Reality Filtered On Beliefs, ATMs & Environment

We don’t see reality clearly. We all think we perceive reality as it is. And the truth is, that’s just not the case. The brain can’t see reality as it is; it predicts reality. Right now, your brain is absorbing 11 million bits of information—the light entering your eyes, the sound of my voice, the ambient temperature of the room.

That’s the equivalent of reading War and Peace every second, twice. However, your conscious attention can only process 50 bits. That’s one sentence per second. You are only consciously aware of 0.000045% of reality entering your brain.

How does the brain make sense of all this? It predicts reality. We all live in a simulation inside our own minds. Our reality is filtered based on our beliefs. Study after study shows how people can observe the exact same event and see something completely different.

If you’re on a diet, you see food as larger. If you’re afraid of heights, you see distances as further. Watch a football game: the ref makes a call, and fans of one team see it as absolutely correct, fans of the other team see it as ridiculous. Think about geopolitics: people committed to the belief that one side is right see every event through that lens. We do not see reality clearly. We do not see people clearly. We see others as we believe they are.

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People often cite that the invention of the ATM did not reduce bank teller employment, which actually increased steadily until the late 2000s. But they miss the second half of the story, which is that another technology did – the iPhone.

Labor substitution is about comparative advantage, not absolute advantage: the relevant question for labor impacts is not whether AI can do the tasks that humans can do, but rather whether the aggregate output of humans working with AI is inferior to what AI can produce alone.

Given the vast number of frictions and bottlenecks that exist in any human domain—domains that are, after all, defined around human labor in all its warts and eccentricities, with workflows designed around humans in mind—we should expect to see a serious gap between the incredible power of the technology and its impacts on economic life.

That gap will probably close faster than previous gaps did: AI is not “like” electricity or the steam engine; an AI system is literally a machine that can think and do things itself. But the gap exists, and will exist even as the technology continues to amaze us with what it can now accomplish.

The true force of a technology is felt not with the substitution of tasks, but the invention of new paradigms. When a technology automates some of what a human does within an existing paradigm, even the vast majority of what a human does within it, it’s quite rare for it to actually get rid of the human, because the definition of the paradigm around human-shaped roles creates all sorts of bottlenecks and frictions that demand human involvement.

It’s only when we see the construction of entirely new paradigms that the full power of a technology can be realized. The ATM machine substituted tasks; but the iPhone made them irrelevant.

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Everyone is panicking about the death of reading. This narrative has a seductive simplicity. Screens are destroying civilization. Children can no longer think. We are witnessing the twilight of the literate mind.

I spend my working life in a university library, watching how people actually engage with information. What I observe doesn’t match this narrative. Not because the problems aren’t real, but because the diagnosis is wrong.

Consider a simple observation. The same person who cannot get through a novel can watch a three-hour video essay on the decline of the Ottoman Empire. The same teenager who supposedly lacks attention span can maintain game focus for hours while parsing a complex narrative across multiple story lines, coordinating with teammates, adapting strategy in real time. That’s not inferior cognition. It’s different cognition. And the difference isn’t the screen. It’s the environment.

Peer-reviewed research demonstrates that social media platforms exploit variable reward schedules, the same psychological mechanisms that make gambling addictive. Users don’t know what they’ll find when they open an app; they might see hundreds of likes or nothing at all. This unpredictability acts as a powerful reinforcement signal (often discussed via dopamine ‘reward prediction error’ mechanisms), keeping people checking habitually. This isn’t because screens are inherently attention-destroying. It’s because the dominant platforms have been deliberately engineered to fragment attention in service of advertising revenue.

We have been here before. Not just once, but repeatedly, in a pattern so consistent it reveals something essential about how cultural elites respond to changes in how knowledge moves through society.

Ancient Greece – Socrates worried that writing itself would produce forgetfulness
1533 – Thomas More denounced Protestant texts as deadly poisons threatening to infect readers.
17th–18th Centuries – People considered literacy spread to the general population as corrupting
Late 18th/Early 19th Century – Novel-reading was treated as an existential threat
Mid-To-Late Victorian Era – Penny Dreadfuls were condemned as morally corrupting
20th Century – Comic books, radio, and television

I used to believe, as I was taught, that literacy was primarily about decoding text. But watching how people actually learn and think has convinced me that literacy is about something deeper: the capacity to construct and navigate environments where understanding becomes possible.

Consider those who flourish with audio books but struggle with printed text. For years, educators told them they had learning disabilities, by which they meant: disabilities that prevented learning through the one true method we recognize. But they don’t have learning disabilities. The instruction has a disability – it can’t accommodate different neurological architectures. Give them the same text as audio, and suddenly the ‘disability’ vanishes.

The pattern I observe repeatedly: people who ‘can’t focus’ on traditional texts can maintain extraordinary concentration when working across modes.

We haven’t become post-literate. We’ve become post-monomodal. Text hasn’t disappeared; it’s been joined by a symphony of other channels. Your brain now routinely performs feats that would have seemed impossible to your grandparents. You parse information simultaneously across text, image, sound and motion. You navigate conversations that jump between platforms and formats. You synthesize understanding from fragments scattered across a dozen different sources.

The real problem isn’t mode but habitat. We don’t struggle with video versus books. We struggle with feeds versus focus. One happens in an ecosystem designed for contemplation, the other in a casino designed for endless pull-to-refresh.

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A.I. should allow medical schools to rethink whether 4 years is still necessary. If students can focus more on clinical practice and less on memorizing the Krebs cycle and molecular bio, many programs could eliminate a year, reducing both costs and physician shortages.

Drexel joins roughly 20% of med schools with or are developing 3-year programs for certain specialties, like family and internal medicine and pediatrics. The accelerated path can make these historically hard-to-staff specialties more appealing to students.

Aliveness, Discretionary Time & Strike Zones

There is an anxious, stomach-clenching feeling that the world is changing very fast, and that you’ll need to struggle very hard to keep up. The furious scramble to a place of psychological safety, to avoid being condemned to disaster and cast into the void………….

You don’t, actually, have to live like that. It won’t make you happier. It probably won’t even aid your career.

It’s worth briefly noting that of course there’s a mundane sense in which keeping up with changing times is a good idea. If you work in a job you’d like to retain, it’s wise to keep your skills fresh. If you see ways that a software tool might genuinely enhance what you do, you’d be foolish to refuse on principle to experiment with it. But that’s not the existential desperation I’m talking about here – that feeling of needing to claw your way to safety, so as not to tumble backwards into the abyss. Instead, you’re just making the sober judgment that, because a certain outcome matters to you, it makes sense to do certain things to try to obtain it.

The stomach-clench of anxiety isn’t anything like that. Rather, it emerges from the feeling that reality poses a fundamental threat to your security, so that hypervigilance and constant effort will be required to forestall annihilation. It implies that it’ll be very difficult indeed to make it to safety (with the corollary that if you fail, it’ll be because you didn’t try hard enough).

But this is one of those cases where the agony arises, in a sense, not from getting things out of proportion, but from not taking them far enough. Because for finite humans, it’s not “very difficult” to reach a place of safety from the onrush of events. It’s impossible. The moment of invulnerability never arrives. Even if you were to find a way to feel like a winner, technology-wise, by 2027, there’d be 2028 to worry about. Even if you felt completely secure in your career, there’d be your health, and the health of those you love, to worry about. And even if you and your family were the healthiest people alive, you might get hit by a bus tomorrow. Uncertainty is our basic state of existence, not something to be got through to the certainty beyond.

The reason “you’re not ready for what’s coming next”, in other words, is that we’re never ready for what’s coming next.

I’m not suggesting that when you grasp this insight you’ll immediately cease worrying about the future and be free of anxiety forever. (That hasn’t been my experience.) But it can free you up sufficiently to notice a different way of approaching life: not by anxiously bracing against impending doom, but by taking a deep breath and settling down a bit into the basic uncertainty of it all. And then, in that tremulous and vulnerable state, to navigate from one day to the next by choosing, from the paths available to you, whatever seems to lead in the direction of more aliveness.

There’s no reason this can’t involve immersing yourself in all manner of digital tools. But you’ll be relegating them to their proper role as tools, useful in some contexts and too limited to be useful in others, as opposed to gods you must appease, regardless of the cost to your experience of life.

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“Discretionary Hours” refers to time beyond sleep, meals, and hygiene. They are available for work, leisure, and other activities. “Work Hours” includes paid work, travel time to and from work, and household chores. The balance between work and leisure has shifted over time, particularly in the 20th century, due to factors like technological advancements and increased productivity

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A bit of positive news. In the past 12 months, we’ve seen:

the largest decline in US murder rate ever recorded
huge declines in traffic fatalities and drug overdoses
a surprising (and largely unreported) decline in teen anxiety and despair, coinciding with ongoing declines in suicide
continued advances in GLP-1 medicines that seem to reduce obesity, inflammation, cardiovascular disease, and other illnesses that are currently under study

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Baseball umpires have improved dramatically. The heat maps below show the evolution of the MLB strike zone from 2007 to 2025. The zone has changed dramatically, going from vibes to nearly matching the rule book definition perfectly.

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The truth about millionaires in America:

-Half have less than $2 million in net worth (and less than $340,000 in liquid assets)
-Most are NOT business owners
-Almost all are house/401k rich but cash poor

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About 90% of all outstanding bonds in the world yield lower than 5%:

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The falling number of public companies/stocks available to buy is a global phenomenon:

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After the Global Financial Crisis (GFC), the P/E ratio for US stocks was similar to that of the rest of the world, but the surge in tech valuations has now pushed the US P/E ratio 40% higher:

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What software companies are in more danger vs. more safe from the relentless A.I. disruption:

🔴 High danger — “Search layer” companies: Companies whose main value is making publicly available data easier to search through a fancy interface. This includes financial data terminals built on licensed exchange data, legal research platforms built on public court records, and patent search tools. Many have already lost 40–60% of their value.

🟡 Medium danger — “Mixed portfolio” companies: Companies that have some proprietary assets but also rely on repackaging public information. The key question is: what percentage of their revenue comes from things AI can’t replace? (Think S&P Global — their credit ratings are safe, but their data analytics tools are exposed.)

🟢 Safer companies have one or more of these shields:

They own data nobody else can get — Bloomberg’s real-time trading desk data, S&P’s credit ratings, Dun & Bradstreet’s business credit files. AI actually makes this more valuable since every AI agent needs it.
They’re protected by regulations — Epic (hospital software) is shielded by HIPAA rules and FDA certifications. AI doesn’t change those requirements.
They’re embedded in money flows — If your software processes payments or settles trades (like Stripe), AI sits on top of you, not instead of you.
They have network effects — Bloomberg’s chat system works because everyone on Wall Street is on it. AI doesn’t change that.

China, Value, & Something Big That’s Happening

For years, AI had been improving steadily. Big jumps here and there, but each big jump was spaced out enough that you could absorb them as they came. Then, on February 5th, two major AI labs released new models on the same day: GPT-5.3 Codex from OpenAI, and Opus 4.6 from Anthropic (the makers of Claude, one of the main competitors to ChatGPT).

These new AI models aren’t incremental improvements. This is a different thing entirely. And here’s why this matters to you, even if you don’t work in tech.

The AI labs made a deliberate choice. They focused on making AI great at writing code first… because building AI requires a lot of code. If AI can write that code, it can help build the next version of itself. A smarter version, which writes better code, which builds an even smarter version. Making AI great at coding was the strategy that unlocks everything else. That’s why they did it first.

And now they’re moving on to everything else.

The experience that tech workers have had over the past year, of watching AI go from “helpful tool” to “does my job better than I do”, is the experience everyone else is about to have. Law, finance, medicine, accounting, consulting, writing, design, analysis, customer service.

AI is now intelligent enough to meaningfully contribute to its own improvement. It’s now building itself. Dario Amodei, the CEO of Anthropic, says AI is now writing “much of the code” at his company, and that the feedback loop between current AI and next-generation AI is “gathering steam month by month.” He says we may be “only 1–2 years away from a point where the current generation of AI autonomously builds the next.”

Each generation helps build the next, which is smarter, which builds the next faster, which is smarter still.

This is different from every previous wave of automation. AI isn’t replacing one specific skill. It’s a general substitute for cognitive work. It gets better at everything simultaneously. When factories automated, a displaced worker could retrain as an office worker. When the internet disrupted retail, workers moved into logistics or services. But AI doesn’t leave a convenient gap to move into. Whatever you retrain for, it’s improving at that too.

Nothing that can be done on a computer is safe in the medium term. If your job happens on a screen (if the core of what you do is reading, writing, analyzing, deciding, communicating through a keyboard) then AI is coming for significant parts of it. The timeline isn’t “someday.” It’s already started.

Eventually, robots will handle physical work too.

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In 2007, John Arnold became the youngest American billionaire, and he now focuses on philanthropy. He recently visited China and posted some of his thoughts:

The speed to add manufacturing capacity is stunning. Permitting takes weeks. A factory making sophisticated equipment is built in 12 months. An auto plant took 16 months from groundbreaking to first production. Slack in labor market makes it easy to staff and flex employment.
The US and China have significantly decoupled since early 2020. The # of flights between the two countries is down roughly 70%. Two long-term residents I spoke with said the # of American expats is down 50-75% from the peak. The # of Americans studying in China is down ≈90%.
Universities and government research labs are at least as tightly woven into the startup ecosystem as in the US, and in many cases more so. Their mission and incentive structures explicitly include commercialization, not just research.
China awards 1.3 million engineering undergraduate degrees each year vs 130,000 in the US.
Intense competition leads to widespread overcapacity and low profitability across many industries. Once an industry is deemed strategic, provincial governments deploy subsidies and other supports as they compete to turn local firms into hubs and capture the associated jobs.
I don’t know if Chinese manufacturers will ever make money but I came away not wanting to invest in any manufacturing business in the rest of the world.
You see American fast food everywhere. There are 12k KFCs (vs 4k in the US), 6k McDonalds, 7k Starbucks, 4k Pizza Huts.
Tier 2-4 cities are very quiet. Few cars on the road. Don’t see many people. Factory workers live in dorms on campus. Other workers are in gated compounds that are self-contained neighborhoods. Food delivery and e-commerce have replaced dining out and shopping.
China is one of only handful of countries with highly educated workforce, robust access to capital, and strong entrepreneurial culture. Only the US and China meet those conditions and have scale.
As industries become more complex, scale matters more than ever. Large countries can fund frontier R&D, support dense talent markets, amortize infrastructure, and create robust supply chains. Few countries can be cost competitive in high value-add manufacturing.
While the supply chain on transmission and grid infrastructure is backed up in the US, there is spare capacity in China.
A security check including bag x-ray is required to enter subway stations, at least in major cities. It’s interesting that most Western countries that are more dangerous do not do this, presumably for speed and cost.
There were fewer cranes than I expected, presumably reflecting the collapse of China’s real estate market.
Lower density cities still had most housing in high-rise residential buildings, usually built in complexes of 10-50 identical buildings. I guess it’s the most practical way to house people in a city growing quickly but the aesthetic damage is real.

Robotic coffee shops are taking off in China first even though wages are much higher in the US.

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The Yale model, investing in private companies, worked in the ’80s and ’90s for one simple reason — there wasn’t a tidal wave of capital chasing deals. Buyouts were done at reasonable entry prices.

Today, small and mid-size businesses are being acquired at sky-high valuations, often with little margin for error. High entry prices make outsized returns harder to achieve (even with leverage, even with financial engineering).

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Europe and Emerging Market countries have not embraced stock buybacks, yet.

Market concentration for the largest stocks is everywhere in the world, not just the United States:

U.S. valuations are still well above the rest of the world, even as the rest of the world outperformed the U.S. in 2025:

The CAPE ratio of the U.S. vs. the rest of the world:

Most emerging market countries are still extremely cheap, but some have moved into the more expensive red zone:

Within the United States, it’s the large cap stocks that are extremely expensive:

Another valuation metric in historical comparison:

FOMO, Silence, LLMs & Things Learned

A few of my favorites from an excellent best things learned in 2025 list:

All things being equal, the liquid inside a glass bottle contains more microplastics than the liquid inside a plastic bottle—up to 50X more! This is because plastic-coated metal caps found on glass bottles shed more particles than plastic caps found on plastic bottles.
If you have a son, the chances of your next child being a boy are not 50%, they are actually 57%.
Noise-canceling headphones are causing hearing problems in young people, not because they’re listening with the volume too high, but because blocking ambient noise prevents the brain from learning to filter and process everyday background sound in the real world.
In team sports, women are 13.69 times more likely to be attacked by a fellow teammate than men.
Until very recently, networks didn’t save live television footage because storage costs were too high. The only reason we have access to footage that aired between 1979 and 2012 is because a woman from Philadelphia recorded it and saved it on over 40,000 VHS tapes.
The screens of all laptops in Apple stores are set at an angle of exactly 76 degrees, which is just awkward enough to invite people to tilt them back a bit more, thereby taking the first step toward interacting with the product.
No NFL game has ever ended with a score of 36–23. Across the approximately 17,000 games that have been played in NFL history, this score should have happened 2.68 times by now.
Women are more likely to believe ghosts are real; men are more likely to believe aliens are real.
Coal-burning plants release 100 times as much radiation as nuclear plants per megawatt of power produced.
In 2024, the word “delve” appeared in journal abstracts 28X more frequently than in 2022 because ChatGPT likes the word delve.
The average West Virginian eats more than one hot dog per day.
In Mexico, extending the school day by 3.5 hours led to a 12.6% increase in divorce rates. The extra time made it more likely for women to participate in the labor market, thus increasing their economic independence.
Before 2000, it was common for 10% of Americans to have the same favorite athlete. The 10% threshold was last crossed in 2003, and since 2014, no more than 5% of Americans have had the same favorite athlete. This trend reflects a broader shift away from monocultural sports consumption, where everyone watches the same sports on a few channels, and a shift toward the fragmentation of sports media, where audiences are split across digital platforms and niche interests, preventing any single athlete from dominating the national consciousness.

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I conducted dozens of bot challenges based on real things people do with AI, including writing breakup texts and work emails, decoding legal contracts and scientific research, answering tricky research questions, and editing photos and making “art.” Human experts including best-selling authors, reference librarians, a renowned scientist and even a Pulitzer Prize-winning photographer judged the results:

For writing and editing – use Claude
For research and quick answers – use Google’s AI Mode
For working with documents – use Claude
For images – use Google’s Gemini

If I could change one thing about today’s AI tools, I’d make them better at asking follow-up questions that could completely change the answer.

When I asked the chair of the department of medicine at the University of California to judge ChatGPT’s responses to real medical questions he said the difference between a bot with access to infinite knowledge and a good human doctor is that the doctor knows how to answer a question with more questions. That’s how you actually solve someone’s problem.

He suggested an AI strategy I now use regularly: Front-load your queries to a chatbot with as many details as you can think of, knowing that the AI might not stop to ask for some of them before trying to answer. Instead of “summarize this lease,” try “summarize this lease for a renter in D.C., flagging clauses about fees, renewal and early termination.”

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The bill on a steak dinner for four can easily climb to $500. But after accounting for the restaurant’s costs—from the steak to rent—profits from the meal amount to around $25.

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Warren Buffett always had lunch at the Stage Deli on Seventh Avenue. A friend pointed out there were many good eateries in New York — why not try someplace new? Buffett replied, “If I like the Stage, why eat somewhere else?” The fear of missing out — responsible for a high percentage of foolish speculations — was unknown to him. This character quirk flowed from a subtle insight: People get in trouble far more often from doing and changing too much rather than doing too little.

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Podcasts have devastated my relationship to music, but that is not to say I’ve embraced silence. Whereas I used to listen to music all the time, now I fill every available moment with the sound of people talking.

My change in listening habits comes from a compulsion that many people in my life share: to make every minute of the day as “productive” as possible. By that blinkered calculus, an informative podcast will always trump music. But listening incessantly to podcasts has actually narrowed my interests and shown me just how limiting too much information can be.

I’ve found that trying to make every listening minute count inevitably becomes counterproductive. The internal pressure to optimize free time and always multitask is ultimately exhausting, not enlightening.

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There were incredible 2025 medicine breakthroughs in:

Metabolic Medicine
Infectious Diseases
Transplant Medicine Firsts
Gene Therapies
Neurological Diseases
Cell Therapies
Cancer Vaccines and Treatments

Contentment, Luck, Knowledge & Experience

When we dream about being happier in the future, we’re imagining being content with what we have. Maybe we picture a new house or a luxurious lifestyle. But what we’re really imagining is being satisfied with those things. We’re not just picturing wealth, you’re picturing contentment. But often, when reality doesn’t live up to expectations, it’s because the moment we get something new, we immediately start wanting whatever comes next.

The more you desire something you don’t have, the more you’re just focusing on the fact that you’re not happy right now. The person who has everything but wants even more feels poorer than the person who has little but wants nothing else.

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In economics, there is something called the law of diminishing marginal utility. Simply put, it states that for any commodity, you will derive lower levels of utility (or pleasure) with each additional unit you consume. For example, if you’re hungry and you buy a burger, that first one will be amazing. But if you buy another burger, then that one will be less pleasurable than the first. And by the 5th burger, you’ll hate yourself and won’t buy that burger again for the next month (at least).

When it comes to overcoming obstacles, however, I feel that there’s an inverse of this: a law of increasing marginal utility. With each obstacle you overcome, the utility comes in the form of a lesson you can import into the next obstacle you face. And once you overcome that one, the utility gained has a compounding effect that takes all the prior lessons into account as well.

This has the interesting effect of allowing calmness to be more of a baseline state as you’re introduced to various obstacles over time, one of the benefits of getting older.

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A group of researchers piggybacked on the Global Flourishing Survey, which asked more than 200,000 people in 22 countries over five years to rate how they feel about several aspects of life. One item was the question: “In general. How often do you feel you are at peace with your thoughts and feelings?”

The older people get, the more they feel inner peace. The pattern that emerges is the one that people who no longer compete with other people (whether it is for a job, a salary increase, a spouse, etc.) simply are happier.

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Knowledge of the world (through screens and images) vs. experiencing the world in-person:

“It feels as if the whole world has been transformed into images of the world, and has thus been drawn into the human realm, which now encompasses everything. There is no place, no thing, no person or phenomenon that I cannot obtain as image or information. One might think this adds substance to the world, since one knows more about it, not less, but the opposite is true: it empties the world, it becomes thinner. That’s because knowledge of the world and experience of the world are two fundamentally different things. While knowledge has no particular time or place and can be transmitted, experience is tied to a specific time and place and can never be repeated. For the same reason, it also can’t be predicted. Exactly those two dimensions – the unrepeatable and the unpredictable – are what technology abolishes. The feeling is one of loss of the world.”

Apart from anything else, another good reason to get outside, and soon.

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We are told to view winning, in sport and in life as: “success must be earned by an effort of willpower, preferably in a triumph over adversity.”

Natural talent conflicts with the consoling fantasy that we live in a meritocracy where hard work always pays off in the end. But it doesn’t. We simply never hear about the thousands of would-be athletes (or business people, or musicians, or inventors) who put in their 10,000 hours but lack the talent to make significant progress.

If people believe, as more and more of them are encouraged to, that their advancement comes 100% from their own merits . . . they can be insufferably smug. Recognizing luck as a factor in success is inherently civilizing.

It can be difficult to accept that we are all, to some degree, victims and beneficiaries of circumstance, but we are. We are misled by histories of great men and women in which it’s implied that each planned his or her ascent meticulously, homing in on success like a soldier finding a flag in an army training exercise.

The origins of success are usually much more subtle and complex. Successful people, by being open to opportunity and exposing themselves to chance, take new directions that prove more fruitful than anyone could have predicted. We change in many ways as we grow. A missed opportunity represents the failure to evolve into a different, better person.

Believing in luck does not imply fatalism, as many people mistakenly believe. But it does demand openness—and humility. What about effort, skill and planning? All necessary, of course—but never sufficient.

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AI may produce faster and more extensive searches and may find correlations that human efforts could not identify in a lifetime, but that’s all still existing information. In short, AI has no creative capacity. It cannot “think” of anything new, unlike humans who create new formulas and works of art routinely. AI is not “intelligent” or creative. It’s just fast.

In a recent experiment, a supercomputer and a group of first grade children were given a ruler, a teapot and a stove and asked to draw a circle. The computer “knew” that the ruler was a draftsman’s tool not unlike a compass and promptly tried to draw a circle with a ruler. It failed. The children glanced at the teapot, saw that the bottom was round and used it to trace perfect circles.

AI will never be superintelligent, expenditures have hit the wall of diminishing returns, AI offers no creativity at all (just fast searches), and children can outperform the fastest machines when the task calls for intuition. Is the frenzy about to hit the wall?

There are some encouraging solutions that may allow AI to add value beyond robotics and fast processing. One of these is the use of small language models (SLMs) instead of LLMs.

Unlike LLMs, which troll the entire internet or large subsets, SLMs contain far less data and are curated by subject matter experts to be tailored to specific tasks. One difference between SLMs and LLMs is the number of parameters that the model is trained on. SLMs can run faster on far less energy. They can also be scaled more easily for smart phones and other applications like self-driving cars and household appliances.

SLMs also have fewer “hallucinations” than LLMs and run on less expensive chips, which may have negative implications for monster chip makers like NVIDIA. SLMs running on smaller cloud systems may make the massive server farms now being constructed, either redundant or obsolete.

Time, Work, Beer & A.I.

Does Time Seem To Be Flying By? There Are Ways To Slow It Down. Exposure to variety in your life creates memories, which in turn makes time seem to pass slower because there is more to look back on. For children, fresh experiences and “firsts” are a natural part of everyday life — losing that first tooth, first day of school, first bicycle. This constant stream of new occurrences stretches the passage of time in a young mind.

Older adults, on the other hand, often slip into predictable patterns where days differ only by the calendar date. With scant new memories being formed between existing time markers like birthdays and holidays, Christmas seems to roll around quicker each year.

So as simple as it sounds, if you want time to slow down, the key is to intentionally introduce more novel experiences into your daily routine. Researchers divide these into two categories:

Distinct novelty. Taking a trip to somewhere you have never been fires a whole different system in your mind that preserves all the details like a high-resolution photo, creating vivid memories you recall for years to come. Your brain’s reaction is, “This looks important. I’d better save all of this!”

Common novelty. You decide to try a different restaurant in your neighborhood instead of the ones you normally frequent. It’s new but related to something you already know, so the impression is not particularly powerful.

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Typically, what you find in highly successful people is that an addiction to work is, in fact, based on an inchoate belief that love from others—including spouses, parents, and friends—can be earned only through constant toil and exceptional merit.

Why might someone fall prey to such an erroneous belief? It could be the way you were raised. Workaholic parents tend to have workaholic kids. If you grow up seeing adulthood modeled by people who work all hours and are rarely home, you can be forgiven for regarding this as appropriate behavior for a responsible spouse and parent. This is at least partly the same mechanism behind the fact that you are much likelier to become an alcoholic if you were raised by one.

Researchers have also shown that when parents express love for a child in a conditional way based on the child’s behavior, that person is likely to grow up feeling that they deserve love only through good conduct and hard work. This might sound as though I’m describing terrible parents, but I don’t mean to do so at all; well-intentioned parental encouragement can be heard by a child as a message about their worthiness.

In the workaholic’s case, it might look like this: Your parents wanted you to succeed in school and in life, so they gave you the most love and attention when you got good report cards, won at sports, or earned the top spot in the orchestra. You were a bright kid, and put two and two together: I am extra lovable when I earn accolades. In my experience, this describes the childhood of a lot of people who strove to be special to gain their parents’ attention, and who carry this behavior into adulthood by trying to earn the love of others through compulsive work.

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Michelob Ultra has become king of the hill among beer brands. By topping the sales by volume charts for 2025, it has ousted Modelo Especial as America’s best-selling beer.

While its lower caloric content certainly appealed to many people, some of Michelob Ultra’s success can also be credited to aggressive marketing campaigns, which helped the brand gain notoriety at major sporting events like the FIFA Club World Cup, NBA games, and the PGA tour. That falls in line with Michelob Ultra’s focus on folks with active lifestyles.

More people are seeing Michelob Ultra on tap. The new top dog surpassed its sister brand, Bud Light, in bar and restaurant presence in December 2024. Michelob Ultra’s upsurge in popularity happened at a relatively quick pace; the brand has flourished by 15% since 2020. That equates to a 2% hold over the entire beer market in that time frame.

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A.I. investors shouldn’t swim upstream, but fish downstream: companies whose products rely on achieving high-quality results from somewhat ambiguous information will see increased productivity and higher profits. These sectors include professional services, healthcare, education, financial services, and creative services, which together account for between a third and a half of global GDP and have not seen much increased productivity from automation. AI can help lower costs, but how individual businesses incorporate lower costs into their strategies—and what they decide to do with the savings—will determine success. To put it bluntly, using cost savings to increase profits rather than grow revenue is a loser’s game. The companies that will benefit most rapidly are those whose strategies are already conditional on lowering costs.

With A.I., knowledge-intensive services will get cheaper, allowing consumers to buy more of them, while services that require person-to-person interaction will get more expensive, taking up a greater percentage of household spending. This points to obvious opportunities in both. But the big news is that most of the new value created by AI will be captured by consumers, who should see a wider variety of knowledge-intensive goods at reasonable prices, and wider and more affordable access to services like medical care, education, and advice.

There is nothing better than the beginning of a new wave, when the opportunities to envision, invent, and build world-changing companies leads to money, fame, and glory. But there is nothing more dangerous for investors and entrepreneurs than wishful thinking. The lessons learned from investing in tech over the last 50 years are not the right ones to apply now. The way to invest in AI is to think through the implications of knowledge workers becoming more efficient, to imagine what markets this efficiency unlocks, and to invest in those. For decades, the way to make money was to bet on what the new thing was. Now, you have to bet on the opportunities it opens up.

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There is a consistent doom-and-gloom forecast that within 18 months A.I. software will make human capabilities worthless. The far more significant crisis is precisely the opposite. Young people are already degrading their cognitive capabilities by outsourcing their minds to machines long before software is ready to steal their jobs.

Many recent articles have loudly proclaimed what most people were already thinking: Everybody is using AI to cheat their way through school. By allowing high school and college students to summon into existence any essay on any topic, large language models have created an existential crisis for teachers trying to evaluate their students’ ability to actually write, as opposed to their ability to prompt an LLM to do all their homework. Massive numbers of students are going to emerge from university with degrees, and into the workforce, who are essentially illiterate.

The demise of writing matters, because writing is not a second thing that happens after thinking. The act of writing is an act of thinking. Students, scientists, and anyone else who lets AI do the writing for them will find their screens full of words and their minds emptied of thought.

As writing skills have declined, reading has declined even more. Most of our students are functionally illiterate. Achievement scores in literacy and numeracy are declining across the West for the first time in decades.

Americans are reading words all the time: email, texts, social media newsfeeds, subtitles on Netflix shows. But these words live in fragments that hardly require any kind of sustained focus; and, indeed, Americans in the digital age don’t seem interested in, or capable of, sitting with anything linguistically weightier than a tweet. The share of Americans overall who say they read books for leisure has declined by nearly 50 percent since the 2000s.

Even America’s smartest teenagers have essentially stopped reading anything longer than a paragraph. Students are matriculating into America’s most elite colleges without having ever read a full book. High schools have chunkified books to prepare students for the reading-comprehension sections of standardized exams.

Thinking benefits from a principle of “time under tension.” It is the ability to sit patiently with a group of barely connected or disconnected ideas that allows a thinker to braid them together into something that is combinatorially new.

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A.I. related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth and 90% of capital spending growth since ChatGPT launched in November 2022. Data centers are eclipsing office construction spending and are coming under increased scrutiny for their impact on power grids and rising electricity prices.

The biggest medium-term risk I can think of for top heavy US equity markets: China’s Huawei and SMIC pierce the $6.3 trillion NVIDIA-TSMC-ASML moat by creating their own supernode computing clusters and deep-ultraviolet lithography machines of comparable quality.

Oracle’s stock jumped by 25% after being promised $60 billion a year from OpenAI, an amount of money OpenAI doesn’t earn yet, to provide cloud computing facilities that Oracle hasn’t built yet, and which will require 4.5 GW of power (the equivalent of 2.25 Hoover Dams or four nuclear plants), as well as increased borrowing by Oracle whose debt to equity ratio is already 500%. In other words, the tech capital cycle may be about to change.

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This is a fascinating look at how foreign households invest. I had no idea U.K. residents had such a low percentage of their personal investments in stocks, and the amount Japanese citizens hold in cash (which has provided no interest/return for decades) is incredible.

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Africa is enormous. These countries would all fit within Africa’s border:

Money, Happiness & Cancer

William Vanderbilt was the son of the great Cornelius Vanderbilt. When his father died, Cornelius was the richest person on the planet. Billy took his father’s wealth and almost immediately doubled it with some shrewd business maneuvers (in today’s terms, imagine Elon Musk’s son inheriting $500 billion when he dies and then investing it and quickly doubling it to $1 trillion). Being the richest rich person didn’t make William Vanderbilt any happier:

“The sheer magnitude of his fortune, he told Chauncey Depew, gave him no advantages over men of moderate wealth. “I have my house, my pictures and my horses, and so do they. I can have a steam yacht if I want to, but it would give me no pleasure, and I don’t care for it.” On another occasion he spoke of a neighbor saying, “He isn’t worth a hundredth part as much as I am, but he has more of the real pleasures of life than I have. His house is as comfortable as mine, even if it didn’t cost so much; his team is about as good as mine; his opera box is next to mine; his health is better than mine, and he will probably outlive me. And he can trust his friends.”

Being the richest person in the world brought him, he said, nothing but anxiety.

The founder of MVMT recently sold his company for $100 million at age 29. He recently posted on Reddit how two years after selling his company he’s lonelier than ever and deeply depressed. Money dramatically improves everyone’s lives up until the point they can relax and be content. After that, assuming they are in moderately good health, almost all happiness comes internally.

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The largest medical A.I. randomized controlled trial yet performed, enrolling >100,000 women undergoing mammography screening, was published today. The use of A.I. led to 29% higher detection of cancer, no increase of false positives, and reduced workload compared with radiologists without A.I.

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The Drug Industry Is Having Its Own DeepSeek Moment. It isn’t just artificial intelligence—Chinese biotechs are now developing drugs faster and cheaper than their U.S. counterparts. Many top scientists trained in the U.S. have returned to China over the past decade, fueling the emergence of biotech hubs around Shanghai. And just as DeepSeek built a formidable chatbot—allegedly on a lean budget with limited access to semiconductors—Chinese biotech companies are also scrappier, capitalizing on a highly skilled, lower-cost workforce that can move faster. Additionally, companies can conduct clinical trials at a fraction of what they would cost in the U.S., while recent changes in the Chinese regulatory system have streamlined and accelerated the approval process to get a study started.

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A new study by Stanford University researchers finds that the average online sportsbook customer expects a gain of 0.3 cent for every dollar wagered. In reality, sports bettors lose an average of 7.5 cents per dollar wagered, reflecting widespread overoptimism about financial returns. We found that people more or less understood the amount of money they had lost in the past, but they just thought the future would be better. Parlay bettors do so much worse than single-outcome bettors and are so much more overconfident in their chances that they likely account for most of the excessive optimism in the overall sample.

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Only 13% of U.S. imports come from China:

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European stocks have under-performed U.S. stocks in 12 of the last 15 years. However, the pedestrian pace of the European economy and markets could be a virtue for investors in the years ahead. Europe suffers from none of the over-building excesses that haunt the Chinese economy. European equity markets have none of the bubbly valuations that pose a threat to U.S. stocks. A starting point of a weak euro and monetary easing, combined with a high savings rate and fiscal capacity has the potential to boost both economic growth and dollar-denominated returns on European equities. Attractive dividend yields can allow European equities play a respectable role in generating income. Moreover, political pressure from within Europe, along with the threat of tariffs from the United States, could motivate bolder action from European policymakers in both deregulation and fiscal stimulus, triggering greater economic momentum. The strongest case for European equities is simply a value case. At the end of January, the MSCI Europe ex-UK had a forward P/E of 14.7 times compared to 21.8 times for the S&P500, a discount that is more than two standard deviations greater than its average over the past 20 years. It also sported a dividend yield of 3.3% compared to 1.3% for the S&P500.

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The silver market is heading into a perfect storm. Even in our most conservative case, holding everything but solar demand constant, we’re looking at potential deficits of 100-200 million ounces annually for the next decade. Solar panels now consume one in four ounces of silver mined globally. Even at current solar installation rates – before factoring in any AI-driven surge in energy demand – we’re looking at a supply-demand gap as large as the entire elastic (price-sensitive) portion of silver supply. Solar demand is structurally inelastic – panel manufacturers will buy silver at almost any price because it represents a tiny fraction of total costs but is essential to functionality. The sheer scale of the energy transition dwarfs anything in silver’s industrial history – we’re talking about rebuilding the entire global energy infrastructure.