ClickBeta: 2-Tail Black Swans

Three Friends Hashing Out the Now

Episode 3 of ClickBeta - the please-God-make-it-all-make-sense show I’m doing every few weeks with Jason Buck from Mutiny Funds and Matt Zeigler from Sunpointe - just dropped:

Here’s my paradox: at an hour, I never feel like we have enough time. At an hour, I completely understand why sometimes you just want the TL;DR. So here’s the playlist: 7 top quotes from the episode, a few thoughts, and the songs they made me think of:

Listen along:

"Optimistic" by Radiohead (2000)

"I feel like with people I'm talking to there's a lot of: here's things I'm super, super optimistic and excited about, and here's things that are gonna destroy the world. So I'm trying to put together a list for myself of stuff that is actually potentially world ending and also stuff that there’s still some hope or excitement about.” - MZ

The whole point of a Gaussian distribution is that most of the outcomes aren’t in the tails. While we focused a lot on the tails in this episode, and a lot of those tails were negative, I think it’s really important to maintain a sense of hope, even when things don’t feel all that hopeful. I know that I, like the song says, often feel like a “Nervous messed up marionette, floating around on a prison ship.”

The Takeaway: Actively seek out the right tails, not just the left ones.

"Trust" by The Cure (1992)

"Gen AI, whether it's art, whether it's spreadsheets, whether it's coding, whether it's text in the Wall Street Journal … all of that Gen AI comes with a lot of potential left tail problems. The erosion of trust is the biggest one. - DN

As the song says: “There's no one left in the world that I can hold on to.” In an increasingly AI-mediated world, the issues go way beyond whether it’s hilarious or abhorrent to explicitly violate Hayao Miyazaki’s wishes that Studio Ghibli avoid the AI-swamp. But they’re definitely related. When we can no longer tell the origin of something, we have no ground to stand on. This was the big point of my “Black Hat World” thesis.

The Takeaway: AI-literacy is now a survival skill. Yes, you should learn how to use all these tools, even if only to be a better judge of reality. Otherwise, you’re just a patsy waiting to be taken in the next game.

“Liar” by Rollins Band (1994)

"The bull argument, so sounds so airtight at the top and like bear market sounds so airtight at the bottom." -JB

As St. Henry declares “everything I say is everything you want to hear.”

The infection of economic discourse with political pathogens is hardly new, but boy it seems like it’s pretty impossible to believe anything right now. The narrative that “the data is wrong” isn’t fringe: noted Internet Investing Celebrity Nerd, “Pomp” just flatly declared “I have been convinced that you can not trust most of the reported data” last week.

The Takeaway: This is a terrible moment to assume you can time the market. If you no longer trust the map, it’s not the time to start just making turns at random. Staying pointed generally in the right direction is the answer to stormy seas.

“Debaser” by The Pixies (1989)

"It's gonna be something completely off the radar that just acts as that spark." -DN

The best part of Debaser is that hardly anyone actually pays attention to the source material. The entire song is just about what is arguably the oddest and most disturbing movie ever made, Un Chien Andalou from 1929 which shocked audiences then, and shocks Zoomers now when they stumble across the Salvador Dali-scripted scenes of a woman’s eyes being sliced open

(it was a sheep’s eye, they tell us, special effects dontchaknow).

The challenge of the now is that we’re all numb. We’ve come to expect both the horrors and miracles from modern life daily.

The Takeaway: Don’t stop chasing curiosity and novelty, because otherwise, we’ll all absolutely miss whatever’s next.

“New Dawn Fades” by Joy Division (1979)

"Can either of you name your grandparents' middle names?" -JB

I mean, this one hit me in the chest like a bullet. Yes, I could, in the moment, but the point was made: we have forgotten the faces of our fathers. Or perhaps, as Ian Curtis put it:

A change of speed, a change of style
A change of scene with no regrets
A chance to watch, admire the distance
Still occupied, though you forget

We’re so quick to think that we’re something new, doing something novel. We crave change and excitement, but we forget.

The Takeaway: The “short termism” that modern capitalism encourages robs us of the very tools we need to survive the ravine we now find ourselves in. As someone who tries *not* to dwell a lot on stories of the past, I got the message.

“World Leader Pretend” by R.E.M. (1988)

"Does anybody want to hang out with the U.S. anymore? If we keep going down this path, do we pick up fights where we're the coolest bully in school until we bully all the kids, so then there's nobody left." -MZ

I mean. Yes. This right here. This is in fact the biggest issue facing the U.S. geopolitical strategy. I absolutely get the arguments from the Avalon-Hill Boardgame strategists who think “Greenland” is just another boardspace to be filled with advance deployments. But we don’t live in a bilateral world. The U.S., for all its might, is less than 5% of the global population. This leaves us, like Michael Stipe sings, at a table waging war on ourselves, and it does indeed seem like it's all for nothing.

The Takeaway: The U.S. has much less “hand” than we pretend we do, and less by the day.

“Global A Go-Go” by Joe Strummer and the Mescaleros (2001)

"If the U.S. finally stumbles, do we actually redistribute? Do we see earnings broadening out? Do we see earnings around the world broaden out as these large US leaders actually struggle?" -MZ

It seems odd, but Matt may actually be on to a-crazy-and-not-tail potential outcome. While the U.S. tries to pull up the ladder behind us and erect walls to our markets, it’s not inconceivable this sparks a new wave of globalization — one that just skips the U.S. I’m skeptical the trade war gets that far, but it’s certainly possible we mangle the diplomacy of the now so badly that the Rest-of-World coalition increases free-trade while we increasingly abandon it.

The Takeaway: Headlines around things like “Nordic Sovereign Wealth” and “UK Country Home Bias” are worth paying more attention to.

See ya next time. Until then. Freaky Tales.