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Samuel Lee Profile picture
Samuel Lee
@svrnco
Tulip merchant
Jul 1 • 4 tweets • 2 min read
I've pointed this out years ago, but will point it out again: The stock market exhibits extreme autocorrelation in relative performance in growth/value and US/intl. Exhibit 1, QQQ/IWM, 2000-now: Image Exhibit 2, SPY/EFA, 2000-now, monthly Heikin Ashi candles: Image
Feb 2, 2023 • 4 tweets • 1 min read
The Fed is still running very easy monetary policy. Back in the 00s and 90s, the Fed funds rate was 2.5%-3% higher than core CPI for extended periods to tamp down inflation. The Fed's projected terminal rate is still below YoY core CPI. Image The easiness of Fed policy is probably why assets want to bounce really hard and why the real economy doesn't seem to be cratering. The market was taken aback by the suddenness of the shift in policy, but it's now coming around to the idea that monetary policy is still easy-ish.
Aug 31, 2022 • 6 tweets • 2 min read
This thread is getting traction but it makes a ridiculously strong claim upfront, that on-chain orderbooks are in principle unsustainable on a "general purpose chain." Usually there's an unclear or faulty premise when a claim of this strength is made. It's uncontroversial that an on-chain CLOB of the same speed/quality as a centralized CLOB is essentially impossible. But if you're willing to accept more slowness/higher costs, there's no reason in principle an on-chain CLOB could work.
May 23, 2022 • 4 tweets • 1 min read
The equity risk premium--defined as operating earnings yield minus 10-year real Treasury yield--is only around 4%. During major crises in the past 15 years, it spiked to over 6%. An interesting feature of this chart is that throughout the 90s, stocks were way overvalued compared to bonds, with an ERP of under 2% for much of it. There was a regime shift post-financial crisis where it settled to around 4%ish in calm times, spiking in crises.
Feb 24, 2022 • 15 tweets • 2 min read
Many people still don't have a good mental model for crypto.

Here's a simple, parsimonious model with a lot of explanatory power:

Crypto is cultic internet money. The true innovation in crypto is social, not technological.

Crypto has value because the community agrees it does. It maintains this consensus through a powerful, self-propagating, self-regulating belief system—an internet religion.
Mar 28, 2021 • 6 tweets • 1 min read
Good thread on getting screwed. Let me add some rough heuristics on when you're likely to be screwed in business/life. 1. A big knowledge gap between two parties. e.g., a financial advisor/broker peddling a complex financial product to someone wealthy but uninformed like a dentist or doctor.
Jul 24, 2020 • 5 tweets • 2 min read
10-year breakeven inflation has been steadily rising and is now almost back to pre-pandemic levels. The bond market thinks inflation is increasingly likely: Image Many investors I've spoken to are reflexively dismissive of inflation because of the post-financial crisis experience. The inflation hawks were humiliated. However, this time we have MASSIVE fiscal stimulus worldwide. Standard econ predicts this is inflationary.
Jan 17, 2019 • 6 tweets • 1 min read
In honor of Bogle's passing, I want to point out some of his intellectual as opposed to moral contributions to finance. Contrary to what some think, Bogle wasn’t a diehard efficient marketeer like Eugene Fama. Bogle's main argument for indexing was the “cost matters hypothesis”, which states that the net outperformance of investors as a whole is zero before costs, so reduce costs. He didn't advocate elegant but wrong nonsense like the CAPM.