Matthew Lekushoff |

Once again, most global stock markets moved lower over the last two-week period, while gold and oil were slightly higher over the same time frame. With less than 10 trading days remaining this year, it's likely most markets will end 2018 in negative territory. The only major stock market with a reasonable chance of ending in the positive is the U.S., as it's currently trading slightly lower than its end-of-2017 level.

As mentioned in previous letters, Western Canadian Select (WCS) has been selling at heavily discounted prices relative to global energy levels. Although WCS usually trades at a small discount due to the additional processing it requires, these abnormally low prices have been caused by production levels that are exceeding the system's capacity to transport it to market.

In an attempt to reduce this glut, Alberta Premier Rachel Notley announced a mandatory production cut of 8.3% or 325,000 barrels per day for Alberta beginning January 1. Although controversial, the move has helped the price of WCS more than double its low of just a few weeks ago.

Given these recent measures, along with increased shipments by rail and a new pipeline to be open in a year's time, the future should be brighter for Canadian energy producers. And, if either the Trans Mountain or Keystone pipelines can be built, it could be considerably brighter!

On another note, this will be the last letter of 2018! We'll be taking a short break for the season, sharing the next letter on January 10. Wishing you all a very safe and happy holiday season, and all the best for 2019!


The Laws of Human Nature   by Robert Greene: Francis Bacon once said, "Some books are to be tasted, others to be swallowed, and some few to be chewed and digested." I've been chewing on The Laws of Nature for over a month.
The book uniquely encourages readers to accept the darker side of human nature. For example, the chapter on envy states that we all experience envy from time to time-----  even, and sometimes especially, toward those we are closest to. Although it's easy to believe others could resent a friend for winning the lottery or losing 30 pounds, naturally, we believe we'd never be susceptible to such pettiness! But in denying our uglier side, Greene believes we not only restrict our ability to know ourselves, but also to become the best versions of those selves.
The book also continues a technique Greene has used in previous books, which begins each chapter with a biography to represent a different law of human nature, helping readers better understand each law. It's worth the read just for the stories about historical figures like John D. Rockefeller, Queen Elizabeth I, Coco Channel, Joseph Stalin, and Anton Chekhov.
At over 600 pages, The Laws of Human Nature covers a lot of important ground, and I'd even go as far as saying it's a must-read for those interested in the study of human nature, yet, more chewing and digesting are needed.
If you'd like to learn more about the book, Greene's interview with Jordan Harbinger and Ryan Holiday are a good place to start.
Stephen Hawking on What Makes a Good Theory and the Quest for a Theory of Everything   by Brain Pickings:   A nice reminder from the late Stephen Hawking on how to formulate a solid theory.
1,000 Little Steps   by Seth Godin: A succinct description of how the world continues to, and has always evolved.
Conversations with Tyler# 49 - Michele Gelfand on Tight and Loose Cultures :   My interests have led me to explore why various cultures are the way they are. In this conversation, economist Tyler Cowen interviews cultural psychologist Michele Gelfand to discuss the differences between tight and loose cultures.
The World's Best and Worst Places for Ease of Doing Business by Visual Capitalist: It's noteworthy to observe the high, though not perfect, correlation between the ease of doing business in a country and its economic prosperity. Exceptions include countries like Saudi Arabia, which is ranked fairly low, but is wealthy on a GDP per capita basis. It's probably safe to say its wealth is mostly due to its abundant natural resources and, of course, its ability to manage and export it effectively. I also found it interesting that, although Canada is in the top quintile at #22, it's not closer to the top.


"The survival of our earliest ancestors depended on their ability to communicate with one another well before the invention of language. They evolved new and complex emotions-joy, shame, gratitude, jealousy, resentment, et cetera. The signs of these emotions could be read immediately on their faces, communicating their moods quickly and effectively." 
- Robert Greene, The Laws of Human Nature
"If you come across any special trait of meanness or stupidity . . . you must be careful not to let it annoy or distress you, but to look upon it merely as an addition to your knowledge-a new fact to be considered in studying the character of humanity. Your attitude towards it will be that of the mineralogist who stumbles upon a very characteristic specimen of a mineral." 
- Robert Greene, The Laws of Human Nature
"Any physical theory is always provisional, in the sense that it is only a hypothesis: you can never prove it. No matter how many times the results of experiments agree with some theory, you can never be sure that the next time the result will not contradict the theory. On the other hand, you can disprove a theory by finding even a single observation that disagrees with the predictions of the theory. As philosopher of science Karl Popper has emphasized, a good theory is characterized by the fact that it makes a number of predictions that could in principle be disproved or falsified by observation. Each time new experiments are observed to agree with the predictions the theory survives, and our confidence in it is increased; but if ever a new observation is found to disagree, we have to abandon or modify the theory." 
- Stephen Hawking

  • Aerodynamics in ActionAssuming no tricks are being used (the pedals strangely continue to move), it's a compelling illustration of wind resistance and the impact of aerodynamics in action. I'm especially impressed that he didn't wipe out.

Matthew Lekushoff

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