Thursday Night Links

• That has to be the beginning of any discussion of vaccine mandates, travel restrictions, or whatever – the vaccines in their current form never worked properly, don’t work at all any more, and what’s more, it should have been obvious to everyone involved in their creation that they wouldn’t work . There’s no point in getting bogged down on the ethical and moral dimensions of mandating vaccination when the vaccine in question doesn’t actually work to begin with! [The Antisocial Darwinist]
  
• The waiting room at St. Lambert Lock in Montreal looks out at a quarter-mile of chain-link fence, six security camera towers, a blaze-orange derrick and a guardhouse. There, three armed men stare at a 750-foot stretch of placid, blue-green water waiting to lift 33,000-ton freighters up along the St. Lawrence Seaway. The lock is part of the oldest and most traveled inland waterway in America — a 2,300-mile corridor that connects the Atlantic Ocean with all five Great Lakes and the Mississippi River. Since deep draft navigation opened on the St. Lawrence in 1959, more than two and a half billion tons of cargo, worth around $375 billion, have traversed the seaway. [NY Times]
  
• Then there’s Gordon Johnson. He worked at large investment banks before starting GLJ Research, where he covers 20 stocks. He’s bullish on uranium stocks and bearish on cannabis, but all anyone wants to talk about, he says, is his $67 price target on Tesla. “I’ve gotten death threats,” he says. “Now I don’t even answer the phone when I have unknown calls.” In Johnson’s view, there’s no reason to assume Tesla will do well in adjacent businesses. “You could take McDonald’s and say they’re going to start selling Nikes and chairs and pianos and add those valuations,” he says. In cars, he calculates that the stock price implies a production ramp-up that no car maker could achieve. “Selling cars is not selling iPhones or shirts,” he says. [Barron's]
• You know, Ronald Reagan used to quote a Scottish philosopher, who predicted that democracies and civilizations wouldn’t last much longer than a couple hundred years. And John Adams wrote this, “Remember, democracy never lasts long; it soon wastes, exhausts and murders itself. There never was a democracy yet that did not commit suicide.” That’s John Adams. [Willard Romney]
• Mainstream “super food” scams: Kale, spinach, soy, fake meat, fake milk (soy milk, oat milk, almond milk etc., quinoa veganism... The REAL superfoods: Home made sauerkraut, raw unpasteurized milk, yogurt, butter and kefir, meat stock, bone broth, bone marrow, organ meats. [link]
• The nicotine stream from an e-cigarette becomes like the internet itself: constant, unbreakable and yearning for their attention. “I was like, ‘I am just consuming way too much nicotine,’” said Ms. Yara, who found herself inhaling more than one Juul pod a day, the equivalent nicotine of a pack of cigarettes. “I hated how if I couldn’t find a vape for a second, I could not do schoolwork.” Ms. Yara returned to cigarettes as a means of decreasing her vape use. So did Emile Osborne, a 22-year-old graphic designer. “I switched back to cigarettes because I thought it would be healthier than Juuling,” he said. “Cigarettes seem like a known evil, whereas vaping you don’t know the side effects at all. I can go out for a cig a few times a day. It’s a break from what I’m doing. That’s my nicotine fix for the day.” [NY Times]
  
• Local real estate prices have served as a consistent and powerful predictor of bank stock prices in the US for the last 20 years. While many investors write banks off as difficult to analyze, this simple concept of using local real estate prices to explain the variation in individual bank stock prices can serve as a critical input in an investor’s bank stock selection. This is not the only relationship I’ve found in bank stocks, but it is one of the most impactful. Because they are heavily regulated, banks are forced to provide the public with additional transparency beyond that which is required of other industries. This results in more granular data relative to what is found in many other industries, making banks well-suited to implementing an industry-specific, data-driven investment strategy. [Verdad Cap]
• In the past, I've worked as a software engineer, hacker, sailor, captain, and shipwright. I used to travel a lot; I've hopped freight trains across the US from coast-to-coast a bunch of times, have gotten some really great and some really terrible rides hitchhiking all across America, and have sailed a few near-derelict sailboats as far as I could take them. I currently live in California. I like computer security and software development, particularly in the areas of secure protocols, cryptography, privacy, and anonymity. But I also secretly hate technology. I like sailing, have a Master's mariner license, and used to do yacht deliveries world-wide. I'm interested in sailing without engines, and draw great inspiration from the likes of Moitessier, as well as the entire 1968 Golden Globe crew. I've spent enough time on the water to love the ocean, but also to be constantly terrified of it. [Moxie]
• In suggesting that bitcoin should be labelled a game rather than an investment, I don’t mean to belittle it. Financial games provide value. A casino employs not only croupiers but also managers, marketers, cooks, cleaning staff, programmers, security guards, and more. These jobs help the economy. People fly to Vegas for a reason. In moderation, financial games are fun, sort of like how going to a horror movie provides thrills. Likewise, bitcoin’s price contortions can be entertaining. Combine this with the constant soap opera generated by the personalities involved in the space, and you’ve got a form of recreation that competes head on with Netflix, League of Legends, or the NFL. Bitcoin and its many ancillary services—exchanges, payments processors, and wallet providers—create jobs for programmers, marketers, lawyers, and economists. If financial games were illegal, then the provision of lotteries, poker, and other forms of betting would shift to the underground economy. Not only would the quality of the product decline, but violence could rise as criminal organizations fight to control their gaming turf. Bringing these activities into the light—in bitcoin’s case by implementing an open and transparent online version—makes society safer. And of course, there are times when bitcoin serves as more than just a financial game. In 2011, for instance, Wikileaks relied on bitcoin to maintain its connection to donors after being cut off from the banking system. This payments function was why bitcoin was originally created, but it has taken a distant back-seat to the technology’s dominant role as a decentralized financial game. Indeed, what makes bitcoin such a thrilling game—its rollercoaster peaks and troughs—is the very feature that militates against its usage as a medium of exchange. People don’t want volatile money, they want stable money. This gets me back to Brian Armstrong’s admonition to Coinbase’s customers to invest responsibly. His warning label just doesn’t cut it. No one invests in a zero-sum game, they play it. A casino owner daring to suggest that playing roulette is akin to investing would be justifiably pilloried for engaging in purposeful deception or, at best, sloppy word usage. Same with a lottery operator who advertises Powerball tickets as an investment. Likewise, people buying bitcoins should not be encouraged to believe that they are engaging in the age-old art of investment appraisal. They are playing a zero-sum game. The word “investment” should be reserved for the act of allocating capital to win-win games like shares in private businesses, publicly traded stocks, and bonds. [jpkoning]
• What I want to know is, if in the 21st century, where in the 17 seconds spanned by when the clip starts to when the officer yells to his colleagues “go, go, go!” with the man pulled from the wreck just before the train arrives, if there isn’t some way, with all of the wonder-high-tech industry in California, that the train could be signaled to stop short? There is a Web site run by Kalmbach, the publisher of Trains Magazine, where railroad employees and train enthusiasts alike register to post blog comments to call people who risk being struck by a train, “idiots”, “morons” and “Darwin award recipients” because as anyone who knows anything about trains knows, “The train cannot and will not stop.” I know that too, but isn’t it a form of social-technological barbarism to have a steel Juggernaut as a mode of transportation? [Sailer]
• It has been interesting over the last month to watch the curious saga of Scott Adams on Twitter. He has gone from being a bog standard normie to very nearly crossing the bridge to covid enlightenment, only to draw back from the brink and instead go full on Branch Covidian. Of course, to save face for how he and others have been so wrong so often while a bunch of anonymous right wingers on social media have been right, Scott has taken to portraying himself as merely “doubting the doubters,” casting their correct predictions as mere luck, a case of the crowd occasionally getting something right entirely by accident. Underlying all of this is Scott’s abiding faith in “experts,” and his corresponding incredulousness that non-experts, social media anons and the like, could have been right when the experts were wrong. It must be a fluke. Those who don’t think so are just engaging in confirmation bias, just”coping” (with what, being right when the experts were wrong?). Surely their rightness isn’t because they had access to better information or had better instincts than the experts, that’s impossible! All of this is even more ironic because Scott’s whole brand as expressed in his books and in his Dilbert comic strip is that those in positions of authority rarely know what is going on and the little guy drones in the trenches are the ones who really make things work. What this unmasks, I suspect, is ultimately that he is a product of his generation and cannot escape its assumptions, even when he tries to. The intellectual underpinnings for Boomers were formed when most of America’s institutions still actually worked as advertised. Their generation is used to assuming that things like government agencies and large corporations fundamentally operate for the good of those who they supposedly serve. This creates a normalcy bias that leads to undue trust being granted to them. Boomers have a great deal of difficulty coming to grips with the increasing institutional decay and dysfunctionality that characterises modern America. [Vox Day]
• Many cite the Diamond Princess as instrumental in convincing them that SARS-2 was never a big deal, before lockdowns were even proposed. That natural laboratory is probably one reason why the narrative shifted so quickly from apocalyptic fatality rates to overwhelmed hospitals as March approached. Many realised something was wrong when the Spring 2020 wave failed to bring the promised disaster (or, in many places, even very many infections); or when Summer 2020 was used to consolidate and extend the containment regime, even though almost nobody was sick. The Floyd riots were a huge moment for Americans; the duplicitous public health messaging on behalf of the rioters did untold damage to the credibility of lockdowns in the United States, to an extent even I hadn’t realised. The absurdity and internal contradictions of many containment measures alienated a lot of people. One reader writes that it was Fauci’s double-masking campaign in Fall 2020 that pushed him over the edge. A final decisive moment was of course the vaccines. [eugyppius]
  
• The serial asset bubbles instigated by the Federal Reserve (and front-run by Fed Board Governors and Congress members alike) has transformed the national character. The reigning zeitgeist from Silicon Valley to r/wsb is a mad, speculative dash to make enough money now that the country's problems won't apply to you come the 4th Turning. Arguably, if anything, Boomers' selfishness has insured the widely hailed, if slow to arrive, 4th Turning's inevitability. My fear is that the Boomers, like the Victorians, won't actually be around to experience that which they have wrought. [CBS]
• The scarcity of cash results in lots and lots of political conflict over the value of money, which is part of a broader political conflict between creditors and debtors. Creditors need to be careful about thinking they have debtors cornered. Debtors outnumber creditors, so the rules can be changed. Drawing out the foreclosure process buys debtors time for reflation to rescue their claims. Another rule change is devaluation, which first was by going off the gold standard and then was through money printing. The post-2009 restructuring (no public auctions, quantitative easing) seemed to be designed to make sure that only the elites could get the benefit of the reflation. They weren't going to allow more Beals. [CBS]
• CNRL puts an awesome metric in their investor presentations: "proved plus probable reserves before royalties (BOE) per common share". For 2020 year-end, it was 13.5 BOE, up from 8.3 BOE at the end of 2016. (This number can actually grow over times if accretive share repurchases and rising oil prices outpace depletion of the resource). So for $43.50 per share you are getting 13.5 BOE of 2P resource! Note that the BOE metric of course includes natural gas at a 6:1 BTU ratio with oil. If you look strictly at 1P (proved) crude oil reserves, it is an enterprise value of $6 per barrel, and that is ignoring natural gas as well as probable reserves. Remember what it is that we like about royalty trusts and long reserve life, slow decline Canadian oil companies. They both avoid the principal-agent problem that afflicts other types of oil and gas producers with small amounts of reserves that need to be replaced often in order for managements to keep their jobs. Those companies have a poor track record of creating long term value for shareholders because management's incentives are bad. They need to buy assets to keep their companies from liquidating (and losing their jobs), but they only have the money to buy assets at the top of the cycle when properties are expensive. The companies that fracked for shale over the past decade managed to transfer almost all of their investors capital (both equity and debt!) to sellers of land and service providers. [CBS]