d like to further account for Russian bot accounts. A common way to normalize a non-stationary series to a more stationary one is to normalize it with a ratio. GDP vs GDP per capita. Inventories vs Inventory/use.

Straddles, Volatility, and Win Rates

One of my favorite follows on #voltwit is @SqueezeMetrics. The account more colloquially known as “the Lemon” has a personal crusade against using implied vol to refer to option prices. Recall, volatility is just the asset’s standard deviation of returns. It’s usually an annualized number. So if the SPX has a 15% volatility that just means you expect the SPX to return +/- 15% about 68% of the time1

“Lemon” prefers using the average expected move, more commonly known as the straddle.

Thus tweeted the Lemon:

I think the convention of turning the straddle price into an annualized standard deviation is obfuscatory. Straddle gives you the average move that’s priced in. Why complicate that?

I can see how the distinction between average move (aka the “straddle”) and standard deviation (aka the “vol”) is “obfuscatory”.

So let’s clear it up.

Expect to learn:

  • The math relationship between the straddle and the volatility
  • How the distinction relates to win rates and expectancy
  • Why the spread between the straddle and volatility can vary in turn altering win rates
  • My own humble opinion on the matter

Turning Volatility Into A Straddle and Vice Versa

A handy formula every novice trader learns is the at-the-money straddle approximation2:

Straddle = .8Sσ√T

where S = stock price
σ = implied volatility
T = time to expiry (in years)

Ok, let’s pretend the SPX is $100, there’s 1 year to expiry, and implied volatility is 15%. Plug and chug and we get a straddle value of $12 or 12%. Pretty straightforward.

Straddle/S = .8σ√T

If we want to simply speak in annualized terms then we can assume T = 1 and can simplify:

Straddle as % of Spot = .8 x σ

Which of course means if you know the annualized straddle price as a percent of spot you can go in reverse to get the volatility:

σ = Straddle as % of Spot x 1.25

When is this useful?

Let’s say based on a stock’s past earnings move you see that it usually moves 5% per day. In other words, the earnings day straddle should be 5%. Then, you can find the standard deviation:

5% x 1.25 or 6.25%

The standard deviation is a volatility which you can annualize to plug into an options model which will spit out a 5% straddle price.

6.25% x 252 = 99.2% vol

Knowing the 1-day implied volatility is useful when you are trying to estimate a term volatility for a longer period that includes the earnings day (topic for another time).

What’s the practical difference between straddles and volatility?

Volatility is a number you stick into a model to generate a price for an instrument you actually trade. In this case, a straddle. If you input 15% vol into our above example, you will find that a 1-year straddle will cost you 12% of spot.

If you buy this straddle your return is equal to:

Absolute value of SPX return – 12%

Your worst case scenario is the SPX is unchanged and you lose your entire 12% premium. You are “long volatility” in that you want the SPX to move big one way or another.

So let’s talk about what we really care about — expectancy and win rates.


The point of the model is to generate a price that is fair for a given volatility. 12% was the fair theoretical value for a 15% vol asset.

If you pay 12% for the straddle on a 15% vol asset you have zero expectancy.

But that’s not the whole story.

Win Rates

Expectancy and win rate are not the same. Remember that the most you can lose is 12% but since there is no upper bound on the stock, your win is theoretically infinite. So the expectancy of the straddle is balanced by the odds of it paying off. You should expect to lose more often than you win for your expectancy to be zero since your wins are larger than your losses.

So how often do you theoretically win?

A fairly priced straddle quoted as percent of spot costs 80% of the volatility. We know that a 1- standard deviation range encompasses about 68% of a distribution. How about a .8 standard deviation range?

Fire up excel. NORMDIST(.8,0,1,True) for a cumulative distribution function. You get 78.8% which means 21.2% of the time the SPX goes up more than .8 standard deviations. Double that because there are 2 tails and voila…you win about 42% of the time.

So in Black-Scholes world, if you buy a straddle for correctly priced vol your expectancy is zero, but you expect to lose 58% of the time!

Outside Of Black-Scholes World

The Black Scholes model assumes asset prices follow a lognormal distribution. This leads to compounded or logreturns that are normally distributed. This is the world in which the straddle as percentage of spot is 80% of the annualized volatility.

In that world, you lose when you buy a fairly priced straddle 58% of the time. Of course fairly priced means your expectancy is zero. What happens if we change the distribution?

I’m going to borrow an example of a binary distribution from my election straddle post:

  • 90% of the time the SPX goes up 5.55%
  • 10% of the time the SPX goes down 50%

    Expected move size = 90% x 5.55% + 10% x 50% = 10%

Expected move is the same as a straddle. The straddle is worth 10% of spot. Your expectancy from owning it is 0.

If this was Black-Scholes world, we would say the volatility is 1.25 x 10% = 12.5% (not annualized). But this is not Black Scholes world. This is a binary distribution not a lognormal one. What is the standard deviation of this binary asset?

We can compute the standard deviation just as we do it for coin tosses or dice throwing.

σ= √(.9 x .05552 + .1 x .502)

σ = 16.7% (again, not annualized so we can compare)

Note that your straddle is 10% but your volatility is 16.7%. That ratio is not the 80% we saw in the lognormal world, but instead it is 60%.

Note you cannot repeat the earlier process to find the win rate. You can’t just NORMDIST(.6,0,1,True) because the distribution of returns is not normal. Luckily, with a binary distribution our win rate is easy to see. In this example, if you pay 10% for the straddle you lose 90% of the time.

Even if you paid 6% for the straddle you still lose 90% of the time. However if you bought the straddle that ‘cheap’, your expectancy will be massively positive!

My Own Humble Opinion

When there is a short time to expiration, arbitrarily let’s say a few weeks, my mind’s intuition might latch on to a straddle price. I might think in terms of expected move as one does for earnings in getting a feel for what is the right price. But on longer time frames I prefer to think of implied vol because I am going to be dynamically hedging. Measures of realized vol can be readily compared with implied vol.

If I look at a straddle price for a long period of time, say 1 year, I might fall into a trap thinking “20%? That just sounds high.” I’d rather just compare the implied vol which would be 25% (remember 1.25 x straddle), to realized vol since I am interested in the expectancy of the trades, not the win-rate.

There are all kinds of house of mirrors when looking at vols and straddles and thinking about winning percentages. As Lemon says, it’s “obfuscatory”. Everyone should do what works for them.

If you tend to be long vol, be aware having more losing months than winning months might be completely normal. It’s baked into the math. And the more skewed the distribution, the worse your batting average will be.

But in the long run it’s your slugging percentage that matters.


  • Straddles as a percent of spot are 80% of the volatility (all annualized)
  • Straddles tell you the average move.
  • Fair straddles have zero expectancy.
  • You lose more often when you win when you are long a straddle.
  • Your win sizes are larger than your losses.
  • Skewed distributions change the relationship between win rates and expectancy. They also change the relationship between straddle prices and standard deviations.

The Curse of the Reserve Currency

I’m familiar with the US dollar as the world’s reserve currency through a conventional lens. As a deliberate bargain between the US and the rest of the world.

It goes something like this:

The US enjoys a stable currency effectively lowering her cost of capital. In exchange, US Naval might enforces order on maritime trade routes. The safety of shipping lanes is a global good lifting all economies through the efficiencies of comparative advantage and arbitrage. This global good would be difficult to coordinate without a single cop like the US so the world accepts this bargain as reasonably fair even if it might nitpick aspects of it.

If you are a just being introduced to this idea you can see my notes on:

I recently read a different perspective on this global arrangement. In this alternative view, the status quo was not an explicit or even implicit deal between the US and the rest of the world but an emergent phenomenon. The distinction is important because the force that maintains it is not international diplomacy shaped by national interests. Instead, it is simply the position at which the equilibrium is at rest according to economic gravity. The invisible hand working bottom-up not authority working top-down.

Yakov Feygin and Dominik Leusder explain:

The dollar system evolved not as a tool of imperial statecraft, but as the project of a transnational elite that has effectively usurped control of an international public good.

Frameworks for understanding the persistence of the dollar system tend to vary from from reductionist to outdated, often examining international politics with discrete nation states as the main unit of analysis. In this view, the dollar is a product of hegemonic US interests, wielded as a tool of statecraft. But global financialization has upended this framework: elite interests are not aggregated domestically but internationally, and are transmitted via the balance-of-payments mechanism and the financial system…Herman Mark Schwartz, one of the foremost experts on the dollar and American hegemony, offers a better way to think about the dollar—namely, as the state money of a quasi-imperial global system, in which the different economic regions are tied together by a shared reserve currency. This ‘imperial currency’ is more of a by-product, and less of an enabler of (or even an enabling constraint on) American expansionism and military adventurism, both of which preceded the reserve currency status of the dollar.

In this version of world order, the status quo is not actually to any nation’s benefit but to a political and economic class whose interests transcend sovereign borders. This leads to a counterintuitive conclusion:

to the extent that the world has prospered since Bretton Woods, it is in spite of, not due to, the USD being the reserve currency.

The full case is laid out in The Class Politics Of The Dollar System (Link)

My Selected Excerpts And Notes

The Soft Power Of Issuing The Reserve Currency

Two clear geopolitical advantages accrue to the US because of its reserve currency status:

  • Sanctions

  • Dollar liquidity swap lines

The source of the Federal Reserve’s power over the eurodollar system—and the vulnerability of emerging markets within it—is the global reliance on central bank backstopping. In the 2008-9 crisis, the Fed deployed so-called central bank liquidity swap lines to backstop the global system. These took the form of reciprocal currency arrangements between central banks: The Fed replenished the dollar reserves of other central banks in exchange for local currency. The real power of the swap lines is not who gets them but rather who doesn’t. In a recent piece for the Nation, Andres Arauz and David Adler highlight how these swap lines can be used for a form of monetary triage, in which the United States decides which countries have better prospects for weathering economic storms.

Questioning the Narrative

Despite the advantages, dollar eminence should not be a goal. The long-run cost outweighs the near-term benefit.

Dollar primacy feeds a growing American trade deficit that shifts the country’s economy toward the accumulation of rents rather than the growth of productivity. This has contributed to a falling labor and capital share of income, and to the ballooning cost of services such as education, medical care, and rental housing. With sicknesses like these, can we say for certain that the reserve currency confers substantial benefits to the country that provides liquidity and benchmark assets denominated in that currency?

How The Plumbing Works

Offshore dollar pools depend on the liquidity of treasuries and near substitutes as collateral to raise cash in the event of a margin call.

The reason for these dollar pools is twofold. First is the need to fund trade. The Eurodollar system facilitates trading relationships between countries with different currencies by giving them access to a common stable currency in which to denominate trade—the dollar. Dollar credit allows the execution of contracts without actual, US-issued currency being exchanged. Instead, the system functions as an exchange of IOUs to deliver receipts at various periods of time.

Because 80% of trade in emerging market economies is denominated in dollars, firms with receipts in a domestic currency acquire unsustainable debt in dollars if the domestic currency falls. For this reason, central banks attempt to stockpile dollar assets, most commonly US debt. To acquire them, they usually run a persistent trade surplus by repressing the real wages of their workers. (I need more clarification on this point)

This might be sustainable in the short run, but in the long run, it leads to periods of economic stagnation, or international trade and currency wars.

The second driver of these offshore dollar pools is wealth inequality and outsized corporate returns. Large corporations, pension funds, and extremely wealthy individuals cannot bank their money in the retail banking system. Instead, they hold them in pools of dollar liquid denominated assets that can be converted into dollars quickly. While this ‘shadow banking’ system has legitimate uses, it also facilitates tax evasion and kleptocratic corruption.

The dollar system thus facilitates and fuels the power of elites who have an interest in maintaining the status quo. A globalized system with a dominant key currency aids the accumulation of rents at the expense of higher consumption from workers in exporter countries and the hoarding of those rents in the legal black hole of offshore finance.

Zooming In: How It Hurts The US

  • Financial “Dutch Disease”

    Talent or ample resources have a downside. Some might even say a curse. It can make you lazy or overly reliant on your intrinsic advantage. Here’s the idea applied to USD dominance.

    Demand for high quality dollar-denominated assets saddles the United States with a financial ‘Dutch Disease’; a situation in which the reliance on exporting a single commodity raises the exchange rate and thus squeezes out the production of tradeable, value-added goods in favor of services and financial rents….Dutch diseased economies often result in a shrinking, narrow elite whose power rests on income from sales of the single commodity, or the services and management that bloom around the cash flows generated by this commodity. For the United States, this single commodity just happens to be the dollar.

  • The evidence

    The most visible cost of the disease is the steady appreciation of the dollar since the 1980s, despite a falling US share of global gross domestic product. The main domestic symptom has been the rising costs of non-tradable goods—such as medicine, real estate rents, and education—over tradable goods. This disconnect is at least in part responsible for the country’s low rate of inflation, falling wage share, and increased economic insecurity despite access to a wider range of consumer goods. While the American consumer can now purchase an ever-expanding set of appliances, electronics, and small luxuries, services that are necessary for economic mobility and household sustainability are increasingly out of reach.

  • MMT as full blown financial Dutch disease

    Justin Czyzsczewski writes:

    In the MMT view, there is no recourse against a government going off the rails. Some developing countries are said to suffer from a “resource curse“, when an abundance of natural resources means the government doesn’t rely on taxes, and so becomes unresponsive to the wants and needs of the populace. In the past, kings with powerful armies ruled in the same way. There is a very real risk of the same phenomenon when government spending becomes untethered from taxation.

Zooming In: How It Hurts Developing Nations

  • The need to hoard dollars crowds out productive domestic investment

    For the rest of the world, the ills are clear enough. In developing countries, the need to insure their economies against currency crises and debt deflation has meant the accumulation of dollars at the expense of necessary domestic investment. These policies are usually accompanied by a suppression of consumption and incomes to establish a permanent trade surplus vis-à-vis the dollar system.

  • Dollar liquidity lowers the cost of corruption

    The dollar system allows corrupt elites to safely transport their ill-gotten earnings to global banking centers located in jurisdictions with opaque ownership laws.

While the dollar system has undoubtedly had a disproportionately negative effect on developing countries, the main fault lines that emerge from the dollar system are along class, rather than national lines.

In other words, a rich Chinese national has more in common with the US elite than their fellow citizens.

Obstacles and Remedy

  • Elites’ preference for status quo

    Developed world exporters like Japan and Germany also maintain a growth model based on cost competitiveness and wage suppression. An increased role for the Euro or the Yen would undercut these models. For resource exporters, it facilitates corruption and tax evasion through simple capital flows. In the United States, it benefits financial industry elites, who can reap the rewards from intermediating capital inflows into US markets, while the cost of non-tradable services like tuition, healthcare and real estate rises for everyone else. Across all countries, elites win.
  • Reducing Inequality

    Too great a share of the national income is in the hands of high-saving entities with dollar liquidity preferences, such as high net worth individuals and large corporations. To reverse this imbalance, income would have to be transferred from these powerful interests to China’s workers—a dynamic described by Albert Hirschman as early as 1958.

The fact that the dollar system is primarily based on social, rather than geopolitical conflict means that the best solutions suggest at a reform of the system in a manner that empowers people at the bottom of the global social hierarchy.

Channeling Greg Giraldo

When I moved to CA in 2012, I thought earthquakes were the greatest natural disaster risk.

The forests of CA: “Hold my beer”

CA is on fire again. People are being displaced in what is now a late-summer tradition. We have been very lucky so far since our only inconvenience is needing to wear a mask inside our smoky house. At least we have a house.

Afternoon activities this week have included staying indoors and watching Floor is Lava on Netflix. This is not a twisted programming choice given the circumstances just the whim of the kids. If you must know, it’s like American Ninja Warrior except nobody is a ninja. Or a warrior. Or coordinated even. But at least we had power. We didn’t experience any of the rolling blackouts this week when it hit 105 degrees. Lucky.

Other activities included calling my insurance company to review my fire coverage. I’ve started to hear stories about friends unable to even find companies to underwrite or renew policies My company, Farmers, does provide insurance. It’s expensive but at least available. Lucky again.

I’m gonna stop now because I feel like I might be channeling too much of the first 90 seconds this bit by the late Greg Giraldo. Just replace “in this economy…” with “during Covid…”. (Link)

A warning: you probably shouldn’t listen past the first 90 seconds.

Giraldo is one of my favorite comics and I got to see him live a few times. He’s vulgar as hell. He lived fast and died young. He also had a JD from Harvard and Wikipedia says he had a near-perfect LSAT. He reminds me of a mix of Carlin and 1980s Denis Leary. I never listened to Kinnison but I wonder if he fit that mold. Check him out at your own risk.

Binary Straddle Example Based On The 2016 Election

This is a dramatization loosely based on the 2016 election.

It may be hard to remember, but leading up to the election the market would sell-off when Trump’s odds increased and vice versa. So let’s make some assumptions.

  • It’s the morning of the election, the SPX index is trading for $100 and the election day straddle is trading for $10.
  • If Donald Trump wins the SPX goes down. If he loses the SPX goes up.
  • The SPX price is completely binary. It will go to either an “up price” or a “down price”.
  • Trump is liquidly trading at 10 cents on the dollar to win the electoral college in betting markets.

If Trump wins the election where does the SPX go?

[This section is blank for your algebra]

If you felt lazy here’s my work:

  • The expected value of the 1 day change in SPX is 0. It’s fairly priced at $100.
  • The probability of the SPX going down is 10% since that’s Trump’s implied probability of winning.

    For both of these statements to be true in a binary situation we know the expected down move which occurs 10% of the time is 9x the expected up move when Trump loses.

    P(up) Stock_up + [1-P(up)] x Stock_down = 0
    .9 x Stock_up + .10 x Stock_down = 0
    .9 x Stock_up = – .10 x Stock_down
    Stock_down / Stock_up = -9 / 1

  • Now let’s bring in the straddle.

    The straddle is trading $10 or 10% of spot. The straddle is the expected absolute value of the change in the SPX.

    P(up) x Size_up + [1-P(up)] x Size_down = Straddle
    .90 x Size_up + .10 x Size_down = 10

    Using the substitution that Size_down = 9 x Size_up:
    .9 x Size_up + .1 (9 x Size_up) = 10
    1.8(Size_up) = 10

    Size_up = $5.55
    So Size_down which is 9x Size _up must be $50

If Trump has a 10% chance to win the election tanking the market AND the straddle is worth $10 then the market was expected to rally 5.55% if he lost. If he won the implied sell-off was 50%!

If that didn’t sound reasonable to you (but you were certain the event was a true binary) then there are relative bets to be made between vertical spreads, outright straddles and election odds depending on what you disagreed with.

To recap:

The exercise here was to turn a binary event with

a) an implied probability


b) a straddle

into an implied up and implied down price after the election.

Formulas you can remember based on the above algebra:
Up Move Magnitude = straddle / (2 x P(up))
Down Move Magnitude = Up Move x P(up)/P(down)

A little post-script based on my memory of 2016. At the beginning of the year, there were giant buyers of gold and upside call verticals in gold. Whispers were that it was Drunkenmiller and perhaps a few other macro whales. Well, whoever was buying these call spreads was spot on. Gold had a sharp rally in Q1 of 2016 before settling in somewhere like up 20% in the first half of 2016. A big move for a sub-15% vol asset.

Fast forward to election night. The futures markets were unhinged. In the peak of panic over Trump winning, the SPX was down nearly 10% while gold spiked higher. By the light of the following morning, the market had whipsawed from those points and Drunkenmiller or whoever was leaving footprints in gold had allegedly used the election night headfake to rebalance the long gold position on the highs into an SPX position on the lows.

The 10% straddle seemed to be well-priced, but somehow the GOAT macro trader realized the sign of the Trump move was exactly backward!

Some broker chatter I loosely recall after the election:

Banks that were long Nikkei variance hedged with short US variance allegedly crushed it that night as the Nikkei observation for the variance calc was down over 5% while the US point-to-point return was little changed despite the hellacious path. The Japanese markets closed in the middle of the US night when SPX was at its lows.

There are a number of exotics and bank traders who read this so maybe one of them will fill me in on the color or veracity of that 🙂

We Don’t Need No Education

I kinda hated school as a kid. Sunday nights were sad. Like funerals where the weekend was laid to rest.

Why did I hate school?

It was a tiresome place to be. The waking up early didn’t help. I discovered the snooze alarm at an early age. But that could have been overcome if the destination was fun. But it wasn’t. I was bored. That’s not an “I was too smart for school” flex. It’s just that I liked playing more. I think the only aspect of school that kept me sane is the fact that I’m a pleaser. I’m happiest when I get approval. Getting good grades was a way to do that, at least from adults.

As I got to high school, getting good grades was a path to a good college which was a path to a good job, which was a path to money. I didn’t think much beyond that (money or lack thereof was a source of baggage and well beyond the scope of this post). My scholastic life started with A’s as a path to approval and ended with a 4.0 as a path to money.

Education As A Byproduct

If I learned anything along the way it was an accidental outcome of trying to win the report card tournament. Inverting, good grades are a lossy way to measure learning. The correlation between getting good grades and learning is pretty hazy.

Here’s a non-exhaustive list of what good grades actually indicate:

  • Horsepower that’s well-matched to school: Reading, spelling, and arithmetic are easier if your parents are good at them and you’re not dyslexic.
  • Obedience: Your homework makes it to the teacher’s desk without a dog eating it.
  • Competitiveness: You heard ranks were being assigned to humans so you paid attention.
  • Fear: You were afraid of short term pain (getting grounded) or long term pain (being broke).

And finally,

  • Some actual learning. You could use this “reading” thing to follow Nintendo Power‘s instructions to defeat Ganon. You finally found a use for English class.

Notice how good grades are driven by extrinsic motivation more than a desire to learn. That’s a shame because losing a desire to learn was not inevitable. We are built to learn. Not for any grand reasons necessarily. We don’t need to pretend we emerge from the womb with little monk minds ready to contemplate the mysteries of the world. Learning is just the tool by which we solve problems.

If you have ever witnessed the frustration of a gesturing, prelinguistic child you know the power of motivation. Learning words has a direct bearing on the solution to the problem the child is solving for — nuanced communication. If a child points to her belly because she has a stomachache and mom thinks she’s just hungry the child realizes words are more effective than charades. Necessity, meet your baby, invention.

In contrast to a toddler’s home environment, the school environment concocts contrived problems that feel irrelevant. This makes actual learning an inefficient way to get what they want — good grades. School severs the link between learning and solution. It has replaced this link with “good grades are a solution to getting approval/eliminating pain”.  My most pressing problem in the confined setting is how do I get my parents or teacher off my back so I can do what I want. Not how long it took train A to overtake train B if A is moving twice as fast B.

For the kids who aren’t totally defeated by the seeming irrelevance of their education, getting good grades becomes an all-consuming priority. Not learning. We dangled “approval” in front of a child instead of a pertinent goal that would call for actual learning. To a social animal in a group setting, the returns to approval dwarf the returns to true understanding. This is a recipe for an underwhelming formal education.

Instead, we used our capacity to learn to onboard the wrong lessons. What follows is my evolving understanding of:

  1. What school teaches us
  2. What we mean by learning

  3. What’s necessary to learn

  4. How to actually learn

1. School Teaches Us That Time Is Scarce

Tim Ferris didn’t teach us the 80/20 rule. School did. It made us feel that time is scarce.

Nabeel Qureshi1 recounts his calculus education:

I remember being taught calculus at school and getting stuck on the “dy/dx” notation (aka Leibniz notation) for calculus. The “dy/dx” just looked like a fraction, it looked like we were doing division, but we weren’t actually doing division. “dy/dx” doesn’t mean “dy” divided by “dx”, it means “the value of an infinitesimal change in y with respect to an infinitesimal change in x”, and I didn’t see how you could break this thing apart as though it was simple division. At one point the proof of the fundamental theorem of calculus involved multiplying out a polynomial, and along the way you could cancel out “dy*dx” because “both of these quantities are infinitesimal, so in effect, this can be canceled out”.

This reasoning did not make sense. It turns out that my misgivings were right, and that the Leibniz notation is basically just a convenient shorthand and that you more or less can treat those things “as if” they are fractions, but the proof is super complicated etc. Moreover, the Leibniz shorthand is actually far more powerful and easier to work with than Newton’s functions-based shorthand, which is why mainland Europe got way ahead of England (which stuck with Newton’s notation) in calculus. And then all of the logical problems didn’t really get sorted out until Riemann came along 200 years later and formulated calculus in terms of limits.

But all of that went over my head in high school. At the time, I was infuriated by these inadequate proofs, but I was under time pressure to just learn the operations so that I could answer exam questions because the class needed to move onto the next thing. And since you actually can answer the exam questions and mechanically perform calculus operations without ever deeply understanding calculus, it’s much easier to just get by and do the exam without really questioning the concepts deeply — which is in fact what happens for most people.

This process is not limited to math. Here’s Nabeel on liberal arts:2

My problem with a lot of humanities education is that it trains you to find arguments for/against things, but does not train you to find the actual truth. You’re rewarded for generating the most original, plausible-sounding arguments, ideally backed by the obscurest writings from the coolest thinkers. At no point is “what is actually true about this topic” really the focus. Robin Hanson calls this “better babblers”. Certain combinations of words have better expected reward outputs than other combinations, so students learn to generate the “winning” combinations in clever ways. In this way everybody GPT-3’s their way to a degree.

In other words, school trains us to do what Eliezer Yudkowsky calls “guessing the teacher’s password“.3 Instead of understanding a concept, we mime an understanding by parroting a verbal sequence back to a teacher. The sequence is comprised of the bold-faced words in your textbook with the occasional memorized equation mixed in for, um, rigor.

If school is teaching us the wrong lessons, Nabeel is clear on the result.

How many people understand in a deeper way? Very few. Moreover, the ‘meta’ lesson is: don’t question it too deeply, you’ll fall behind. Just learn the algorithm, plug in the numbers, and pass your exams. Speed is of the essence. In this way, school kills the “will to understanding” in people.

Ouch. School kills the will to understand. This brings us to the next key point. 

2. Learning is Understanding

Learning is commonly defined as the “acquisition of knowledge”. This is too broad of a definition. Much of what we call “learning” under this definition is simply “labeling”. That thing hanging in the sky all day is the”sun”. That thing where food is created from the sun’s rays is “photosynthesis”.

The words “sun” and “photosynthesis” are symbols representing concepts. The symbol we English speakers know as “sun” is a link in a food chain. But it is also a source of light for illumination, heat for viability, and gravity for lassoing planetary orbits. The ideas that we assign tidy names to have many facets and are context-dependent.

Learning is to increase your understanding of each context and the relationships between them. When we scale the process up we create a web of interlocking ideas. Imagine we could project this knowledge web as a hologram. Then understanding would mean growing the web. Understanding would mean being able to walk around it, seeing it from different angles and under different lights.

Contrasting Deeper Understanding From Broader Learning

Most of school was just ‘labeling’. That type of learning is necessary. It’s a prerequisite for actual understanding.

Let’s consider the pros and cons of the shallow/broad “labeling’ education vs the deep/narrow “understanding” education. A superficial introduction to many ideas is typical of school. The benefit is self-evident. Especially at younger ages when you are a blank slate. As you progress through school you need to pass tests in many subjects. This has a sneaky cost. It trains you to stop exploring at shallow depths.

Nabeel on the risk of staying shallow:

People who have not experienced the thing are unlikely to be generating truth. More likely, they’re resurfacing cached thoughts and narratives. Reading popular science books or news articles is not a substitute for understanding, and may make you stupider, by filling your mind with narratives and stories that don’t represent your own synthesis. Even if you can’t experience the thing directly, try going for information-dense sources with high amounts of detail and facts, and then reason up from those facts. On foreign policy, read books published by university presses — not The Atlantic or The Economist or whatever. You can read those after you’ve developed a model of the thing yourself, against which you can judge the popular narratives.

In contrast, diving deeper means a narrower breadth of topics. The benefit, of course, is finding a meaningful understanding.

Evidence of Understanding

A clue that your understanding is solid and growing is that you can either answer questions (aka solve problems) or you can ask good questions. The trajectory of learning is an ascending dialogue between good questions and good answers which feed back into deeper questions. At each plateau in the dialogue, the learner should be testing the understanding either via practice.

Tiago Forte contrasts superficial book knowledge with hands-on knowledge:4

When you’re applying that knowledge directly to a real-world challenge, you won’t have to worry about memorizing it, integrating it, or even fully understanding it. You will only have to apply it, and any gaps in your understanding will very quickly reveal themselves. By the time you’re done solving a real problem with it, book knowledge has become experiential knowledge. And experiential knowledge is something you carry with you forever.

3. Prerequisites To “Understanding”

People vary in their aptitude and strengths. Fortunately, many of the key ingredients for learning are not inborn but acquired. They are what Nabeel calls good “intellectual software” habits.

Nabeel contrasts “intellectual software” from “intellectual hardware”:

Intelligent people simply aren’t willing to accept answers that they don’t understand…Importantly, this is a ‘software’ trait & is independent of more ‘hardware’ traits such as processing speed, working memory, and other such things. Moreover, I have noticed that these ‘hardware’ traits vary greatly in the smartest people I know — some are remarkably quick thinkers, calculators, readers, whereas others are ‘slow’. The software traits, though, they all have in common — and can, with effort, be learned. What this means is that you can internalize good intellectual habits that, in effect, “increase your intelligence”

Nabeel catalogs these “intellectual software habits” :

a) Determination

For most people… it’s much easier to just stop at an answer that seems to make sense than to pursue everything that you don’t quite get. It’s also so easy to think that you understand something when you actually don’t. This requires a lot of intrinsic motivation because it’s so hard. It’s not just energy. You have to be able to motivate yourself to spend large quantities of energy on a problem, which means on some level that not understanding something — or having a bug in your thinking — bothers you a lot. You have the drive, the will to know.

Many of you will recognize this habit as that annoying thing kids do when they keep asking “why?”. Louis C.K. described it best in this comedy bit.

b) Honesty

Intellectual honesty or integrity: a sort of compulsive unwillingness, or inability, to lie to yourself. Feynman said that “the first rule of science is that you do not fool yourself, and you are the easiest person to fool.”

c) Self-confidence

Here’s Malcolm Gladwell on his father:

My father has zero intellectual insecurities… It has never crossed his mind to be concerned that the world thinks he’s an idiot. He’s not in that game. So if he doesn’t understand something, he just asks you. He doesn’t care if he sounds foolish. He will ask the most obvious question without any sort of concern about it… So he asks lots and lots of dumb, in the best sense of that word, questions. He’ll say to someone, ‘I don’t understand. Explain that to me.’ He’ll just keep asking questions until he gets it right, and I grew up listening to him do this in every conceivable setting. If my father had met Bernie Madoff, he would never have invested money with him because he would have said, ‘I don’t understand’ a hundred times. ‘I don’t understand how that works’, in this kind of dumb, slow voice. ‘I don’t understand, sir. What is going on?’

4. How to learn

  • Make learning about trying to solve problems from the beginning.

If you want to learn Excel, don’t start with a course. Watch some videos then find something useful to build like a budget or portfolio tracker. Learn by doing. Google liberally.

  • Don’t be afraid to go deep.

Jacks of all trades and renaissance men are celebrated. As a guy, I see this embodied by brands like Art of Manliness which extol the virtues of brains and brawn. But this culture can easily give way to “lifehacking”. There’s nothing wrong with this if you are just looking for a bar trick icebreaker. But this is a far cry from being a magician. How do we marry the virtue of breadth with the type of integrity and satisfaction that only comes from depth?

The answer is focus. Consider Josh Waitzkin. Chess champion, tai chi champion, and jiu-jitsu master. As a child, he was the subject of the film Searching For Bobby Fischer. In this thread, we learn how Waitzkin defines and ascends levels of competence. How he establishes an internal locus of control. How he prefers not to “simmer” or multitask. He is either intensely on or intensely off. How he spends 5-10 years immersed in a craft before taking on a new one.

If Waitzkin represents a reliable path to mastery then our modes of spending 8 hours in an office or classroom are simply unnatural. A lion is either peacefully resting or the pinnacle of violence. Her energy is a precious resource of which she cannot spare a drop.

  • Forget the ladder

School felt like a race against time. But even worse, it implied life was a ladder. It’s true you can’t do algebra without arithmetic. But why does algebra need to precede geometry? And for that matter, why are you learning trigonometry before stats? The ladder metaphor is confining. Taylor Pearson breaks down an alternative metaphor coined by Shery Sandburg, “the jungle gym”:5

Using a jungle gym as the metaphor for your career opens up all new possibilities that a ladder doesn’t allow for.

For one, a career ladder implies a linear path. The logical thing to do after you step on the first rung is to step on the second rung. There is a very different end when you get on a jungle gym than when you get on a ladder. What do you do on a ladder? Climb to the top, obviously. What do you do on a jungle gym? Well, you can still climb to the top. But you could also hang from it and feel your shoulders stretch. You could drop to the ground and rest for a few minutes when you get tired.

No one looks down on someone for not climbing to the top of a jungle gym the way they would look down on someone not climbing to the top of a ladder. We look down at people who climb the career ladder slowly (or not at all) because why would you not get to the top of a ladder as fast as possible? That’s the whole point of a ladder.

You can also extend the metaphor in interesting ways. A jungle gym is on a playground and if there’s some asshole camping out at the top, you can simply go play on something else. Perhaps there is another jungle gym. Or some monkey bars. Or a fort. There isn’t a better or worse way to play on a jungle gym or playground. You just do what gets you excited.

  • Zooming in

Perhaps the most powerful tool we have when learning is the ability to get our hands dirty. Tinker. Throw some numbers in a spreadsheet and play. Jot words down on the page and re-arrange. Sketch. Draw arrows. Trace. Copy. Take a photo. Explain an idea to someone else and handle their questions honestly. Re-examine the holes in your understanding.

Nabeel pulls an example from Zen and the Art of Motorcycle Maintenance to explain how come closer to insight:

He’d been having trouble with students who had nothing to say. At first, he thought it was laziness but later it became apparent that it wasn’t. They just couldn’t think of anything to say. One of them, a girl with strong-lensed glasses, wanted to write a five-hundred word essay about the United States. He was used to the sinking feeling that comes from statements like this, and suggested without disparagement that she narrow it down to just Bozeman.

When the paper came due she didn’t have it and was quite upset. She had tried and tried but she just couldn’t think of anything to say. He had already discussed her with her previous instructors and they’d confirmed his impressions of her. She was very serious, disciplined and hardworking, but extremely dull. Not a spark of creativity in her anywhere. Her eyes, behind the thick-lensed glasses, were the eyes of a drudge. She wasn’t bluffing him, she really couldn’t think of anything to say, and was upset by her inability to do as she was told. It just stumped him. Now he couldn’t think of anything to say. A silence occurred, and then a peculiar answer:

“Narrow it down to the main street of Bozeman.”

It was a stroke of insight. She nodded dutifully and went out. But just before her next class she came back in real distress, tears this time, distress that had obviously been there for a long time. She still couldn’t think of anything to say, and couldn’t understand why, if she couldn’t think of anything about all of Bozeman, she should be able to think of something about just one street. He was furious.

“You’re not looking!” he said.

A memory came back of his own dismissal from the University for having too much to say. For every fact there is an infinity of hypotheses. The more you look the more you see. She really wasn’t looking and yet somehow didn’t understand this.

He told her angrily, “Narrow it down to the front of one building on the main street of Bozeman. The Opera House. Start with the upper left-hand brick.”

Her eyes, behind the thick-lensed glasses, opened wide. She came in the next class with a puzzled look and handed him a five- thousand-word essay on the front of the Opera House on the main street of Bozeman, Montana.

“I sat in the hamburger stand across the street,” she said, “and started writing about the first brick, and the second brick, and then by the third brick it all started to come and I couldn’t stop. They thought I was crazy, and they kept kidding me, but here it all is. I don’t understand it.”

She was blocked because she was trying to repeat, in her writing, things she had already heard, just as on the first day he had tried to repeat things he had already decided to say. She couldn’t think of anything to write about Bozeman because she couldn’t recall anything she had heard worth repeating. She was strangely unaware that she could look and see freshly for herself, as she wrote, without primary regard for what had been said before.

The narrowing down to one brick destroyed the blockage because it was so obvious she had to do some original and direct seeing.

When I’m feeling anxious I find that it’s coincident with thinking too much. Like I’m stuck in my own head. The remedy is to bring ideas down to the level of action. Build a model focused on a narrow problem, spend time with others, or get outside and active. It’s counterproductive to spend too much time in the abstract at the expense of field observation. Zooming in allows you to reduce dimensions and recruit more senses. When I start feeling lost I try to remember “Bozeman”.


Life is demanding. Everyone is busy. It’s not realistic nor desirable to acquire a deep understanding of most things or even many things. But when you choose to 80/20 something make sure it’s a choice and not just a bad habit overlearned from years of academic grinding.  

Personally, I never wanted to 80/20 learning the guitar by just learning a few “cowboy” chords. The best explanation for that is my interest in guitar isn’t derived (an example of a derived interest would be to learn guitar “to get chicks”). Guitar itself is the end goal. In this case, understanding requires study, deliberate practice, and tinkering. There’s no goal in mind but progress moves in many directions not along a single arrow. Developing an ear, improving rhythm, improvisation, copying songs, and applying bits of theory across all these domains is a slow but rewarding endeavor. I can’t say anything I did in school mapped well to how I approach my hobbies or career. Because in things that actually matter to me I learn because it sustains me. Not because I have to pass a test.

School is a scalable solution to a public need. I found the experience dreary. I’m not an expert on school and I recognize that the desires and constraints of all its stakeholders are varied. The system is asked to make impossible compromises. But I wrote this with a particular irony in mind. One that seems to pop up over and over amongst old and new friends alike.

People who call themselves lifelong learners didn’t actually start learning until after they were out of school.

Ultimately I just have questions.

Could we have trained our “understanding” muscles earlier and ended up in the same or better place even if our educations were narrower or more tailored to our curiosities?

Did we race to the finish line only to bring the wrong lessons into adulthood? Did those lessons dictate how we live and what jobs we choose?

We don’t need that education.

“The shortcut is twice as long.”


The Post Every Prospective Homeschooler Needs

With the upcoming school year set to be remote Yinh and I panicked. We felt like distance learning was the worst of all worlds and not suitable for young children (our kids were in preschool and 1st grade). We wanted to know our options. So we looked into homeschooling. As in unenrolling from public school and taking ownership of educating our boys.

In researching, we were introduced to a friend of a friend, who whether she likes it or not, must now be our friend too because she’s amazing and we won’t take no for an answer.

Why do I feel that way?

Because of her amazing response when I asked her for guidance on homeschooling. Remember I was basically a stranger reaching out. I got her permission to publish it here. I’ve edited it modestly, adding some headings and changing her girls’ names.

I hope this enlightens you as much as it did Yinh and I.


I have two daughters, Mary (9) and Amy (6). We started homeschooling Mary last year in second grade and this current year was my first year with both girls. I was utterly bewildered when we started this homeschooling thing, and I still feel overwhelmed at times, but I’ve been pleasantly surprised by how fun it is. The girls don’t always have good attitudes, there are occasional tears, but I take it as a good sign.

Some hints of unadvertised benefits of homeschooling

When we first started, Mary would occasionally burst into tears and I mistakenly thought she was trying to manipulate me. I was eventually able to coax it out of her that she sometimes felt like crying in school, but didn’t want to be embarrassed in front of her class, so she just held it in. With me at home, they can let out all their frustrated feelings when they’re overwhelmed. I was also surprised at how easy it is to gauge their understanding and progress. It is so obvious when they really grasp the material and when they need more time/practice. As a non-teacher, I was sure I would fail at this endeavor, but when it’s just us, one-on-one, it’s manageable. My sister-in-law, who was a classroom teacher and then homeschooled her four kids, told me that so much of what teachers learn in college is classroom management, which you don’t really need at home with just your kids.

Transition to homeschool

The transition from a classroom to home can be so jarring. Some kids need a “detox” period when they truly start homeschooling, and not just distance learning. As I’m sure you’ve learned already, they need lots of motion breaks, especially without the social pressure of the classroom to sit. Another big difference between the classroom and home is writing. Writing will be the source of many breakdowns. Writing is so hard for elementary kids – forming the right letters, putting them in the right sequence, considering punctuation. At school, teachers often scribe for the class while teaching a lesson. At home, we can lessen the writing burden by scribing for them or allowing them to narrate their answers. Ask what the purpose of the assignment is. Is it to assess their knowledge or to practice writing? Is it to draw out big, fun ideas from their wondrous brains? You can even have them copy the answer you wrote down. They’ll be practicing writing for the rest of their lives. They’ve got time.

Loosely scripted days

Sometimes we’re halfway through school at 8am. Sometimes we don’t start til the crack of noon. Sometimes my kids crave a schedule. Sometimes my kids want to choose what’s next. Sometimes they like to sit at the table to work. Sometimes they’re hanging upside down on the trapeze while they answer questions about a reading assignment. Moods and needs change. I’m flexible when I can be and try to pick my battles.

A custom education

There are so many different styles of homeschooling, so many different curricula to choose from. Some kids like the worksheets and workbooks because it feels like real school. Other kids need a more relaxed approach. I have a friend who just buys generic workbooks in every subject and has her daughter do one lesson a day until they’re finished. I have a friend who uses mostly online programs (Time 4 Learning, Starfall, etc.) so she can work while her kids do school. I have a friend whose kids run wild all day, and she just pulls them in for 10-15 minutes at a time for a quick lesson. I have another friend who unschools, which is a lot more work than you’d think. There’s the Charlotte Mason philosophy and Classical education. There are even people who gameschool. The options are overwhelming!

Getting comfortable with the inevitable uncertainty

The good news is that even if all you do is read books and do a little math in the next year, your child will be fine. In elementary school, science and social studies is just a repetition of what they did the previous year with a little bit more detail. Science is the plant life cycle, the planets, maybe the density experiment with oil, water, and corn syrup. Social studies is a lot of boring talk about community rules, community helpers, and US symbols. A lot of the work in science and social studies at this age is just practicing how to read for information. That can be done with much more interesting sources than dusty old textbooks. Art, music, nature, and poetry are springboards for science, history, and literature. Art includes movies and video games. Film scores are music and rap is poetry. Trace a leaf. Copy down the lyrics to a favorite song. Watch a TV show and ask “Who’s being brave?” There’s no limit to where they can go. As an example, Amy listened to a Classics for Kids podcast about Vivaldi and got curious. We listened to The Four Seasons as she did other school work. Then she painted a picture of what she hears in the music, wrote a description of her painting, and copied the sonnet that accompanies the season. She noticed similar words in the English translation and the original Italian sonnet and looked up some Latin root words. When her hand got tired, we traded off writing sentences. We listened to more podcasts about the Baroque Era, looked at art and architecture from the same period, read The Story of the Orchestra, listened to the Beethoven’s Wig series of silly songs set to classical pieces, and watched Fantasia. There’s no limit to where they can go when they show curiosity. Something to keep in mind as you explore the world with them: so many available resources are Euro-, white-, and Christian-centric. We keep a map of the world and mark where our interests have taken us, reminding us there’s a big world out there with more to offer. We ask three questions of everything we read, listen to, or watch: 1) Who’s telling the story? 2) Who benefits from the story? 3) Who’s left out of the story?

More good news: everything is learning!

Cooking, cleaning, sorting laundry, organizing a bookshelf, drawing on the wall, laying on the floor and staring at the ceiling in utter boredom. All learning! You don’t have to have a plan or a project or even an idea. Some of the best learning experiences we’ve had have been completely accidental. Learning happens everywhere all the time. It can be slow and not feel like learning but that’s okay. We have nothing else to do for the next year, right?

How to Start

There are two ways to officially homeschool in California: 1) Declare your home a private school by filing an affidavit with the Department of Education. There’s very little oversight beyond keeping records for attendance. 2) Enroll in a public charter school where the learning takes place at home. We are enrolled in Visions in Education and have friends who use Valley View. Families are assigned a credentialed teacher (CT) who offers guidance about curriculum, collects work samples, acts as a teaching coach, and generally keeps us all moving in the right direction. Because it is a public school, students are held to the same standards as any California public schools. We meet with our CT at least once every 20 school days (which works out to about once a month) where she collects work samples and chats with the kids to assess their learning. It’s very informal and we love our meetings. They’re very reassuring for me and the girls like to show off what they’ve been doing. We really click with our CT, but I have friends who have butted heads a bit with theirs. In addition to having the guidance of a CT, the public charter option provides a student budget to purchase curriculum and to pay for extracurriculars, which can be anything from art lessons to dance classes to sports. We get $2700 per student per year with Visions. The kids are able to try all kinds of classes and we use most of it to pay for the expensive outdoor ed program they attend at Sienna Ranch. The bad news is charter schools have seen a lot of interest in the last few months, but it doesn’t hurt to put in an application. I have a friend who was waitlisted last July but got a call in October because families had withdrawn after deciding it wasn’t the path for them.

There are so many other choices out there, but it helped me in my first (very overwhelming) year to deeply research just the ones that meet CA standards. Cathy Duffy is well known for her curriculum reviews. She is blatantly Christian, but she’s reviewed just about everything out there and is a great place to start if a particular program catches your eye. She is also great at noting what has religious content and what is secular. I also read a lot on the Secular Homeschool forums before we took the plunge. It offered great insights into what I could expect in this adventure. People discuss common problems they’ve run into, programs they’ve had success with, programs that were not a good fit for their learners, etc. Other resources that have guided our choices are and The latter, from the Southern Poverty Law Center, has been particularly useful in establishing an anti-racist learning environment.

I’ll outline below some of the programs I’ve used. It is A Lot, but homeschooling doesn’t have to be A Lot! Don’t let the following list overwhelm you.

Resources By Discipline

Language Arts

I used the Brave Writer program for both girls this year. For the 6-year-old, we used The Wand for reading/phonics and Jot It Down for writing. I was skeptical about the effectiveness of the phonics portion, but we’ve seen really great results. In fact, I was so impressed, I started having Mary sit in on Amy’s lessons and she learned so much that she had somehow missed in public school.

For Mary, we used The Arrow and Parternship Writing. The Arrow guides use a very relaxed, conversational style. It felt weird to be so informal, without vocabulary exercises and comprehension questions to answer, but they were so engaged and obviously learning. Next year for first grade, we will use The Dart for Amy and continue to use The Arrow for Mary.

We had a lot of fun with Jot It Down and Partnership Writing too. Brave Writer wants to get to the heart of what writing is really about – communicating. Rather than be restricted by the mechanics of it all, we help get all those great ideas onto the paper. Our job as the parent is to jot it down for them. Sometimes I just record Amy’s voice so we can write it down later together or I take dictation for her as she answers questions or gives me her thoughts or we trade off writing sentences. Mary does a lot of the writing herself, but I jump in for dictation or recording her voice whenever she needs it. The mechanics will come in time. Our role is to help them develop their ideas. They do get some practice with mechanics and learn grammar through copywork and dictation in The Wand/The Arrow part of the curriculum. Our teacher loves the work we do with Brave Writer so much that she’s going to use it with her kids this summer (and possibly fall, depending on what school looks like then). It’s always the first thing she wants to see when we meet with her. As a teacher, she loves it.

The downside to Brave Writer is that it’s very parent-participation-heavy. I used to schedule the girls’ writing time at the same time but I had to switch that up. I couldn’t do two at once. It also takes some prep work for you to support them. It takes a project or two of practicing but now I remember the questions and methods to use without thinking twice about it. It also helped me adjust to this new mindset when it comes to writing. I leave the grammar and the spelling to the grammar and spelling lessons. Writing is about the ideas and what they have to say. The best writing mechanics doesn’t mean anything if the writer doesn’t have a good idea! It was hard at first, but now I’m able to let the girls take their projects in whatever direction they want. It may not be to the exact letter of the assignment, but as long as it’s in the spirit of the assignment, I let them run wild. For example, Amy’s animal book assignment morphed into a trip to the zoo. She carried a clipboard around all day, copied down the names of the animals she was interested in, took pictures of them (and the informative placards in from of the enclosures), and then wrote about them when we got home. She included a little personal bit for each animal based on our trip to the zoo. (Ex: We saw seven lemurs from a tunnel in the enclosure.) She even included a squirrel in her book and was delighted at her trick because it wasn’t really a zoo animal, it just lived on the grounds. She was so excited to see her zoo trip come to life in her very own book. I had her type it on the computer so she even got to practice her typing skills for this project too. Point being, you and your learner can do as much or as little as you want. Some assignments just aren’t as interesting to them as others and that’s okay. Do as much as they’re inspired to do and let it go when they’re done.

I also use a simple writing workbook with the girls called Building Writers, from Learning Without Tears. They are short, easy exercises that help them with the mechanics of writing. So even though I may talk a big game about being breezy with expectations, I still on some level can’t let go of the mechanics! But Building Writers is truly just a little sentence practice in the elementary phase. It’s meant to build their confidence and ease with writing and I feel it’s been helpful. I also use the handwriting books from Learning Without Tears, which have been great for my kids.

We use a separate spelling program called Words Their Way. My teacher friends rave about it and my kids have been very successful with it. It involves sorting lists of words to notice their patterns. Last year, I used Soaring With Spelling. Mary never got less than 100% on a spelling test, but still couldn’t spell worth a damn, so it clearly wasn’t the right program for her. It was the same with our phonics program, Explode the Code. As I said earlier, it’s pretty apparent when a program is working and when it is not.

We used Blackbird last year with Mary and it was a great program, but very formulaic and by the end of the year, she was ready for something new. Our writing program last year was Write Source, which we liked but it was very traditional and I wanted to try something a little different.


For math, we use Math Mammoth and we love it. It’s big on pattern recognition and games, which the girls respond to very well. Last year, I used Primary Math (the Singapore math method) to teach Amy kindergarten math and it was wonderful. We started this year with Math In Focus (the Singapore math method written to align with US standards), but it just didn’t work for us. We switched back to Math Mammoth and we’re all happier for it.


For science, we used Studies Weekly for both girls, which I don’t love. It’s boring, but meets all the CA standards and was a good option for us this year as I figured out how to teach two kids simultaneously. It was also cheap!

Everyone thinks that I, as an engineer, must love teaching science to my kids, but honestly, most programs I’ve looked at make me want to die of boredom. I didn’t pursue science because I liked reading textbooks and making baking soda and vinegar volcanoes. I just liked solving puzzles and figuring things out and finding answers to questions. I like to use nature journaling as a good place to start with science. It’s such a great way to let kids follow rabbit holes to satisfy their curiosity, sometimes in completely unexpected ways. Mary likes to compose poems while observing in nature. Amy isn’t confident in her drawing but loves to take pictures of what she sees. Sometimes she’ll just trace a leaf over and over again, and then color it in using different tools – marker, pencil, crayon, pastel, watercolor – just to experiment. We jot down the things we’re interested in learning about and head to the library (well, we used to) to search for books on the subject.

John Muir Laws made his book about teaching nature journaling free and it is absolutely worth downloading. It gives great advice for how to guide your kids through observations and questions so they can really take in and process what they’re seeing. Often while investigating natural history, we learn about human history as well. (For example, invasive species are a really great introduction to colonialism!) It’s science, art, math, history, geography, and literature all from just observing what we see around us, and it’s so easy to let their interests guide us. One day, I had the kids help me pull weeds in the yard. We organized the weeds into piles after identifying them with the iNaturalist Seek app. We came up with multiple ways to measure our haul – counting, volume, mass. We identified the plant parts and talked about the life cycle of plants in relation to the seasons. We classified them as either monocots or dicots. We counted petals on roses and poppies using multiples of 3,4, and 5. They composed a song about how much they hate weeding. They each picked a flower to draw and paint. As I said earlier, their best learning experiences have been completely unplanned.

This summer, we started Life 1 from Pandia Press’s Real Science Odyssey program and we are really loving it – even me! Pandia Press’s materials are geared toward multiple ages. I was worried it would be too simple for Mary, but both girls are able to understand on their own levels. We’ve had a lot of fun with it so far. Because Real Science Odyssey is based on studying one branch of science for one academic year, it doesn’t meet the CA standards where each branch of science (physical science, life science, earth and space) is covered equally. Our CT is on board with us trying new things and is willing to help us fill in the gaps so we can continue using the program.

Social Studies

We also used Studies Weekly for social studies. Again, it’s boring, but it hits the standards and is cheap. This summer, we started a new history curriculum, also from Pandia Press, called History Quest. Like Real Science Odyssey, we are having so much fun and I am learning right along with them. It doesn’t hit the CA standards, but it’s a lot more engaging than reading boring texts about the usual classroom stuff. It’s actual history!

In the past, I used Pearson myWorld which is a very traditional program, focused on communities and a little basic geography. It was fine, but Mary dreaded it and I had to drag her through every lesson.

Unit Studies/All-in-One

There’s a curriculum type called a unit study that incorporates all different subjects (language arts, social studies, science) while focussing on a novel, though math is usually taught separately. To start the year, we did a unit study through Build Your Library for Harry Potter and the Chamber of Secrets where we studied astronomy, botany, mythology, and Greek and Latin etymology as we read the book. The girls wrote articles for the Daily Prophet, created myths to accompany constellations they made up, and devised new spells based on Greek and Latin root words.

Build Your Library also offers a complete second grade curriculum. It’s a very affordable PDF, but there are lots of books to buy or borrow from the library. It’s the same with Torchlight, a very similar curriculum. I’ve been using the kindergarten level of Torchlight on a casual basis this year for the world geography and culture. The girls love it and look forward to reading our books and visiting places via Google Earth and youtube and museums every morning at breakfast. The booklists from BYL and Torchlight are extensive and an amazing resource, even if you never homeschool. We’ve found so many wonderful books from their lists. I chose Torchlight over Build Your Library because BYL uses Story of the World as a spine (backbone of the program). SotW is pretty problematic. Until recently, it was the only attempt to teach world history as a story, which really keeps kids’ attention. But it only starts 6000 years ago and is very Euro-, Christian-, and white-centric. Pandia Press has started releasing similar books that are less problematic, but as of now they only have History Quest Early Times 1 (elementary level) available. They are working hard to release History Quest Middle Ages 1 before September.

Some other popular complete curriculum packages are Moving Beyond the Page and Oak Meadow. The tricky thing about complete packages is that if you or your learner ends up not liking it, you’ve spent hundreds of dollars and now you need to spend more to find something that does work for your family.

Marketing Yourself

Financial careerists will find useful ideas in this Shawn Wang post which likely had developers and designers in mind:

How To Market Yourself Without Being A Celebrity (Link)

In fact, if the thought of “marketing yourself” offends you then you are exactly the person who needs to read it. Some of you reading this are crushing it and don’t think you need to self-market. But consider another perspective. A public-facing body of work is an invitation for others to engage. This is an obvious benefit to ladder-climbers. But even if you are satisfied with your career arc, building this outward invitation will be rewarding. It can lead to collaborating on passion projects or causes, it can reduce your cost to hire, and it leads to more credible introductions into domains you are interested in. Domains where you are just a beginner. You are transmuting your prior track record into more general mana.

The entire essay is filled with useful strategies and specific tips down to the tradeoffs of platforms.

Some sections I especially liked:

  1. Personal branding strategies

    Anything but average: I identify as a “Basic Bro” – I have my PS4, and Nintendo Switch, I like Marvel movies and watch the same Netflix shows you watch. Just like the million other Basic Bros like me. Totally basic. Totally boring. NOT a personal brand. In fact anything not “average” is a good candidate for inclusion…

    Identity + Opinions: [Shawn gives examples] I really want to give you more hints on this, but I’m afraid if I gave more examples I might limit your imagination.

  2. Marketing Yourself In Public

    Don’t Lie: Stephen Covey calls this the Speed of Trust. Once you lose trust, everything you say gets run against a suspicion check, and you have to put up more proof points to be taken seriously.

    Don’t share secrets: I always think about Christopher Lee, who fought in the British Special Forces in World War 2 before his legendary acting career. When pried for information about what he did in the War, he would say: “Can you keep a secret? Well, so can I.”

    Inbound vs Outbound Personal Marketing: Borrowing from Hubspot’s Inbound marketing and Seth Godin’s Permission marketing. Outbound Personal Marketing is what most people do what they look for jobs – only when they need it, and trawling through reams of job listings and putting their CV in the pile with everyone else. Inbound Personal Marketing is what you’ll end up doing if you do everything here right – people (prospective bosses and coworkers, not recruiters) knowing your work and your interests, and hitting you up on exactly the things you love to do.

    Market Like Nobody’s Watching: Because normal comfort zones are not set up to market yourself, you should try to do a little more than you’re comfortable with. An aggressive form of this advice? If you’re not getting complaints about how you’re showing up everywhere, you’re not doing it enough. This makes sense to some people, and is way too upfront and annoying for others. We all have to find our balance – it’s your name on the line after all.

    Market Like One Person’s Watching: Marketing is more effective when it is targeted at a specific someone instead of just everyone…

    Market for the Job You Want: This is a variant of “Careful what you wish for… You just might get it.”