#218: Uncomfortable Truths

micksonmatch
January 24, 2025

I tend to be quite a direct person, which naturally has the potential to offend. I don’t wish to offend people, but naturally that is sometimes the result. I have given a presentation a number of times, where I speak about uncomfortable truths in trading and investments.

The ruler of the largest empire, Emperor Marcus Aurelius, had this to say:

If you can show me and prove to me that I am wrong in my thinking or in my actions, I will gladly change. I am only after the truth. Truth doesn’t harm anyone. Persistent self-delusion and ignorance do. – Marcus Aurelius, Meditations, 6.21

Maybe I am channelling Ray Dalio after my letter yesterday, who gained fame or notoriety for his principle of radical transparency. I love the idea, and I am sure if done in a safe space, it has tremendous potential for growth.

I will let you think about this over the weekend. Would you rather be told you are wrong so that you can try and fix your mistake, or would you rather live without that knowledge and continue believing what you believe?

S2N Spotlight

I have been involved in the AI space for quite a few years. Together with my team in 2006, we built a global macro machine learning model using neural networks. In those days it wasn’t called AI.

In 2018 I was a co-founder in a failed startup where we launched an AI university in Europe and an AI consulting business attached to the university.

With that background, I am staggered by the progress that has been made in this space in the last few years and the impact it will have on society and the economy. Let me start with the incredible technological progress, and let me add that every word of my newsletters is written and typed by me. Hence the chaotic flow of my mind streamed into these letters.

Most of you will have never heard of DeepSeek; don’t feel bad; I hadn’t heard of them until recently. It is a competitor to ChatGPT and Claude and one you should keep your eye on. A close friend of mine, a leading mathematician, shared with me how he asked it to solve a topological geometry problem that remains one of the most fundamental unsolved. It seems to be free at this stage, and it is friggin smart.

DeepSeek in a few seconds provided an approach to solving a highly nontrivial and specialised question in differential geometry/geometric topology at the intersection of contact geometry. Its approach to the problem only about 200 mathematicians in the world would understand. It came up with a quite novel angle to my friend’s decade-long attempt to solve the problem. While it didn’t solve it, its approach would be an important step towards solving it.

There is also a new trend in the AI space where AI agents are being used to deploy all this knowledge with action. For example, I could get ChatGPT to provide me with some code, then I would need to use that code and input it into a code interpreter and make lots of different joins along the way to build stuff with it. We are heading towards a world where the bots will do the work as well through their agents. Which begs the question: What will most people do for a living?

On Friday nights around the dinner table, we often have lively conversations with friends and family about worldly events. A few weeks ago my daughter and her cousin got stuck into the idea that capitalism is crap. It actually was a fascinating conversation, and we all learned something.

When I told them that the US is the most prosperous nation on earth, they laughed at me. My daughter said the healthcare is crap, and my cousin said, You can’t be serious. I think this chart says it all—mic drop!!!!

In today’s Wall Street Journal there was a fascinating argument I am contemplating sharing with the useful idiots (only joking). Its about how factions of the GOP are starting to endorse certain ideas shared by Marx. On the surface, the 19th-century philosopher and 21st-century conservatives seem to hold opposing worldviews.

While Marx marvels at the free market as the greatest engine of development the world has known, he argues that capitalism inevitably fails to guarantee a good life to hardworking people.

Capitalism is complicated; we will discuss it another time.

S2N Observations

Is Trump in Davos, or is he doing it all via teleconference? When does that man sleep? With all the attention on the elections, court cases, the inauguration, the Trump coin, and the bromance with X owner Elon Musk, you will forgive the Trumps for lagging behind with their Trump Media & Technology March IPO.

I think a new series of The Apprentice is in order, as the CEO is probably about to get fired.

Hat tip to Wolf Street for the theme of solar companies that have collapsed. With all the fanfare of clean energy, solar accounts for 5.5% of the total energy produced in the US. Here are a few companies that focus on this niche, suffering from a severe case of pump and dump.

SunPower got cremated the old-fashioned way. It sold its assets to Complete Solaria, which is suffering from similar sunburn. Looks like SunRun has run out of sun.

I actually have a lot more to say today. I think I am suffering from a severe case of verbal diarrhoea. Let’s discuss Ross Ulbricht next week. I am happy in case you were wondering.

S2N Screener Alerts

I would be remiss if I never mentioned the S&P 500 made another new all-time high. I don’t often show the volume on the chart but thought this was quite interesting.