MARKET WATCH

March has been another strong month for international stock markets with most rising two to three percentage points. However, the real excitement has been in commodities. Energy stocks have risen more than 8%, while metal stocks (copper and steel) are 14% higher. And higher still is gold. The yellow metal burst through $2,100USD a few weeks ago, then $2,200USD yesterday, which has driven gold stocks up an incredible 22% in March alone.

Why is this happening? A number of factors are at play. The news out of China, while not fantastic, has improved, which indicates an increased demand for energy and metals could be on the horizon. The financial press is also slowly becoming aware of how the copper market (required for numerous green initiatives like EVs) could be in a pinch a few years from now. This is something I learned about in my research last year - hence our position in metals.

As for gold, it is increasingly seen as a safe haven against spiraling government debt or declining currencies. The U.S. Fed has indicated it may cut interest rates sooner than expected, which is bullish for gold. Central banks continue to aggressively buy gold as a countermeasure to the U.S. dollar (China purchased 225 metric tons in 2023). International jewelry purchases are also rising. Sales of gold and jewelry products rose 24% in China year over year during the Lunar New Year period and, last week, a client in India provided anecdotal evidence of similar behaviour there.

Looking forward, I don’t expect international markets, especially the U.S., to continue this strong performance. However, it’s also possible that we are in the early stages of a commodity run, which would bode well for our portfolios.

As always, feel free to reach out if you have any questions, and if you’re looking for more timely information on the markets, you can find them on the research section of my website, or on my Twitter, Facebook, and LinkedIn feeds.

WINNING, EXCELLENCE, AND POWER

Aside from research, much of what I read, watch, and listen to is based on my interests at the time. I then add the titles to a document, which later evolves into this newsletter. By the time I begin working on it, I usually have a sense of what I've consumed and why. But sometimes - like this month - I’m surprised. I hadn’t appreciated how much Robert Caro’s, The Power Broker, has driven my interest in the themes pervading its covers. Those being dominance, excellence, and the acquisition of power.

To me these themes have one thing in common: They can’t be reasoned with. How do you tell Michael Jordan three trophies is enough, or Robert Caro that a book should only take a couple years to write, not a decade? Or how would you even begin to convince Alexander the Great or Rockefeller that dominating their competition wasn’t their birthright? You wouldn’t have a chance.

Although understanding the minds of the unapologetically extreme likely won’t enable me to change them, given how the world is tilting, it’s a topic I’d like to understand better.

BOOKS

Powers and Thrones: A New History of the Middle Ages by Dan Jones: Dan Jones is at the vanguard of the next generation of history writers. This readable history of the Middle Ages not only does a good job of representing the era and its various themes, it also illustrates how much our modern world has in common with it. For example, the arrival of barbarians in Roman territory was believed to be, at least in part, due to a change in climate. This forced them to migrate in search of arable land, thus landing on the doorstep of the Roman Empire.

The Bomber Mafia by Malcolm Gladwell: The Bomber Mafia is about the evolution of military bombing, particularly how it evolved during the bombing of Japan in the Second World War.

But it’s also about how science, philosophy, strategy, and war intersect. A group within the Air Force, who called themselves “The Bomber Mafia”, were convinced wars could be won by a revolutionary strategy of precision bombing, which destroyed vital infrastructure targets. (Up until that time, mass bombing was the common strategy.) Unfortunately, what worked on paper didn’t work nearly as well in the messy theatre of war. As a result, the Air Force returned to the more deadly approach of mass bombing.

Towards the end of the book, the atomic bombs that devastated Hiroshima and Nagasaki were covered. For most of us, these are the prominent events in regards to the bombing of Japan. However, the fire-bombings of Japanese cities, including Tokyo, which were built almost entirely of wood, suffered much higher mortality rates.

I think it’s a quirk of the human mind that enables the more shocking and unexpected events to eclipse ones that were much more deadly. 

The Soul of Money by Lynne Twist: I’d been looking forward to reading this book for a while. I was hoping it would provide fresh insights on money and its role in our lives. It opened with some interesting points on the conflation of monetary and life success, as well as a critique on how too many people confuse their net-worth with their self-worth. Unfortunately, the rest of the book felt (at least to me), like a tangle of stories making similar points. It’s a relatively short book that could benefit from more shortening.

ARTICLES

Airfoil by Bartosz Ciechanowski: I’m not going to pretend that I understand even a fraction of how airfoils work. However, this is way too good not to include in case any of you find engineering or air flow interesting. And here is an archive of other topics on the website.

Pattern Recognition: Opportunities and Limits by Michael Mauboussin and Dan Callahan: A few years ago, I read Daniel Kahneman’s book Thinking, Fast and Slow. One of the topics that caught my eye was the question of when intuition is reliable and when it isn’t. This research paper by Mauboussin and Callahan revisits the topic and, I believe, comes to a similar conclusion: in stable and reliable environments (like chess where you’ll always start with 32 pieces and 64 squares), with enough experience, intuition can be reliable. However, in realms where the environment isn’t stable (like investing where unexpected recessions, wars, and apparently even pandemics can arise without warning), intuition and experience is much less reliable. The following passage from the paper explains further:

“Acknowledging when pattern recognition is reliable is the first step in trusting its usefulness. Individuals can cultivate pattern recognition in systems that are stable, provide reliable cues, and lend themselves to accurate feedback. Pattern recognition can be alluring but misleading in systems without those traits.”

Introducing the Next Generation of Claude: Anthropic recently released a significant upgrade to its AI chatbot, Claude. It and Perplexity.ai are my current go-tos.

How to Win Attention by Tyler Cho: My friend Tyler Cho spent more than 100 hours reading some of the most important books on marketing and advertising. This short post outlines his seven takeaways.

A DOCUMENTARY, A CONVERSATION, AND A BUNCH OF PODCASTS

Turn Every Page: Tanya and I loved this documentary. It explores the lives of, and working relationship between, two men who were arguably the best their generation had to offer at their crafts. Biographer Robert A. Caro and editor Robert Gottlieb. The lengths each went to ensure their work was of the highest standard was incredible. There is something about glimpsing into the creative process of obsessive genius that I find captivating. If you enjoy biographies or the written word, Turn Every Page is well worth your time!

Josh Waitzkin, Adam Robinson and Dr. Leah Lagos in Conversation: Great conversation on learning, excellence, and personal growth.

Founders #342: The Lessons of History (Will and Ariel Durant): The Lessons of History by Will and Ariel Durant is a 100-page summary of their 13-volume series on The Story of Civilization. In this episode, David Senra riffs on his biggest takeaways from the book… albeit from a business owner’s point of view.

Founders #232: Alexander the Great: Alexander believed it was his destiny and right to conquer the world. He applied his super-human work ethic, self-belief, and discipline to achieve that goal.

Founders #341: Cornelius Vanderbilt (Tycoon’s War): When Cornelius Vanderbilt’s business assets were seized in Nicaragua, he didn’t use the law to get them back. He put a hit on the man responsible for it. This illustrates the tenacity in which he went about his business.

Founders #307: The World’s Great Family Dynasties: Rockefeller, Rothschild, Morgan, & Toyoda: A look at four of the world’s more successful family dynasties. Although they had a lot in common (each had a single founder, overcoming adversity, had long-term visions, and successfully transferred wealth from generation to generation), there were also many differences. The Rothchilds, for example, kept business control exclusively within their bloodlines, while the Toyoda family often invited son-in-laws to become full members of their company’s leadership - to the point of having them change their last names to Toyoda.

Founders #340: Kobe Bryant and Michael Jordan: Based on two of Tim Grover’s (trainer to both Kobe and MJ) books, this podcast is an exploration of two of the most extreme athletes to ever engage in a sport. Regardless of what they achieved, it was never enough!

SELECTED INSIGHTS

“I believe the way toward mastery of any endeavor is to work toward simplicity; replace complex technology with knowledge. The more you know, the less you need. From my feeble attempts at simplifying my own life I’ve learned enough to know that should we have to, or choose to, live more simply, it won’t be an impoverished life but one richer in all the ways that really matter.”

— Yvon Chouinard

“There are a lot of areas where people who have experience think they’re experts. But the difference is that experts have predictive models, and people who have experience have models that aren’t necessarily predictive.”                               

— Social psychologist Gregory Northcraft, as quoted in "Pattern Recognition"

“In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention.” 

— Herbert Simon

"Nothing is clearer in history than the adoption by successful rebels of the methods they were accustomed to condemn in the forces they deposed."         

— Will and Ariel Durant