Thursday, August 25, 2022

Thursday Night Links

  • Long-dated call options are far too cheap. This is where I need to be pressing it and with far more capital on this pullback. These options give me cheap exposure to what’s about to happen. The skew is all wrong. When JPOW declares that The Pause is in effect, the market will positively explode to the upside and the IV will spike as the skew shifts. The next up-surge will make the last cycle’s trading in monkey JPEGs look tame—except this time I expect it will be an energy bubble. [Kuppy
  • If EIA is overstating exports, then the US implied oil demand is understated. If EIA is not overstating exports, then global oil demand is healthy. The end result is that demand is not as bad as you think. In our many years of analyzing and following EIA data, one fact has always remained true: storage is the only figure that's accurate. And storage is painting an obviously clear picture. Our conclusion is simple and straightforward. Global oil demand is not as strong as we had expected (below 2021), but they are nowhere near 2020. Either EIA is overstating product exports or it's not, and there's plenty of demand for US product exports. The result is the same and storage is reflecting reality. The market is starting to catch onto this irony, and for energy stocks and oil, we have bottomed and are going to trend higher going forward. [HFI Research]
  • Human nature: learn about NRF2, miss the forest for the trees (or something like that), and try to hack it. My advice would be to enjoy yourself trying new things, or different combinations. The goal should be to maintain or improve brain function and physical performance. And not get cancer. There are plenty of behaviors that could support those goals; you just don’t want to be the person who realizes too late that instead of aiming for the low-hanging fruit all along, you’ve brought a cup of water to a forest fire. [Bill Lagakos]
  • Yes I remember the famous salmon post of many years ago. My problem is I live on my boat and a marina where there is a fish store about 500 steps away. They get fish that comes in the day of or the day after it was caught from the local tribes. I can't justify passing it up. I do skip the King however unless I have a guest. And I told you about the fresh oysters at the oyster farm just a few miles down the road. First seafood is definitely one of the reasons I live here. It's been positive that the availability of oysters and other fresh seafood with high amounts of omega-3 fatty acids contributed to the significant culture of art for the BC coastal First Nations people. I'm just trying to follow in their footsteps. [Bill Lagakos]
  • I was at a dinner party recently with a prominent golf course architect, so I was planning a series of challenging questions for him about his design philosophy and his famously fraught relationship with his father and brother golf course architects. But then it turned out that the host seated him next to my wife, who doesn't know anything about golf course architecture other than that I like to talk about it. And it turned out that the famous golf course designer didn't want to talk about golf courses, he wanted to talk about his grandchildren, a topic upon which my wife's advice is far better than mine. [Sailer]
  • Another book that I read recently is Progress and Poverty by Henry George, which is also about land use. George basically deconstructs all of our accepted ideas about land ownership. He claims that they have no basis in nature, showing how traditional societies did not have a concept of single ownership of land (he uses Native American societies for his argument). He points out that there are no “legitimate” claims to land ownership; all land ownership has its origin in bloodshed, whether in the New World, where Europeans appropriated land that had traditionally been lived on and used by Indigenous peoples, or in the Old, where land ownership has always come from conquest and war. George’s philosophy is that man is entitled only to what he produces through his own labour, and since land (and the value of land) is not created by man, it cannot be the entitlement of anyone. Unlike Scott, George is mostly focused on land use in modern, urban environments. George shows how, in cities, since new land cannot be created, land values will increase as the wealth of the city grows. As a downstream consequence, rents will rise to eat up any increase in wealth produced by the labour of the people of that city. Land owners, while producing no wealth, will be able to appropriate the wealth produced by others due to their monopoly on land. This book is almost 200 years old, but this situation sounds familiar doesn’t it? [link]
  • The Internet is the biggest invention to impact the distribution of information in hundreds of years – since Gutenberg invented moveable type, which opened the gate to Protestantism and Copernicus. Now, Gutenberg 2.0 threatens to create similar bloodshed. Narrative dominance before the internet was easy for the regime. Radio and TV required state licensure, expensive equipment, and the skill to use them. Any player who went outside the guardrails of imperial sensibility could easily be shut down…or, more readily, ignored. Newspapers owned by oligarchs would counter-attack. As wealth consolidated, so did the grand narrative, the monoculture. [The American Mind]
  • Lamar is not super-cheap like our Canadian oil investments, but it is a high quality, niche real estate investment. (Our pipelines are also real estate investments, with impenetrable barriers to entry.) Most of the world's businesses are crappy. They have to advertise to remind people that they exist. It would not be too surprising if Cracker Barrel's percentage of sales spent on marketing is higher than its ultimate profit margin. Lamar is a beneficiary of that. [CBS]
  • I guess I could call it “diet” but I dislike that word’s association with an event (losing 5 pounds this month) versus a permanent change.  And “fuel” reminds me the correct place to place food in one’s life.  Just the stuff to fire the engine, but should be the right stuff – and right amount – to power whatever you use your engine for.  One advantage of a delivery service that drops off locally produced real food is that you can avoid even stepping foot in a grocery store, avoiding any temptation to buy any junk food.  Hudson Milk + Market helps me eat clean and support my local farmers.  Everything has a short list of ingredients.  I’ve been particularly enjoying their biltong on runs for convenient and delicious protein without added sugar. [Chris DeMuth]
  • I just started endocrine therapy (12.5 mg enclomiphene/day) to optimize my hormones for athletic performance as well as aging and longevity.  It will probably take two or three months to see how effective it is at putting on lean muscle mass, but a week into it I feel great with more energy and confidence in the gym and on the trails.  To measure its impact, I started by measuring everything I could – using an InBody machine to measure percent body fat and my basal metabolic rate with the hope that the first goes down and the second goes up over the next few months.  I’ll remeasure each month.  I also tested my cortisol as a proxy for stress (results still at the lab) and, of course, hormones. [Chris DeMuth]
  • Measuring is another lie detector.  Measure everything that you care about in fitness and life.  I do a monthly InBody scan to keep myself honest.  Is any of this making any difference in body composition?  Current results are in: percent body fat fell from 11 to 10% over the past month while I picked up 4 pounds of muscle mass, hitting 100 for the first time.  My basal metabolic rate is staying high and visceral fat level is staying low.  People talk about BMI a lot, but I have not found it to be nearly as helpful and relevant an indicator for my goals to be strong enough to lift the Dinnie Stones while fast enough to race up Ben Nevis.  It strikes me as crude relative to actually measuring muscle and fat. I don’t know how much to credit pharma for a bit of progress on muscle v. fat in August but one enclo study shows an average of a 5 lb lean muscle mass gain over 90 days on 25 mgs/day.  I’m 80% of the way there in terms of gains and still have half of the time to go. [Chris DeMuth
  • If you’re going to spend hundreds of thousands of dollars to build something, I suggest you take this step seriously. At a minimum you should read two books. The first is Get Your House Right: Architectural Elements to Use & Avoid by Marianne Cusato with illustrations by Richard Sammons and Leon Krier. It is a thoughtful book, illustrating in a “Use X — Avoid Y” fashion how to reason about appropriate features and patterns. It is the best of its kind that I’ve found. There’s a lot of detail in Get Your House Right, which can seem intimidating. Some of these details are less important, I think, than the proportions and the level of honesty that you put into your design. It is perfectly OK to build a grand house or a simple house, but a simple house should have simple features, and not exaggerated ones. When houses look bad, it is often because things are out of proportion or scale. Cusato’s book is a great introduction to thinking about this. I’ll come back to this concept of honesty later, because I think it is essential for getting things right in any budget. [Simon Sarris]
  • My theory is that Malaysian prime minister Najib put Jho Low in charge of looting a sovereign wealth fund, with the expectation that JL would make legitimate investments that would be politically helpful, give Najib and his wife kickbacks, and take a little for himself - but JL took far more than expected. In fact the fund borrowed multiples of its assets so he looted more than 100% of it. That may be a first. The biggest purchase was a $300 million yacht, followed by big ticket NY and CA real estate, but a lot of it was blown at nightclubs, gambling, and on jewelry and presents for women. When you see people making over the top purchases like these, you have to suspect that they are made with stolen money. The looting was pretty simple - there were no internal controls, so JL just wired the money where he wanted it to go. (See the Fraud Casebook from Q2 reviews.) The big four auditors and investment banks like Goldman did not ask many questions. (Theme from 2018 reviews - no one is looking out for you.) The whole thing was incredibly clumsy and low IQ. Najib could have steered the money towards investments of supporters in Malaysia and generated valuable favors for himself, probably perfectly legally. Jho Low could have done the same. However, they both exhibited total lack of future orientation. Najib's wife acquired "12,000 pieces of jewelry, 567 handbags, and 423 watches" so she is obviously some kind of bizarre hoarder and a liability that he should have cut loose. JL should have managed the fund legitimately - a big opportunity at such a young age. There is a description of a party at a nightclub in New York that sounds like something from Tom Wolfe, with JL being mentioned in the lyrics of a song called "Check My Steezo". (Life imitates Tom Wolfe.) I agree that in the eventual movie about this, Jaime Foxx should play himself. [CBS]

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