Postcard 3: Leverage
Welcome to the third edition of the weekly postcard. I hope you've had a great week. I'm in the midst of the third real-estate deal that I've done in my life, and I've been thinking a lot about leverage.
High leverage activities I've experienced first hand over the last ten years:
Creating: writing blogs, book, talks.
Writing code, building technology products.
Deploying capital, leverage through equity or debt.
Building teams.
The first three are unique to human beings; the last one animals probably do just as well or even better than us. Of course, that's not an exhaustive list of high-leverage activities by any means.
Ten years in, and I've got experience with all four of the above, yet I wouldn't say I'm great at any of them. The next ten years are all about getting great at all four, and I appreciate you joining me on the journey.
I've got a few great articles and tweets I've come across this week.
The top 4 tweets:
1/
Get a cup of coffee.
In this thread, I'll walk you through the basics of leverage -- in our personal lives and in the companies we invest in. pic.twitter.com/9MilmwE9f7— 10-K Diver (@10kdiver) April 10, 2021
Chamath says this is one of the best finance accounts on Twitter, and I agree. They go over the dangers of leverage in finance. Something I think a lot about as I invest more in real estate. That tweet thread is a great primer if you're not familiar with debt as leverage.
Peter Thiel spoke for 90 minutes this week about China
- Bitcoin as a Chinese weapon
- Google giving AI tech to China
- China invading & taking over Taiwan
Here's a 2 minute summary of what he said to save you time: pic.twitter.com/4M8cG3uWhp— Rohun (@RohunJauhar) April 9, 2021
Peter Thiel spent 90 minutes speaking about China this week. Rohun does a great job summarizing his speech, and there are some great nuggets of information on there about the future.
GDP statistics evolved during the Industrial Age and do not seem to be keeping up with the digital age. Thanks to productivity, real GDP growth probably is higher and inflation lower than reported, suggesting that the quality of earnings has increased significantly. https://t.co/7V4dNo3vBL
— Cathie Wood (@CathieDWood) April 6, 2021
Cathy Wood, who runs Ark Invest, has emerged as a favorite among retail investors. She knows her stuff, having proven it by ingesting early in some of the best companies of today, and in this tweet thread, she says GDP is no longer a viable measurement of economic activity. It's a fascinating thread, and I believe she is right.
I've read all of Jeff Bezos's 23 years of Amazon shareholder letters twice now.
It's an MBA of its own.
Here's what I learned about startups, entrepreneurship, investing and more:— Sumit Grrg (@sumitgrrg) April 11, 2021
Amazon's shareholder letters are amazing; if you haven't read one before, I highly recommend you do that. In lieu of that, Sumit has read every single one twice and summarized for us all of the best ideas Jeff Bezos has bestowed upon us over the last 23 years. Great thread of tweets.
Top 3 Articles
“Buy and Hold” No More: The Resurgence of Active Trading by Anish Acharya and Matthieu Hafemeister
Passive investing into an index or mutual funds is no longer the default. New cultural phenomena coupled with new tools and community give retail investors similar capabilities that only hedge funds used to enjoy. A slew of startups is creating a whole set of new retail investors' capabilities, including developer-first trading platforms.
Personally, I think this can only mean one thing, more volatility. Volatility isn't always bad, of course; as I learned in my years as a financial software engineer, volatility is where you can make the big bucks.
Don't hire for top talent; Hire for weakness by Benji Weber
An interesting thought experiment to flip the mindset of the way we hire.
How a Carnivorous Mushroom Poisons Its Prey by Jennifer Frazer
My mother loves to pickle all sorts of vegetables for us; her most recent and best batch of pickled vegetables are cauliflower. They taste out of this world. However, I recently asked her if she could try oyster mushrooms, I know they taste amazing pickled, and she said no because they could poison us if not prepared properly.
Then this week, I stumbled into this fascinating read about how oyster mushrooms are carnivores that poison and eat worms. The mechanisms in which they do it are fascinating too. Needless to say, after reading this, I won't be pickling any oyster mushrooms.
My Most Recent Article
My most recent article this week, titled "Love Boredom, Love the Grind", dives into the big reason for a lot of our failures, boredom. It's easy to be excited about something for a little while; it's a lot harder to stay excited about it long-term. I dive into it and would love to have you read it and hear your feedback.
Thank you again. Don't forget to reach out if you want to discuss any of these articles, ideas, or any of my other writings. My inbox is open; feel free to reply.
Sincerely,
Louie