Friday Night Links

• The true business of oil majors is fuels. Gasoline, the most important of those fuels, and used primarily for regular cars, represents 50% of oil demand today. The problem for oil majors is that most projections agree on peak light vehicle fuel consumption within this decade. Mind the wording there: not peak oil, not peak fuels, but peak light vehicle fuel (basically passenger cars). The driver of that trend is EVs. In no country is this more true than in China, the largest EV market in the world. Last year, China’s light vehicle fuel consumption already fell, and it is still falling in 2025, despite the economy expanding. To aggravate the problem, China has the second-largest refinery capacity in the world. It has a lot of refineries, for which it has no (perspective of) vehicles. [Quipus Capital]
• If President Trump normalizes oil trade with Venezuela—even partially—Canada’s exposure is bigger than it looks. Gulf Coast refineries are built to run heavy sour barrels. When Venezuela was sanctioned off the slate, Alberta bitumen became the backfill. Undo that, and the first barrels displaced are likely Canadian—with knock-ons for Alberta’s revenues and the equalization-era fiscal balance across Canada. [drjennifericonsidine] 
• The impoverished environments of early America looked like a genetic problem despite being an environmental problem, which is why so many elites focused on heredity as the primary culprit of poverty. Grinding multi-generational poverty leading to successive predetermined outcomes of inadequate prenatal and childhood nutrition, along with parasite and infectious disease burden, looked a lot like genetic determinism, but it was fundamentally wrong. Similarly, today, with these basic needs almost universally provided, any remaining inequality is likely to be a residue of primarily genetic influence, or else cultural patterns so deeply ingrained they are impossible to address. Yet we assume, despite having harvested all of the low-hanging fruit of improved environments, that outcomes are determined by environment. [The Tom File]
• In contrast with a general trend of declining trading frictions, over the last several decades the cost of borrowing securities for short-selling has increased dramatically. Using a portfolio approach, we show that as the borrow costs have increased so has the mispricing associated with portfolios of high-borrow-cost names. This decline in market efficiency has resulted from a lack of competition in the intermediation chain that links share lenders with borrowers, and a growing and rational unwillingness among institutional investors to hold and lend high-borrow-cost names. [Kent Daniel]
• I think the marginal seller will remain in tight supply (outside of forced liquidation events) because the bull case has been widely-circulated among many skilled small cap investors, who are likely to have high conviction if they did not already sell on recent weakness in soda ash; i.e., I believe recent quarter(s) were sufficiently weak to flush out weaker hands in a strong shareholder base. Specifically, I’ve been anticipating the recent soda ash-related flush. I think the marginal buyer analysis is more straightforward: I take it for granted, from experience, that the market loves enormous dividend increases almost every time. Lower interest rates would likely bolster this effect as the yield would become relatively more attractive for income-based investors. [scalpavelli]
  
• The winners of the contest are never the same from year to year. The one constant is that the overconfident do poorly. Having extremely confident predictions (e.g. 90% or 10%) on any event that is contentious among participants (has a high standard deviation) is associated with poor performance in the contest. The better performing contestants seem to have an easier time intuitively feeling the range of outcomes that a trip through life's quincunx can deliver. What seems to happen specifically is that a very rigid set of expectations, a very definite view, a simple narrative, crashes on the rocks of reality. In fact, I am learning to avoid any kind of simple narrative for thinking about the future. Consider predictions such as, "there's going to be hyperinflation / a crash / a civil war" next year. Reality is a lot more complicated. Bitcoin hit an all time high and oil hit an all time low in 2020. What probability would anyone have given that? And does it fit a simple label like "hyperinflation"? Since we can't predict, what can we do? The only investing strategy that I can think of for coping with the utter impossibility of prediction is diversification among that which is cheap. [CBS]

Friday Night Links

• One day, everything in the world economy will be priced in Bitcoin. Or, one day, Bitcoin will be regarded as the biggest bubble that ever was. There are stable equilibria between these outcomes, but they are unusual and structurally exotic. There are three major ways in which Bitcoin could still fail. A: it could be actively killed by its enemies. B: it could lose its energy source. C: it could be outcompeted by another candidate monetary standard. [Curtis Yarvin]
• Meta is signing an “operating lease” with an initial term of only four years. They have the option to extend the lease every four years, but they are not obligated to. To persuade the JV to accept the short four-year leases, Meta provided a “Residual Value Guarantee” (RVG) covering the first 16 years of operations. If Meta decides to leave (by not renewing or terminating the lease) within the first 16 years, they guarantee the campus will still be worth a certain amount of money (undisclosed). This payment is “capped” i.e. there is a pre-agreed maximum limit to how much Meta would have to pay. Again, we don’t know the exact capped limit in this deal. [MBI Deep Dives]
• If you have considered an idea from a conference, you did not buy it, and then it does well, you will feel bad. I heard Bill Ackman pitch General Growth Properties at the 2009 Ira Sohn Conference, thought it was a great idea, checked the stock price and then did nothing about it. As it 10x-ed over two years, I felt sad inside, and apparently still do. This feeling is much less painful than a loss from a bad purchase, and unless you’re insane like me you might not even remember, so I’ll assign only 0.25 sad points per occurrence. If you have considered an idea, did not buy it, and it went down, you may experience a little satisfaction from your discernment. This will be a faint emotion and you’re even less likely to remember the stock than one in the “interested-not purchased-went up” basket, so I’ll only give this situation 0.05 happy points. [Harvey Sawikin]
• But there’s a catch: had we tried to do that, we may never have survived to enjoy all the ultimate gains on Lukoil and Norilsk. Between 1995-2021, the period under examination, Russian stocks experienced two major crashes (1998, 2008) and three large corrections (2000, 2011, 2014). Firebird Fund entered all of these with reasonably diversified portfolios (in 1998 and 2014, partially hedged with derivatives and cash); though we were down, the vast majority of our investors rode out the turbulence. We communicated frequently with them and what they saw was a stable management team, calmly assessing events and determined to recover the fund’s recent losses. They may have been disappointed with us but had no reason to doubt our sanity. If, on the other hand, we had entered any of these crashes or corrections with a 75% weighting to just two stocks, Lukoil and Norilsk — which likely would’ve been the case had we kept the 1995 portfolio static — we may have looked like excessive risk-takers to our limited partners. [Harvey Sawikin]
• "With the completion of the Neches River Terminal next year, we are nearing the culmination of a significant capital deployment cycle that began in 2022. These investments included large scale pipeline and marine terminal facilities as well as gateway acquisitions that put Enterprise in a position to support production growth from the Permian and Haynesville basins for years to come. With this large wellhead to water build out cycle behind us, we believe 2026 will see an inflection point in the partnership’s free cash flow. Today, in connection with this expectation, we announced a $3.0 billion increase to Enterprise’s common unit buyback program." [Enterprise Products Partners L.P.]
• Terraform's nominal design size for its kits is one megawatt. For context, one megawatt can power a few hundred homes in Europe, or about 20 to 30 large, air-conditioned homes in America. The company sells a kit that captures solar power and produces hydrocarbons, essentially creating instant oil. The goal is to have the first paying customer for these hydrocarbons, who isn't just part of a demo, as early as next year. [Casey Handmer]
• Piłsudski was aware that the Bolsheviks would not ally with an independent Poland and predicted that war with them was inevitable. He viewed their advance west as a major problem, but he also considered the Bolsheviks less dangerous for Poland than their White opponents. The "White Russians", representatives of the old Russian Empire, were willing to accept limited independence for Poland, probably within borders similar to those of the former Congress Poland. They objected to Polish control of Ukraine, which was crucial for Piłsudski's Intermarium project. This contrasted with the Bolsheviks, who proclaimed the partitions of Poland null and void. Piłsudski speculated that Poland would be better off with the Bolsheviks, alienated from the Western powers, than with a restored Russian Empire. By ignoring the strong pressures from the Entente Cordiale to join the attack on Lenin's struggling Bolshevik government, Piłsudski probably saved it in the summer and the fall of 1919. [Józef Piłsudski]
• Pick a target lifestyle number that you can comfortably live on. Call it $100-200K a year after tax all-in spend for your family. That’s housing, food, childcare, insurance, travel, everything. Then you lock that number. Tattoo it. That number is now your “max lifestyle.” You do not let it scale linearly with income. When your income jumps from $300K to $450K? You do not *deserve* to scale lifestyle 1:1. You siphon the marginal(~$80K-$90K post tax) straight into buying time and leverage: taxable brokerage, second cash-flowing asset, equity in something you own, principal paydown on a mortgage, or building/purchasing a side income stream that is not tied to a boss. Again. You use it to invest in things that earn or you control. [BowTied Bull]
• The articles published by the Annals of Eugenics (1925–1954) have been made available online as an historical archive intended for scholarly use. The work of eugenicists was often pervaded by prejudice against racial, ethnic and disabled groups. The online publication of this material for scholarly research purposes is not an endorsement of those views nor a promotion of eugenics in any way. [Wiley]

Monday Morning Links

• You can see that when gold peaked out in 1980, it peaked out, at least from a yearly price point of view at 2.5x production cost. We know gold actually spiked up to $850/oz or so. But that was a short term spike that didn’t last long. We can see gold peaked out again in 2012 or so at 1.7x cost of production. With gold at $4,100/oz, it is trading at 2.7x production cost, higher than it was in 1980. But if we use the peak price of $850/oz, that was 3.4x the cost of production, so for us to get near that level, gold would have to spike up to $5,100/oz… another $1,000! But last time gold got that high, it went down for the next 20 years, so who wants to get on that boat?! The title of this post is referring to the stock market, but having written this about gold, I now see that gold is clearly in bubble territory. [The Brookyln Investor]
• What we see with bulk population mortality curves is exactly what we would expect to see if we were monitoring the convergence of thousands of similar simulations, or the same simulation run thousands of times with slightly different initial conditions (such as in weather forecasting). Over time the state quantities gradually diverge from their initial harmony. Integrated homeostatic systems consistently restore equilibrium, but there is hysteresis and loss of information. Homeostatic mechanisms are themselves perturbed by the steadily degrading state, and the resulting feedback is a slow (or fast, depending on perspective) slide into an ever less convergent state. The process is deterministic. In numerical simulations, there are plenty of hacks to try. One could speed up feedback loops, decrease timesteps, reformulate the underlying equations, attempt to add dissipation, filtering, or systemic decoupling. Perhaps the reason exercise and caloric restriction improves life expectancy a bit is because it tempers state excursions relative to the capacity of feedback systems to recenter them? [Casey Handmer]
• People often ask what they can do to generate original contributions or comparative advantages. Usually they vastly overestimate how common it is to have gone through the basic intellectual background in a field. If you've actually read the book (actually checked the proof, actually implemented the algorithm), you're probably way ahead of the field. Much expertise is simply doing this over and over. [Nate Meyvis]
• But now you need to figure out: what should it be that you consume a lot of? For me, it's largely newsletter writers. The economics of this aren't fully clear to me (or anyone else, I think), but the people I'm most willing to bet chunks of my cognitive life on are, disproportionately, writing newsletters or newsletter-adjacent things. Why? It makes them prolific, which fuels componding returns for a good reader (see above). There are massive intellectual benefits to writing on the cadence a newsletter encourages, so the writers are improving most rapidly. [Nate Meyvis]
• Cigarette advertising used to be a huge deal. Tobacco ads were banned from broadcast TV and radio way back in 1971, and the practical upshot was that cigarette companies became some of the biggest boosters of print periodicals. Much later, the 1998 Tobacco Master Settlement Agreement between the four largest tobacco companies and 52 state and territory attorneys involved an agreement to stop running cigarette ads in publications that had very large youth-readership shares. Still, when I was an intern at Rolling Stone in 2000, the magazine’s business model relied in large part on the fact that its readership demographics were young-skewing without tripping the T.M.S.A. threshold. [Matt Yglesias] 
• When you observe an extreme outlier, you should usually vastly reduce your credence in the model with respect to which the event counts as an outlier. In crude terms: suppose that you're 95% sure that some model of the situation is right. If you observe an event that is a four-sigma outlier according to the model but much less likely if the model is wrong, then (by Bayes' theorem) your model is almost certainly wrong. So if you were making commitments on the basis of that model, you should stop doing so. [Nate Meyvis]
• Whenever possible, ask: "should I do this same thing again and again?" Getting compound returns is great. Getting diminishing returns is bad. Doing more and more of the same thing tends to get you one or the other, and figuring out which situation you’re in is often very tricky. Work at it. [Nate Meyvis]

Thursday Morning Links

• Many of us still recall the story of Belshazzar’s feast, in which the foolish king’s crime was to take sacred vessels plundered from the Temple in Jerusalem, and use them to carouse merrily with his toadies. As they did so “they praised the gods of gold, and of silver, of brass, of iron, of wood, and of stone . . . which see not, nor hear, nor know: and the God in whose hand thy breath is, and whose are all thy ways, hast thou not glorified.” Then it was that there “came forth fingers of a man’s hand, and wrote over against the candlestick upon the plaister of the wall of the king’s palace: and the king saw the part of the hand that wrote.” The prophet Daniel, brought to interpret the writing, tells him, “God hath numbered thy kingdom, and finished it. Thou art weighed in the balances, and art found wanting.” I wonder if this portion of scripture is read often in Canterbury Cathedral nowadays. I suspect that any nation which neglects it will sooner or later face its own writing on the wall, as we do. [Peter Hitchens]
• So, given that, how does the market look today? The market today looks like it is priced correctly. The 10-year Treasury rate is 4% today, and the S&P 500 index P/E is 25.5x, almost exactly where it should be according to the model. Next year’s estimate P/E is 22x. In past bubbles, the rubber band was stretched. The table below is from an earlier post. Just before Black Monday, the rubber band was stretched as 10-year rates spiked to close to 10% while the earnings yield declined to 4.7%, creating a near 5% gap. On a price basis, the market was overvalued by 100%! During the internet bubble, the gap increased to 1.5% and the market was overpriced 40%. Today, there is no stretch in the rubber band. [The Brookyln Investor]
  
• Jamie Dimon was sitting on the 13th floor of his new headquarters on a Monday morning, sipping a Guinness and looking out at the Manhattan skyline. It was the first day that JPMorgan Chase’s massive skyscraper at 270 Park Avenue was opening to employees; the CEO had arrived with his architect to toast the building, a $3 billion monument to work. [WSJ] 
• Both Rayonier and PotlatchDeltic have also benefited from surging demand from solar-power generators for swaths of land, especially in the South. They each have options and lease agreements with solar developers covering tens of thousands of acres at rates that are upward of 10 times more profitable than growing pine trees. [WSJ]
• The U.S. retreat from its electric-vehicle ambitions is spreading around the globe. In Canada, Prime Minister Mark Carney paused an electric-vehicle sales mandate that was set to take effect next year. In the U.K., Prime Minister Keir Starmer has allowed for a more flexible timetable to hit the country’s EV targets. And the European Union last month bowed to pressure from automakers to rethink—a year earlier than planned—its 2035 target for eliminating carbon-dioxide emissions from cars. [WSJ] 
• General Motors said it is reducing its electric-vehicle manufacturing capacity and booking a $1.6 billion charge on its EV business as demand sinks. In a regulatory filing, the company said that EV sales are expected to fall with the end of government-funded subsidies and regulatory mandates that fueled EV growth. The automaker has dramatically scaled back EV plans after spending billions on the technology. In 2021, GM had said it was committing $35 billion on EVs and autonomous vehicles. Money went toward new models, EV battery development and converting traditional auto factories into EV plants. [WSJ]
• One thing I notice in reading the various things put out by Stahl is that he never talks much about valuations or at least how much he thinks the various investments held by HK and FRMO are worth. Granted TPL and GBTC are the main investments held by Stahl, so the smaller stuff is not hugely important to talk about, but even for TPL I don’t see much in the way of what Stahl thinks these businesses are intrinsically worth. Why is this? Am I just missing it? Like what is the calculation – however approximately – that Stahl is making? IDK why TPL is better than, say, a basket of other oil royalty companies with similar low-capex, commodity-price optionality that Stahl always mentions with talking about TPL (of which there are a good number that are cheaper on a conventional P/E and price-to-flowing-barrel basis). [Lemon Cakes Investing]
• I think this year we're really happy that we were able to cancel just over 2.5% of the shares outstanding. We've also found a few acquisitions that are kind of in the high teens IRRs. That's great as well. I think, again, on top of the dividend, we have still a significant wedge of incremental cash flow. Even though oil over the last three years has gone from $94 to $58 and gas is virtually at zero, we still have roughly $100 million of excess free cash flow a year. We just thought with the growth we've seen in the business and the strong free cash flow yield, it was a great opportunity to cancel shares. We're happy with the amount we've canceled this year. The debt repayment should continue through the back half of the year. [Prairiesky Royalty Ltd.]
• Testosterone has affected my life in ways both large and small. The best way I can describe it is that it uniformly lowered the activation energy required for pretty much every activity. When I get a message, I respond to it. When I need something from another room, I stand up and go get it. In fact, I have energy to burn; sometimes I find myself pacing in my office. I get 1-2 hours more peak productivity per day. [Cate Hall]
• Should people start taking lithium orotate, such as the low dose of 5 mg now, widely available as an unregulated supplement? The answer is no, even though we’d anticipate it would be safe, without worrisome side effects as seen with considerably higher doses of lithium carbonate used for BD. Yes, it’s tempting, with the body of evidence presented here that exceeds supplements in common use, but we need a clinical trial to prove that the new study translates to a human benefit. If lithium orotate does work, we don’t know the right or optimal dose. Even 10 mg would be a huge dropdown from the usual dose for lithium carbonate, which for BD in adults is between 600 to 1,800 mg/day. The amount of elemental lithium in lithium orotate is approximately 1/5th of lithium carbonate. [Eric Topol]

Monday Night Links

• Let’s suppose that the Gospels really are a historical account of real people and events, and not some later invention. Well the Gospels are full of named individuals, so we should expect the statistical distribution of their names to match that of the society from which they were taken. Sure enough, the fit is very good: if you go and tabulate the names found in first century Judaean ossuaries, the most popular ones by far are Simon and Joseph, and there are 8 distinct Simons and 6 different Josephs mentioned in the New Testament. The most popular female name at the time was Miriam (Mary). None of this is something that somebody making up a story centuries later would have known, and once again we find that the various apocryphal and gnostic gospels are full of weird names and names that were popular in other times and places. Because you see, the thing about names is they wax and wane in popularity very fast! The most popular names in first century Judaea were not the most popular names in third century Judaea. They weren’t even the most popular names in first century Alexandria! Most of the wealthy and assimilated Jews of the later Roman Empire, the ones that somebody trying to fake the Gospels would have known, were Alexandrine. But the name distribution in the New Testament fits the name rankings of cosmopolitan Alexandria very poorly (common Jewish names in Alexandria included Sabbatius and Dositheus), and that of backward and isolated Palestine very well. You can push the onomastics angle even further. Imagine that you have ten friends named Simon and one friend named Thaddeus. When you’re writing to somebody about Thaddeus, you might just call him Thaddeus, and when you’re writing about one of the Simons, you’d include extra information to disambiguate him. Every bit of the Gospels, down to the random side conversations, fits this principle perfectly. [Mr. and Mrs. Psmith’s Bookshelf] 
• The first pattern that you notice is that popular baby names change over time just like all fashion. What seems to happen is that certain sounds or phonemes become popular and that drives name choices with those sounds. For example, Ava, Emma, and Anna all seem to trend together in part because they share similar sounds. But if any name becomes too popular, it stops being used as much. This leads to shifts in popularity over time. [Explorations in Personality]  
• After that first visit I read the Essay on Development and found, as he did, that “to be deep in history is to cease to be Protestant.” In a gap year I read the Grammar. Back at Oxford, I made the Littlemore pilgrimage each feast day. I drifted from my D.Phil. topic in history into theology. On an Easter retreat at Littlemore, I wrote an essay about my conversion in the library. Then doors opened. [The Lamp]
• The most significant development is that the “scaling law” appears to be breaking down – more compute is no longer delivering proportionately meaningful gains in model performance. Indeed, it is even possible future models start to get worse on account of AI “pollution” of the training data set (discussed more below). Moreover, evidence is also emerging that LLMs have fundamental limitations in their capacity to reason, and in contrast to early speculative optimism, it appears they do not in fact have internal models of the world and are instead simply sophisticated imitation engines. Unreliable output, or “hallucinations”, are proving persistent, and may in fact be an incurable feature of LLM architectures, rather than merely temporary nuisances. To the extent this proves to be the case, LLMs may be a dead end and genuine breakthroughs in AI/AGI may require us to go “back to the drawing board” with RL and/or entirely new and more targeted architectures, potentially a tougher grind and setting us back decades relative to prior expectations. [Lyall Taylor]
• Management was recently authorized to increase Aztec’s buyback program to accommodate additional privately negotiated block purchases. This brings the total dollar amount of authorized buybacks to $8,750,000. Aztec will have repurchased a total of approximately $7,800,000 in shares since December 2024. Subsequent buybacks will be considered on a case-by-case basis. [Aztec Land & Cattle Co., Ltd.]
• BlackRock-owned Global Infrastructure Partners is in advanced talks to buy utility group AES people familiar with the matter said on Wednesday, a deal that could be one of the largest ever involving a U.S.-listed power company. [Reuters]
• [H]e was unhappy that, in two places in the piece, an editor had changed the word “but” to “however.” He made his case for a page and a half, and concluded, “But is a hell of a good word and we shouldn’t high hat it. . . . In three letters it says a little of however, and also be that as it may, and also here’s something you weren’t expecting and a number of other phrases along that line.” [The New Yorker]
• The other night, struggling to sleep, I was visited by a fantasy: The 2028 presidential election is coming to its conclusion and the candidates are Republican Sen. John Thune of South Dakota and Democratic Gov. Josh Shapiro of Pennsylvania. President Trump has quietly—I told you this is a fantasy—announced his intention to retire to the golf course. JD Vance, driven out of the campaign by disastrous polling, will caddy for him. [WSJ]
• Kennedy got into the habit, according to a person familiar with the matter, when he was living in Bedford, N.Y., an area sometimes described as the epicenter of Lyme disease. He liked to start the day by taking his dogs or hawks (Kennedy is an avid falconer) for a hunt or a hike, then hit the gym afterward. Wary of ticks, he wore jeans for his outdoor adventures and then just kept them on for his workout. [WSJ]

Tuesday Night Links

• Even free storage isn't helpful if the cost of energy from the solar arrays is more than natural gas. Lazard's yearly report is the industry benchmark for solar's cost per megawatt-hour. The 2025 edition pegs the best-case US cost at $38/megawatt-hour, equivalent to more than $11/MCF of natural gas. The trading hub price for natural gas has been $3-$4/MCF in 2025 (and many years before that), exposing a significant problem for our thesis. A closer look reveals the issue. The operating cost of a solar farm is very low at $4/megawatt-hour, but the capital cost comes in at $1150/kilowatt in the US, contributing $34/megawatt-hour. Commodity solar panels cost $80/kilowatt globally and $200-$250/kilowatt in the US, meaning there is a lot of waste (and opportunity) in today's solar farm capital cost. The first slash at these costs comes from co-locating the solar array with the storage system. More than $300/kilowatt of cost comes from preparing electricity for export or connecting to the grid. These items include inverters, medium-voltage transformers, switchgear, substations, high-voltage transformers, power lines to the grid, and all the project management overhead to build these systems. [Austin Vernon] 
• The world has arguably been energy-constrained for fifty years, with most economic growth coming in regions with significant coal reserves. Oil has been expensive and a brake on growth. The oil and gas industry has only grown its reserves with high prices. It cannot maintain price stability like in the pre-1973 era. Advancements like shale gas have so far been regional phenomena rather than global forces due to high transportation costs for LNG. The tyranny of oil supply could ease as the manufacturing capacity for solar PV approaches 1 TW/year, with no real constraints to further supply. Deployments at that scale will quickly saturate electric grids and stall solar growth without the development of complementary technologies. The age of solar PV is still young, and it could power humanity’s next leap in living standards. [Austin Vernon] 
• Scale is helpful for most businesses, but refining might be one of the most extreme examples. A typical rule of thumb in chemical engineering is that capital costs increase sublinearly with capacity, usually by (capacity ratio)^0.6. A plant with double the output is only 50% more expensive to build, and operating costs tend to follow similar trends. The reason behind this is that chemical plants and refineries are agglomerations of steel vessels and pipes. Vessel and pipe volume increases faster than surface area as size increases, decreasing steel and fabrication costs per unit of volume. Many items, like controls or operators, cost the same for a large component as they do for a small one. Rapidly expanding refining capacity means crashing costs. [Austin Vernon]
• Conservative intellectuals on Twitter and Substack are constantly sketching out their ideal society: a high-trust community rooted in family (fertility rates are high), self-sufficiency, and continuity with the past. They dream of a life lived closer to the land, with a strong sense of personal responsibility. By almost any of their metrics, the Faroe Islands is the most successful conservative nation on earth. And yet, it is also a profoundly liberal place. It’s cosmopolitan and highly educated. There is a massive social safety net and great equality, a deep belief in the collective over the individual, and a culture where economic aspiration doesn’t dominate life. It is, in many ways, the idyllic left-wing society. The Faroe Islands seems to have achieved the goals of both political tribes simultaneously, without any of the ideological warfare. [Daniel Frank] 
• The Hunt brothers, Herbert and Bunker, had a solid thesis for investing in silver.  Broad trends unfolding over 1960s and 1970s pointed to a high probability of an extreme supply and demand imbalance in silver, which would result in higher prices. Most of the world’s silver is not produced at dedicated silver mines but as a byproduct of mining copper, lead, or zinc mining.  Lower cost surface mines were depleted and had to be replaced with underground deposits that were more expensive to mine.  The sale of US government silver holdings that had been accumulated since 1934 was a temporary source of supply that would eventually be exhausted.  Silver supply could theoretically come from reclamation – melting down coins, silverware, or jewelry – but this would require a high enough price to garner attention of the numerous and disparate holders (one source of illegible silver supply was distributed across India and had to be smuggled out of the country to Dubai before it could enter global markets). [The Magic Bakery]

Friday Night Links

• It’s interesting to think about the risk and return characteristics of leveraged relative-value trades compared to long-only trades, like owning an unleveraged portfolio of fifteen individual equities. With the stock portfolio, it’s difficult to estimate its expected return, but less difficult to forecast its volatility. Sure, a portfolio of equities exhibits a fat-tailed return distribution, but the big outlier events are not as large as the outcomes we have seen with relative-value trades. And of course, a long-only unleveraged portfolio has a well-defined maximum downside—the portfolio goes to zero. By contrast, with leveraged relative-value trades it’s relatively easy to estimate the expected gain, assuming you don’t get blown out of the trade due to mark-to-market losses, but more difficult to define, and assign a probability to, how bad things might get prior to convergence. That’s the trade-off you have: the more you can tie down the expected return as of some date, the less sure you can be as to value fluctuation over the time it takes to get to that date. [Victor Haghani]
• Imagine a gleaming new Federal Reserve bank on the shore in Miami and another in the Phoenix desert. This isn’t a fanciful dream but a real possibility. The Federal Reserve Board has the power under Section 2 of the Federal Reserve Act to change the existing regional bank structure and even create new districts. It’s one of the many reforms the Fed should consider. [WSJ]
• As more homes are put up for sale, owners are finding that demand isn’t there at the prices they expected. Of the 3.06 million properties listed at the start of this summer, only 28% sold, based on data from housing analytics firm Parcl Labs. That leaves 1.96 million homes left on the market going into the fall, a fifth higher than this time last year. Realistic sellers will cut the price. Others are either delisting their properties to wait for market conditions to improve, or becoming accidental landlords: 2.3% of the homes that were for sale this summer ultimately switched to rentals. The share is higher in certain Sunbelt cities where conversions to rentals topped 5%. [WSJ]
• Neoclassical economics was designed and promoted by landowners and their hired economists to divert attention from George's extremely popular insight that since land and resources are provided by nature, and their value is given by society, they - rather than labor or capital - should provide the tax base to fund government and its expenditures. [Mason Gaffney]
• Putting an “I bought this before I knew he was a Nazi” bumper sticker on your Tesla is middle class, indicating your deep concern with social respectability. The upper-middle thing is to put it on your Ford, a cleverly ironic gesture that simultaneously displays your historical knowledge and mocks middle class status anxiety. To be category X today, you’d have to put it on a Volkswagen. [Mr. and Mrs. Psmith’s Bookshelf]
• Not sure that anyone really needs to be thinking about common stock investments that Warren Buffett was making in 1950, seventy-five years ago, but here we are. On the other hand, it does say something that you could have a strategy of buying low quality companies at a big discounts to liquidation value in 1950 and have it still work three-quarters of a century later. You could bring Benjamin Graham and Jerome Newman (born in 1894 and 1897) back today and they could set right to work making a good return with basically nothing changed about their strategy. There is very little actively managed money involved in small bank investing right now, so you can buy small banks for under 1x tangible book value and around 7x earnings. (These are not even low quality businesses necessarily.) [CBS]
• The U.S. Food and Drug Administration (FDA) announced that it will mail materials to 300,000 retailers nationwide that sell vapes, including convenience stores, with a reminder of which products stores are legally allowed to sell. The materials include a list of the 39 vapes (Logic, NJOY, VUSE and JUUL products) and 20 ZYN nicotine pouch products that are authorized by the FDA and can be legally marketed in the United States. [Tobacco Insider]
• Alberta will submit by spring of 2026 an application for a new crude oil pipeline for fast-track approval by the federal government, the province said on Wednesday, even though no private company has said it will build the project. Canada's main oil-producing province said it will act as the formal proponent for the proposal, taking the lead on early planning and engineering work aimed at determining the route, size and cost of a pipeline. Alberta Premier Danielle Smith said her government has no intention of building or owning the pipeline, but expects one or more private sector proponents will come forward if a pipeline is successfully designated a project of national interest. [Reuters]