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ButWhatFor? Four for Friday

• One Quote: Cannot Find Peace

• One Long: 30-for-30

• One Short: It's Leverage

• One Extra: John Collison w/ Stanley Druckenmiller

One Quote

Virginia Woolf is generally considered one of the more influential English-language writers of the 20th century and was one of the first people to bring stream-of-consciousness style writing to more popular literature.

She also wrote the quote above - and I like the idea behind it - because it is something I get wrong all the time at first, and then get right and laugh at myself for having gotten the same thing wrong again and again.

When something is not going quite right, or I have less motivation / happiness / am angry about something silly / can't focus / etc... my first inclination is to withdraw - to go be by myself and ignore the rest of the world. However, that never helps.

What does help, is doing the opposite - going out and doing something with others or away from your normal setting. Interacting with the world seems to be a better way to pull yourself out of a negative internal state than just focusing on that internal state in isolation.

Circling back to Woolf, what is also well-known are her struggles with depression, for which she was institutionalized multiple times throughout her life. Unfortunately, due to a lack of effective treatment and poor understanding by medical professionals in the early 1900s, she committed suicide in 1941 by filling her coat pockets with heavy stones and walking out into a river by her home.

This is also why the above quote stood out to me - my first thought was that it seems like a contradiction. My second thought was that my first thought was incredibly arrogant - we all have contradictions like that in our lives.

It is always possible to have the answer to something at one point in your life and forget it at a second point. It is also possible to logically have the answer to a problem, but be emotionally unable to enact it at a given time.

I think Woolf's quote is a good one to try to remember when you are feeling down or things just aren't lining up like you wished they would. Even in those situations, don't sulk inside yourself - go live life and get outside of yourself.

One Long

30-for-30

I have shared a number of things from Sahil Bloom this year, and it looks like I have to do it again today with an article he wrote about doing something for 30 minutes a day for 30 days in a row as a way to make progress.

It's a simple concept, and not a unique idea - we all probably heard similar growing up. Practice that violin every day... have basketball practice every day... read the newspaper every day... and so on. And, funnily enough, it worked. We got better at things.

However, at least on my end, as I have gotten older, it is harder and harder to have the motivation to start something new and work at it daily. It's partially a time thing - as an adult, you just have fewer free hours in a day than you did as a kid. But it's also partially a prioritization thing - even if you have the time, of the roughly infinite things you could do with that time, what do you pick?

Bloom's approach to this problem is as follows:

• Choose any new skill, habit, or an existing area of competency you are looking to improve

• Commit to 30 minutes per day for 30 consecutive days

• State your intention publicly or tell a friend or family member about your plan

• Track the daily execution with a calendar

So, for next week, I will come up with something to track on my end and share it with you all here.

Related ButWhatFor? articles:

• Perseverance is Great, But Don't Forget to Prepare

• Habits Maketh the Man

One Short

It's Leverage

Today's short is extra short, and I have written too much elsewhere in this email already so I will leave it at this: be careful with leverage.

One Extra

John Collison w/ Stanley Druckenmiller

Stanley Druckenmiller is a somewhat unique investor, for a few reasons.

1) He has good returns, 2) He invests across most asset classes - public equities and debt, currencies, commodities, private equity and debt - and 3) he is a macro-first investor, meaning he tries to understand where the world will be in 18 months and invest around that future world.

Druckenmiller recently sat down with John Collison, co-founder of Stripe, to talk about the macro environment in the US, and a little bit globally. Given Druckenmiller seems to have had useful insights over the last 40+ years when it comes to macro, I thought the conversation was interesting.

Some selected notes from the conversation are below, but this is not meant to be an inventory of everything discussed, so you can check out the hour-long discussion here:

• Two Inflation-Related Historical Precedents

  • 1) When inflation has gotten over 5% historically, it has never come back down without the Fed Funds rate getting above inflation (Fed Funds is currently ~1.5%, versus inflation of 8%)

  • 2) When inflation has gotten over 5% historically, it has never come back down without a recession

• Surprised by the Current Environment

  • He suggests that the current macro environment - high inflation, super-low bond yields, and an economy weakening - requires extreme humility on the part of the investor, because there is not really a precedent in history for this situation

  • Inflation - he was surprised by how high inflation got and how slow the Fed was to react

  • Declining growth company valuations - he expected the bubble to burst, but he is seeing more pain than he expected

• What Are You Watching?

  • Housing is a leading indicator industry, and expecting to see that react to rising interest rates; already seeing homebuilder's valuations get hit

  • Transportation is also leading; some transportation companies are trading off strongly despite strong earnings

  • Retail is a slightly delayed leading indicator, and starting to see some pain; during COVID, retail became more or less 100% of the consumer wallet share, as opposed to 85% pre-COVID; expect there should be a reset

  • The bond market used to be a good signal – the 10-year treasury is the most important marker in the world – but over the last ten years, it has become less useful to watch because the Fed is controlling prices

• What Would He Tell a 20-Year-Old Getting into Investing?

  • Do not invest in the present – have a vision of the world 18+ months from now and invest around that

  • If you don’t love it, do something else

  • Encourage them to look at how all the asset classes flow into each other

  • Look into potential disruption for blockchain technologies [ note: that doesn't mean cryptocurrencies, it means what use cases blockchain-related technology can make better ]

• How Does Work Ethic Impact Success?

  • You must be attracted to the game – lazy people become very driven if they find the right game; so it is more about finding what you get excited about as opposed to finding the will to force a better work ethic

  • “I don’t think I have a strong work ethic; I am just passionate about this specific thing”

• Put All Your Eggs in One Basket / Hot and Cold

  • Schools teach that diversification results in safer returns – doesn’t agree with that – most people get in trouble with stale longs or stale shorts where they are not paying attention [ note: I think this depends on what your investing goals are / if you are investing as your profession; Warren Buffett suggests the average person puts their money in the S&P500 and leave it there, which is very much a diversified portfolio ]

  • Sizing is 70-80% of the equation; if you have conviction and do a 2% bet, you will have poor returns; you get outsized returns by making a lot when you are right and losing less when you are wrong

  • Know when you are “hot and cold,” meaning know when you are getting things right and when you are getting them wrong. If you are getting things wrong – stop and take a break; if you are getting bets right, be confident that you might be seeing something special and keep going

    • Druckenmiller took 4 months off in the early 2000s when he was “cold” (he didn’t look at a newspaper or TV for that time), and he credits that time off to reset as why he got 40% returns the next year

    • “I will go to the grave believing that if I had sat in my room looking at the screen… [with] my brain too messed up in May… it was by stepping aside and clearing my head that I had the gumption to do it; I need those 4 months”

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Have a great weekend,

— EJ

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But What For? Because anything can be interesting