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Michael Profile picture
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25 Jan, 7 tweets, 2 min read
1/n It's unfortunate that this is the takeaway. I have spoken frequently about the objections I have to the intrusion of the state in private affairs and the benefit we all gain when nation states are held in check. HOWEVER, there is a huge difference between emigration
2/n which physically removes you from the power the state holds (bad actors like Putin often exceed this limit) and a Thoreau style "Civil Disobedience" around a desire to disrupt the functions of the state by intentionally choosing a "monetary system" (asset/commodity/SoV) that
3/n empowers the enemies of your country. If you are not a US citizen, you can make your own calculus as to whether you support the US or China/Russia/Iran. I have no objection to your right to choose. If you are a US citizen, then you are either intentionally undermining the
4/n resources available to your country OR you are being naive. My point remains that the evidence is increasingly clear that the primary use cases for bitcoin is (1) as a poor speculative asset for US citizens (average "cost" is roughly $11K vs current price of $34K -- lots
5/n of rich first movers, lots of risk for those being drawn in today) predicated on a St.Petersburg Paradox (stanford.io/2YaQRsO) and (2) for countries like China/Russia/Iran to generate USD (by selling crypto to wealthy first world speculators (see #1).
6/n These are not good choices. First, the St. Petersburg Paradox is an improper framing relying on Expected Value. The solution lies in the work of @ole_b_peters on non-Ergodic systems (go.nature.com/3c65cPD). Unfort, the St. Petersburg Paradox lends itself to the promoters.
7/7 Second, the bitcoin rebellion is functionally a re-enactment of Shay's Rebellion with the added aspect of "helping" countries with an expressly stated interest that are against the US. I am simply suggesting that it will not end differently for the same reasons.

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Michael Profile picture
27 Dec 20
1/n As requested, the TLDR. There are many complaints about the ability of the US govt (via Fed and/or fiscal) to “debase” the dollar and bailout corporate interests. This is a complaint about the choice of how to use this power, but the crypto solutions that supposedly
2/n prevent the ability to debase are fundamentally flawed. Gold-backed and other “hard” money systems were designed to attract users to nascent systems, but WJBryan was right about the crucifixion that occurs when the backing is confused for the social good of a standard of
3/n account. A flexible currency allows forgiveness — a crucial ingredient in risk taking. The 17th-19th century was a uniquely fruitful period in human social progress as the opening of the “new” world created a legitimate check on the power of the elite to permanently impair
Read 8 tweets
Michael Profile picture
28 Nov 20
1/n Yes, @LawrenceLepard chart is misleading. (1) datasets are not comparable. Substantive devaluations of the USD vs gold occurred in 1932 and 1971. These were political and not Fed. Debatable whether post-2000 is CB related or whether gold is really expensive.
2/n The UNIQUE inflation of the 1960s and 1970s is largely misunderstood. From my perspective, the story of "stagflation" in this period is false. There was no "slow growth" in the 1970s -- fastest growth rates for housing and jobs in US history.
3/n This becomes relevant as we think about what Fed has "actually" been doing -- staving off rampant DEFLATION. Were we still on the gold std, we'd be facing events of deflation similar to Great Depression since 2000. Instead, a "flexible" currency has encouraged "stability"
Read 4 tweets
Michael Profile picture
24 Nov 20
1/n It's looking pretty good for the "I told you so" value crowd (and my DMs have been full of "I told you so"). However, there is a big difference between "Value" and "Anti-Momentum". The "value" factor has not actually done anything when adjusted for the anti-momentum dynamic
2/n When we look at the Value factor alone (Value longs vs Value shorts), it's interesting that it looks exactly like economic recoveries in 2002-3 and 2009-10. In contrast, in 2000, a VERY different dynamic occurred
3/n And when we look at market neutral momentum, we have unwound virtually ALL of the momentum outperformance YTD and are now below the 5y moving average and almost at the post GFC trendline that has sustained prior "corrections".
Read 7 tweets
Michael Profile picture
2 Oct 20
@jam_croissant @mre2all 1/n Thanks for this. While I actually agree with some of the fundamentals here, I'm a bit skeptical of the mechanics. Companies like AMZN, AAPL, MSFT, etc have remarkably strong cash flows and have not had to tap capital markets except to subsidize employee compensation
@jam_croissant @mre2all 2/n While we can argue Fed support helped these corps, it seems more likely that the Fed has net hurt these corporations by keeping funding flowing to their weaker competitors. In fact, highly rated corp debt growth has been restrained while lower quality debt has grown rapidly
@jam_croissant @mre2all 3/n I'd go further and note that the holders of "value" stocks continue to be active managers. @choffstein recent piece does a good job of illustrating this. Unless you can create a mechanism for passive funds to flow into actively managed vehicles, I don't see how this reverses
Read 5 tweets
Michael Profile picture
7 Jul 20
@KennyDegu @SuperMugatu @CioEnd @MarkGutman9 1/n Millenials are too old for college and largely too old for advice, so splitting this response. One of the best pieces of advice I ever received was from Mary Modahl (@marymodahl). People are either horses or mules. A horse will work themselves to death given encouragement
@KennyDegu @SuperMugatu @CioEnd @MarkGutman9 @marymodahl 2/n while a mule will work at their own pace regardless. Know which one you are. I was a horse and worked myself until I burned out, convinced I was changing the world. In your 20s, you will almost never change the world. Pace yourself.
@KennyDegu @SuperMugatu @CioEnd @MarkGutman9 @marymodahl 3/n Your 20s are a time of self-discovery. Learning curves are steep and you rarely have time to question convention. Develop excellence in execution. Work hard, but learn how to work SMART. Take vacations. Not to exotic locales, but quiet spaces that let you examine assumptions.
Read 6 tweets
Michael Profile picture
11 Jun 20
1/n This is an interesting question we've tried to calibrate. The challenge is the term "valuation". Makes sense when money resides with discretionary investors where cash is base asset and securities are purchased based on forward expected return. Presumably, a scenario
2/n exists where a discretionary manager finds nothing priced for positive expected return and sits 100% in cash. Obviously restrictions on portfolio construction reduce the proportion of cash allowed. Rodriguez at FPA was last I remember with 50% cash and he caught huge flack
3/n This ability to “flex” cash levels is largely what determines valuations. Ultimately if I buy and you sell, “cash levels” don’t change. The urgency which I get rid of my securities relative to your urgency to sell cash determines price which changes cash % of market
Read 8 tweets

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