Because Writing Stuff Down Helps Me Remember It
A higher price to earnings ratio means a country’s stock market is more expensive. A lower number is less expensive. It’s the price you are paying for the earnings of the companies.
Average of Foreign Developed Stock Markets: 20
Average of Foreign Emerging Stock Markets: 19
United States Stock Market: 35
Status leads people to assume something about us that we might otherwise have had to prove. It’s a pattern-matching mechanism that allows us to quickly filter and process information in a world defined by incomplete knowledge. We live in a time-constrained world where don’t have the capacity to evaluate everyone on merit alone, and status is our way of expediting that evaluation process. And let’s not kid ourselves, most of us care a lot about status, to the point that we’ll sacrifice money for it. In a survey of 1,500 office workers, seven out of 10 said they would forego a raise for a higher status job title.
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Probability has no memory. Just because you’ve had a streak of bad days doesn’t mean you’re due for a good one, something known as The Gambler’s Fallacy. However, in real life, many (if not most) events are not, in fact, independent occurrences. In statistical terms, they are governed by the hazard function: what’s the likelihood that something will happen in a given time interval given that it has not happened already? The hundredth railroad car on a passing train portends the caboose with greater likelihood than the third car.
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Buy this, not that: Buy term life insurance, not whole life insurance. Buy retirement accounts, not annuities. Buy individual disability insurance, not group disability insurance. Buy experiences, not stuff.
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There are only 4,300 US stocks, down from 7,300 in 1996. Meanwhile, the number of private companies backed by private equity has ballooned to 11,200 from 1,900 during the past two decades. It’s also no longer necessary for many companies. Private equity is awash with cash, making it easier for businesses to raise capital from private sources. So, why go public? It’s time to consider the real possibility that the stock market has become a dumping ground for businesses too weak to attract capital in private markets.
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The market doesn’t care who is President:
The ultimate success metric is whether you get what you want out of life. But that’s harder than it sounds because it’s easy to try to copy someone who wants something you don’t. It’s possible to be humble and learn from other people while also recognizing that the best strategy for you is the one closest aligned with your unique personality and skills.
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Some thought-provoking examples of our perception of time and why slowing some things down is not only important but may actually make them better. If you give an engineer a train ride and say, “make it better,” they will look for options on how to make the trip shorter, a faster commute. If you give a train ride to Disney, they will say “how can we make this train ride more enjoyable and fun for the passengers?”
The speedometer below shows how many minutes it takes to arrive somewhere based on your speed. You can see that at the beginning, the value of going faster is enormous. As you hit about 65 miles per hour, the value falls off a cliff while the danger of increasing your speed rises exponentially.
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In the digital thunderdome of LinkedIn hustlers, Twitter thread bros, and Instagram “success stories,” there’s a piece of advice I continue to see shared, repackaged in various forms but always carrying the same core message: surround yourself with the most ambitious and successful people you can find.
But following this advice there’s a risk that goes unspoken, especially for people susceptible to gurus in the first place. It’s the danger of losing yourself. In a desperate bid to absorb ambition and catch the same waves as high achievers, you risk becoming a satellite: a small, rotating body constantly reflecting the light of someone else’s star, but never finding the space to let your own light shine. The cult of personality in our world is real, and many are essentially just part of a kind of self-worth Ponzi scheme.
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This poll reads like a group of people that have been on drugs for a long time, know they’re awful, but cannot stop using them:
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People are biased towards solving problems through addition rather than subtraction. The reason? Because adding something makes you feel like you are advancing, while taking something away makes you feel like you are retreating. We see this dynamic across all parts of the economy, and society at large. the case can be made that we live in an era of too much. Too much information, too much stuff, too many choices, and too many distractions. As a result, there is a good chance that the path to happier lives and investment portfolios performance, might start by taking things away.
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Should Europeans put 72% of their portfolios into 1 foreign country? Obviously, the same question should be asked of Americans, even though they live in that country. As of September 2024, the U.S. represents 72% of the MSCI World Index. Many passive investors simply buy into this widely adopted benchmark, but is that a prudent approach?
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A writer that knows he will soon die looks back on the things he is grateful for.
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“A single death is a tragedy. A million deaths are a statistic.” The reason that tragedies stick with us is because every tragedy represents a story, and stories resonate with us. Stories are undervalued in our world today. As the speed of information continues to accelerate, we rush to “get to the point. We want to lead with numbers, exchange prose for bulleted lists, and replace nuance with formulas. But people aren’t algorithms. We are irrational, emotional, imperfect creatures, and stories are the best medium we have for communicating ideas across our irrationalities, emotions, and imperfections.
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Before we conclude that manifestation (the law of attraction) is a waste of time, or worse, we should note that the studies above tend to look only at manifestation in which a person envisions just an outcome they want. But a person can also envision the process of working toward improvement—and this turns out to have scientifically measurable and different effects. If you believe happiness is not under your control, you generally won’t do the work to get happier; if you believe happiness comes from your personal choices and behaviors, you will probably make an effort to improve your well-being. In other words, manifesting happiness as a destination to which you might gain access is futile, but understanding happiness as a direction based on your habits can work wonders.
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Great newsletter from Lyn Alden walking through the reasons why we will continue to have enormous structural government deficits moving forward and the implications on the global economy and financial assets.
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Ten small actions to improving life today.
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Nobody knows whether stocks will be up or down tomorrow. Occasionally some newsworthy development is the clear driver of stock market movement, but usually daily market watchers are studying randomness, putting themselves at risk of missing the forest through the trees. Price movement always comes before the narrative. Reality is much more complex.
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OnlyFans now generates $6.3 billion in annual gross revenues, up from $300 million five years earlier. A reason for OnlyFans success is its high revenue share rate (with its content creators) – 80% – which far exceeds that which a creator might get as a performer working for a production company or other agency. OnlyFans creators collected $5.3 billion in 2023, a 19% increase year-over-year. Many OnlyFans creators now treat sites such as Reddit, Imgur, Instagram, TikTok, and Twitter as “front doors” for OnlyFans customer acquisition. OnlyFans has paid its two owners $1.1 billion in dividends since 2019, with $472 million paid in 2023 alone.
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While NBA team valuations have soared, revenues have not kept pace–and in the case of at least one of those teams, its EBITDA actually went backwards during the prior tenure. The bulk of the value created in recent years has come as the result of revenue multiple expansion. NBA teams no longer trade at 5-7x revenue, like they did a decade ago. They’re now commanding 10-14x the top line. That may make it increasingly difficult for smart money to justify buying/buying into clubs in the years ahead, at least if they’re underwriting the investment solely on the expectation of growing revenues.
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It’s incredible how few people have air conditioning outside the United States. Only 10% of Europeans have it!
Driving a heavy car makes it much less likely that you will die in an accident, but much more likely the person in the other car will die.
The flow state: the science of the elusive creative mindset that can improve your life. Scientists have long known the mental and creative benefits of the flow state, in which total absorption in an activity banishes anxiety. But what causes it, and how can we achieve it?
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Workers in their 20s and 30s are borrowing years of freedom from their future selves to enjoy some of their retirement while they are still young. Pausing your career during prime working years can slow the growth of a nest egg. But the chance to backpack the globe or take a series of mini-retirements is worth it, say those who have done it, even if it means delaying buying a home or having to work longer later to fund retirement.
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The total amount of credit card debt, one of the scary graphs that floats around the internet, is less important than the amount of credit card debt that is 90 days delinquent (when using data to make a prediction on what will happen in the economy or markets).
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Teen vaping has hit a 10-year low. In an annual survey conducted from January through May in schools across the nation, fewer than 8 percent of high school students reported using e-cigarettes in the past month, the lowest level in a decade. That’s far lower than the apex, in 2019, when more than 27 percent of high school students who took the survey reported that they vaped.
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The dating apps are under a lot of pressure. Falling revenues, people not wanting to pay, and Gen Z seemingly uninterested have led to collapsing stocks and circling activist investors. Their only path forward is monetization – but what does that mean for the demographic crisis?
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Rolling Stone’s list of the 100 best TV episodes of all time: “inside every great show is a 22-to-60-minute story that stays with you forever.”
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American homes have been going up in price since early 2012. That’s part of the reason why it’s been American’s favorite investment for 12 year running. The other reason is leverage. If you put down 20% (or less) and the home price goes up 20%, you’ve made 100% on your investment. Of course, most American’s have done much better than that since 2020.
Based on the way we are wired as humans; our memories are constantly changing over time. Remembering is dominated by the perspective we have in the current moment. We have an ‘experiencing self’ and a ‘remembering self.’ Your experiences of things are continuous in real time and associated with all sorts of feelings and thoughts and sensations. And then in the cold light of reason you have this remembering self in a completely different context, trying to make sense of yourself, a person with a very narrow window of experience.
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Reflecting on life lessons learned from someone turning 60 including distractions, ego, legacies, thoughts and hanging out with people you like.
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A look at why young adults are the ones most in crisis with mental health. A recent study found that 36 percent of participants ages 18 to 25 reported experiencing anxiety and 29 percent reported experiencing depression—about double the proportion of 14-to-17-year-olds on each measure. Older adults, often depicted in popular culture and news commentary as isolated and unhappy report the lowest levels of anxiety and depression.
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Every generation will complain that the youth are getting soft, while the young people will complain that the previous generation had it easy. Same as it ever was.
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How to negotiate with real estate agents today.
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The following graphs show the dividend yields for the S&P 500, MSCI World (all developed stock markets including the U.S.), MSCI EM (emerging markets) and MSCI EAFE (developed markets excluding the U.S.).
Here is the MSCI EAFE forward P/E ratio (stock prices relative to their projected earnings over the next 12 months). The higher the number, the more expensive the market. The S&P 500 is currently at 23. It would be close to being off the chart it is so expensive relative to the rest of the developed world.
They identified 8,577 who were in the study from the early 1990s until 2017 and who met a variety of other criteria for inclusion. This gave them 25 years of follow up, long enough to ask the question: how does participation in sports affect life expectancy? The results? Playing tennis was the clear winner: extending one’s life expectancy by 9.7 years. The other sports all provided benefits too:
One possible reason for tennis, badminton, and soccer doing so well is that out of the 8 sports studied, these are the ones that require 2 or more people and involve social interaction. As the authors explain, “Belonging to a group that meets regularly promotes a sense of support, trust, and commonality, which has been shown to contribute to a sense of well-being and improved long-term health.”
Or it might be that the type of exercise you get in tennis – short bursts of activity rather than slow, steady plodding exercise – might be better for you. The authors noted that “short repeated intervals of higher intensity exercise appear to be superior to continuous moderate intensity physical activity for improving health outcomes.”
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Here’s the interesting thing about loneliness: it’s a subjective feeling. One person can be alone and feel entirely content. Another can be surrounded by friends and feel very lonely. How lonely we feel depends not only on the objective state of our social life but on how we think our social life should be. Unmet expectations that arise between the two can lead to feelings of loneliness.
Constantly being presented with the idea that their friendships should mirror the deep, intimate, dyadic friendships of women alters men’s expectations in a potentially unhelpful way. Guys see memes about how it’s dysfunctional to spend hours with their buddies without discussing personal issues, or read a reddit post about how sad it is that men don’t have friends they can completely open up to, or listen to a podcast about how they need to be vulnerable with other men if they want to be happy and healthy, and start wondering if their social life is subpar and they’re missing out. “Man, maybe I don’t have good friends after all.”
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Results show that from 2003 to 2022, average time spent at home among American adults has risen by one hour and 39 minutes in a typical day. Time at home has risen for every subset of the population and for virtually all activities. Preliminary analysis indicates that time at home is associated with lower levels of happiness and less meaning, suggesting the need for enhanced empirical attention to this major shift in the setting of American life.
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The typical age gap between husbands and wives in the United States has narrowed over the past 20 years, continuing a 20th-century trend. On average, husbands and wives were 2.2 years apart in age in 2022, according to a new Pew Research Center analysis of U.S. Census Bureau data. This is down from 2.4 years in 2000 and 4.9 years in 1880.
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Every forecast takes a number from today and multiplies it by a story about tomorrow. Investment valuations, economic outlooks, political forecasts – they all follow that formula. Something we know multiplied by a story we like.
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Irving Fisher has one of the most famous quotes in financial history (for being very wrong at the worst possible time), but his full story is even more tragic. Another great lesson on the danger of leverage and overconfidence.
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Why you don’t need to separate your clothes anymore. There’s no actual threat to your clothes or machines by washing everything together—the life of your clothes may be shortened slightly, but that’s all. Since most of the clothes we wear are now a byproduct of fast fashion, there’s less investment into each piece, and they’re not really built for the long haul the way clothes once were, anyways. Also, the natural fibers and dyes that used to be mainstream have been long replaced by synthetic fibers and better dye processes, which result in much more colorfast garments. These garments also generally stand up to wash processes better. Advancements in detergents also focused on using less of it, stopping colors from fading, keeping whites bright, and washing everything in cold water to save on energy. As a result, laundry in general is a much gentler on clothes.
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Prices going up feel safe because price increases 1) confirm that we’re right and 2) signal that we’re making money. Prices going down feel dangerous because when you hold a stock that’s declining, you lose money. But cheaper stocks are (at least from a valuation perspective) safer than expensive stocks. Much of the risk is priced in. It’s already happened.
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Great podcast this week with Louis-Vincent Gave on financial markets and the global economy from the perspective of someone outside the United States.
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Scientists have found that humans age dramatically in two bursts – at age 44, then 60. The study, which tracked thousands of different molecules in people aged 25 to 75, detected two major waves of age-related changes.
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For the younger millennials and zoomers who grew up in a world where fully digital was the norm, the question is no longer what can we put behind a screen, but what should we? Which screens were mistakes? What should be reverted? Which “progress” actually set us back? We’re beginning to see that reversion to analog in real time when it comes to things dating, cars, books, etc.
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If you go to the most expensive doctors in the country, they’re pretty much all going to tell you to do the same four things to stay healthy or get healthier: (1) Eat clean food, drink clean drinks (2) exercise (3) get a good night sleep (4) practice mindfulness/mediation/appreciation. *Or replace number 4 with the obvious one: avoid alcohol, tobacco and drugs.
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The mental health of high school students is still a crisis, but it’s shown very small improvement over the last 2 years. When we look at the persistent sadness and hopelessness, it went from 42% down to 40%. While girls and LGBTQ+ students are still more likely to report feelings of sadness and hopelessness, the share of girls reporting this went down from 57% in 2021 to 53% in 2023.
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Derek Thompson discusses happiness and the science of cognitive time travel with Laurie Santos. They talk about modern happiness research, lessons on striving and anxiety from existential philosophy, our relationship to time, temporal mind tricks to reduce anxiety like “psychological distancing,” and more.
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These past few years have been a great time to bet on sports. As most states have legalized sports wagers since 2018, sportsbook operators have climbed over each other to offer generous promotional terms. But sportsbooks have lost money in the gold rush to recruit new bettors, and only a few of them are on solid financial footing. Now the sportsbooks have decided they’d like to actually make some money, and they have pared back their promotional offerings to spend less on “customer acquisition.” In four states that have levied the highest taxes on sportsbooks’ receipts, DraftKings will levy a surcharge on winning bets. That passes part of the company’s tax burden to bettors, who are already subject to normal taxes on their winnings. It worsens the odds on every bet, lowering the payout for winners.
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In more than 200 U.S. cities, buyers will find a price tag of $1 million or more on the typical starter home. The typical “starter home” — defined for this analysis as being among those in the lowest third of home values in a given region — is worth at least $1 million in 237 cities, the most ever. Five years ago, there were only 84 such cities.
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Who Americans spend their time with at different ages of their life:
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Binge drinking among young men is rapidly on the decline:
The pandemic shift away from movie theaters continues:
The nocebo effect is the opposite of the placebo effect; where people are suffering more than they otherwise would because of their negative expectations. With the placebo effect, someone might gradually feel better after swallowing a pill, getting a therapeutic injection or receiving another medical treatment, even if what they were given is an inert treatment. With the nocebo effect, negative beliefs or expectations about a treatment or experience may elicit symptoms of feeling sick, even when the intervention is a sham.
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The table below shows the largest multi-decade stock market drawdowns for countries outside the United States. Imagine investing money in Italy and having to wait 50 years to get back to even.
While the U.S. has never experienced a 20-year period of negative real returns, it has gotten close a few times. From February 1966 through December 1982, U.S. stocks lost 0.16% on an annualized basis, when including dividends and adjusting for inflation. That’s a 16-year period of negative real returns. Additionally, from September 1929 through December 1944, U.S. stocks experienced a 15-year period of negative real returns. This coincided with the beginning of the Great Depression through WWII.
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This article goes through just about any statistic you can think regarding divorce. What about the famous statistic that half of all marriages end in divorce? That’s a bit of an exaggeration when it comes to first marriages, only 43% of which are dissolved. Second and third marriages actually fail at a far higher rate, though, with 60% of second marriages and 73% of third marriages ending in divorce.
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People around the world are spending billions of dollars talking to who they think are OnlyFans models online. Many times, they are actually talking to a fake “chatter” which can even be another guy (if they think they’re talking to a girl). The word is out and now lawsuits are starting.
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This paper discusses how less people are moving south due the rising heat: Snow Belt to Sun Belt Migration: End Of An Era? Internal migration has been cited as a key channel by which societies will adapt to climate change. We show in this paper that this process has already been happening in the United States. Over the course of the past 50 years, the tendency of Americans to move from the coldest places (“Snow Belt”), which have become warmer, to the hottest places (“Sun Belt”), which have become hotter, has steadily declined. Given climate change projections for coming decades of increasing extreme heat in the hottest U.S. counties and decreasing extreme cold in the coldest counties, our findings suggest the “pivoting” in the U.S. climate-migration correlation over the past 50 years is likely to continue, leading to a reversal of the 20th century Snow Belt to Sun Belt migration pattern.
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More and more home buyers are discovering cheap financing through a once-obscure workaround — assumable mortgages. The first question to ask is whether the seller has an FHA or VA loan. These actually make up a significant share of the market: About 13 percent of all mortgages are FHA loans, while about 11 percent are VA loans. The property must be the seller’s primary residence and the buyer must meet the qualifications set by the FHA and the lender. For VA loans, a regional VA loan office has to approve the transaction, but the borrower doesn’t have to be a veteran, she added. In addition, the seller has to sign off on the buyer assuming the loan and provide authorization to the lender. Once the loan is approved and the sale goes through closing, the loan servicer replaces the original borrower with the new owner on the loan documents.
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Research by David Autor from MIT shows that 60% of today’s workers are employed in occupations that didn’t exist in 1940, see chart below. This is important when discussing what impact AI may have on the labor market.
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Japan’s three-day stock market crash this week was their greatest in history. It topped the Fukushima disaster in 2011, the 1987 global crash (when U.S. stocks fell 22% in a single day), the Covid declines, and the massive 2008 drawdowns:
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While the price-to-earnings ratios are currently very high for the largest companies in the world, they were at another level of insanity at the peak of the dot com bubble in February 2000:
The graphs below show the price-to-book ratio on the y-axis and the Shiller Price to Earnings CAPE ratio on the x-axis. The higher the numbers (moving the plot point up and to the right), the more expensive/overvalued the country’s stock market.
Today most of the world stock markets are relatively inexpensive or fairly valued, especially compared to the United States and India which have moved off the chart toward outer space overvaluation levels.
The US market is currently trading 31% higher than in the period 1995-2024. In contrast, Emerging America, Developed Asia and Emerging Asia are attractive, trading 29%, 21% and 7% below their historical valuation averages.
China and India have been oppositive stories since 2020 in terms of their stock prices (dark lines) and their net income (dotted lines):
Sources: Norbert Keimling and Meb Faber
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