Longreads + Open Thread

Midwits, News, Tracking, Gold, Futures; Goldman, pro and con


And also: I was on Will Jarvis' podcast, talking about bubbles, efficient markets, reflexivity, and more.


Open Thread

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Last week's post asked about which companies benefit from network effects in multiple, non-overlapping networks. From Philo:

Maybe not quite the answer you're looking for, but media companies traditionally consist of a lot of non-overlapping network effects businesses, eg if you owned 50 local newspapers, you had 50 separate local networks of advertisers and consumers. The same would be true if you owned a portfolio of magazines or trade journals or cable networks and so on.

This is indeed not the answer I was looking for, but it's a very interesting one! Maybe there's some transferable talent in managing non-scalable network effects, leading to conglomerates that are in "media" broadly and don't get a lot of direct synergies between their various holdings. Capital Cities was a great example of this, with TV and radio stations, local newspapers, trade magazines, and cable—all of which have network effects, but which largely don't interact.

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  1. A partial exception is any system where you're looking at deliberate interactions between two forces that push in opposite directions. In that case, you can have two powerful forces that push in opposite directions and cancel out, and then a bunch of smaller ones that collectively make more of a difference specifically because they don't cancel. Political coalitions look like this sometimes; Joe Manchin is so influential because the main parties' votes roughly cancel each other out, for example. This also applies to diet: if your weight is stable for a long period and you decide to start drinking a can of coke every day at lunch without changing any other aspect of your behavior, that ~6% of daily calorie intake can explain ~100% of your ensuing weight change. And the meta-footnote here is that yes, I know I'm undercomplicating things, but these are exactly the kinds of domains where there is in fact a lot of complexity, and where a decent working model is to assume an equilibrium first and then focus on what disturbs it. Which raises the further fun point that explaining changes can usually be simplistic, while explaining equilibria is complicated.

  2. "Writers have an agenda in mind when they start writing" applies to this newsletter as well, of course, though we do our best to mitigate it. The best hedges against this are 1) to deliberately increase the surface area of raw information—economic datapoints, company financials—relative to summary writeups and pitches, and 2) to try to start with questions ("Why is X happening?") rather than conclusions ("X is happening, and that's terrible/awesome"). Of course, that's not a cure for biases, but it helps.