Basis Risk, Google Finance, Business Mafias, YC as Harvard
It’s been a busy week. The latest posts:
In Basis Risk, Alpha Factories, and Being too Clever for your own Good, I take a look at the perks and perils of hedge funds that lever up to run lots of ostensibly-uncorrelated strategies. It usually works, but everyone knows why it works, so all these different trades end up moving in lockstep at just the wrong time. This has broader implications, too: if elites all go to the same schools, listen to the same podcasts, and pretend to read the same books, then the great Establishment Pair Trades can all unwind at once.
Everything Wrong With Google Finance (Is Everything Wrong With Google) is my critique of Google’s astonishingly poor finance product. Really, guys, you should be embarrassed about this—and I mean “should” both in the positive sense that it’s a logical consequence of offering such a half-baked service and in the normative sense that I believe Google can and ought to do better.
The Great European Dividend Futures Caper is a detailed look at the weirdly mispriced market in futures on European dividends. It’s not a shoot-the-lights-out trade, but it does look enticing. If you’re interested in financial theory, dividend futures are a fun asset class to look at, because they combine the traits of equities and zero-coupon, inflation-linked bonds.
I’ve started writing for Marker, a new publication from Medium. My first post: Where Do Business Mafias Come From? If you’ve ever wondered why Tiger Management and Paypal produced such successful alumni networks, wonder no longer: the answer involves bad luck and the neocortical volume of various primates. Duh.
And hot off the presses: Y Combinator, Not Lambda School, Is Unbundling Education. We all know education correlates with income, but there’s a good argument that this is due to the signaling value of degrees, not the skills you learn in class. Y Combinator found an accidental arbitrage, and built a better Harvard.
On Tuesday Oct. 29th I’m going to be hosting the first of six sessions of an online reading group about financial bubbles. Over the summer, I co-wrote an extended paper on applying René Girard’s mimetic theories to bubbles, and this course builds on that paper. We’ll be doing weekly meetings through Zoom, so you can join from anywhere. Course readings range from 1840s railway bubble fan-fiction to Bitcoin forum flamewars, with detours through the 1920s, the 60s conglomerate bubble, and more. The readings and discussions should be fun, and you’ll walk away after 6 weeks with a good understanding of different bubbles through history and a nuanced theoretical framework for understanding them.
There are 15 total spots available in the group, and we have a couple early bird discount spots for readers ($100 off). Use the discount link below to enroll.
If you can’t afford that but are still interested, there are limited scholarship spots available as well. Email firstname.lastname@example.org with details about your interest and financial situation.
A few weeks ago, my wife and I hosted the inaugural New York Progress Studies meetup. It was a lively discussion, featuring Alexey Guzey’s compelling argument that life sciences are not experiencing a Great Stagnation after all. Reply if you’re interested in attending the next one.
As of this issue, I’ve switched newsletter providers from Mailchimp to Substack. I signed up for Mailchimp in 2011, when it was the best free newsletter product available. It’s still good—about as good as it was then—but not quite right for what I’m doing. Meanwhile, Substack is cool, and easy to use.
I’ll always cherish my Mailchimp t-shirt, at least until it disintegrates.