September 8, 2024 Weekly Recap & Good Reads
September 8, 2024 Weekly Recap & Good Reads
Last week in Random Walk+Good Reads, all in one email
It’s brisk out there. Enjoy!
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. Last week in Random Walk . . .
👇Here’s what Random Walk published last week 👇
Analysis & Ideas
Macro & Markets
Are forecasters overconfident? NY Fed researchers look back at forecaster performance to see how good and/or over- or under-confident they may be. It turns out that forecasters are pretty good at predicting nearer-term conditions, but over-estimated their ability over the longer run. The lesson here is that ascertaining the future is almost impossible, but ascertaining the present is a worthwhile endeavor. I’m, of course, talking my own book.
PE/VC
NAV loans face new scrutiny. As well they should. In the absence of buyers for their portfolio companies, PE is lending against their already levered portfolios to generate some returns to LPs. The incentives here though probably discount the downside risk, if only because if things go bad, then managers are unlikely to get credit for being slightly less bad (whereas returning some money in the interim is the difference between keeping your LPs or not).
Exit alternatives for US VC. PE’s bag of tricks making its way to VC.
Energy
Batteries are a fast-growing secondary electricity source. All the solar energy in the world does no good if you can’t store it, so batteries are an important addition to the grid. Glad to see it.
AI
Why generalists own the future. Great distinction between “kind” and “wicked” conditions. If the former, LLMs accel at providing the textbook answer, presumably because there is less variance in correctly predicting the proper sequence of words from a relatively closed set of conditions. LLMs struggle, by contrast, when past-performance does not predict future results, where the ground is uncertain, and where there is no textbook to read from. That’s because LLMs do not reason or anything remotely like it.
Labor markets
Bosses are finding ways to pay workers less. Anecdotes about shrinkflation in wages.
Consumer
Why it’s not easy being a discount store during a pullback. If consumers are pinching pennies, shouldn’t it be gangbusters for dollar stores? Well, sort of, until Walmart starts eating your lunch.
Regulators
Nvidia’s success makes it a target for another brazen DOJ shakedown. DOJ continues its onslaught against the country’s best companies and their shareholders, this time targeting Nvidia. When you’re dealing with a protection racket, the best thing you can do is stay under the radar, and Nvidia is anything but. DOJ will smash a few windows and rough ‘em a bit, but if they pay the piper, DOJ might leave them alone…for a bit. These unelected thugs are the worst people in the country (by far)—their delusions of grandeur costs innocent American’s billions of dollars—and shame on the “press” for dignifying their thuggery.
Healthcare
Health systems brace for ‘silver tsunami’ The looming supply-demand imbalance in healthcare.
People & Culture
Federal. Review of Roger Frock’s history of FedEx. Fred Smith was a hard-driving, ambitious fella, who seems to have willed his way to success. Some interesting observations about the management shift from private to public co, and being ex-military in the 70s.
Midwest: talent, ambition, culture. Short reflections on the lack of “striver” culture in the Midwest. On the one hand, you want to cultivate ambition, but on the other hand, you need to cultivate an alternative. Not an easy problem to solve.
What causes delusion? Fun video on the persistence of false beliefs among smart people. Tl;dr “being right” is often less rewarding than being hip with the right crowd.
Musk’s “hard turn” to politics. A perfect illustration of the prior point. Musk’s “hard turn” to politics is more accurately described as a refusal to join the general hard turn to politics. CEOs and celebrities routinely engage in politics, and have for a long time, but even more so, recently. Musk’s “hard turn” simply reflects the side he chose. There’s an analogue in the Democratic party’s adoption of MAGA politics, i.e. robust and expansionary industrial policy, including some outright plagiarism e.g. no-taxes-on-tips. It was never about what he stood for, and all about who.
Surge in college closures. A leading indicator in the decline of young people. But also, evidence that the young people we have are beginning to realize that fewer of them ought to be allocated to “higher ed.”
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