Juggling Dynamite

Taleb is a character, to be sure, and he offers many cogent insights in this segment. I especially resonate with the idea that, unlike sales skills, expertise comes from first-hand risk work: seeing what goes wrong and cleaning up mistakes and messes; then designing systems and approaches to minimize the impact of bad outcomes.

The term antifragile was popularized in Taleb’s book of the same name to refer to how systems can be strengthened during extreme disruptions, citing examples from mathematics and science.

In a wide-ranging interview, Taleb admits that he made a mistake when he first studied Bitcoin — failing to appreciate the fact that the cryptocurrency is ultimately fragile because it’s dependent on miners staying operational, whereas gold will always be gold even a thousand years from now.

And when it comes to tech and the recent turmoil around Silicon Valley Bank, Taleb says venture capital exhibits “Ponzi-like” characteristics. In his view, many high-profile VCs “feel that society owes them something because we use an iPhone. They feel that if we use an iPhone, we owe them something and should bail them out if needed.” Here is a direct audio link.

Some seniors across Ontario are at risk of losing their homes in an elaborate scam that involves door-to-door equipment rental contracts, low-quality renovations and unaffordable high-interest mortgages. Marketplace speaks to people who feel they’ve been scammed, some on the brink of losing their homes and someone who already has. Here is a direct video link.

Komal Sri Kumar, Sri-Kumar Global Strategies president, on Loretta Mester’s recent comments on the federal funds rate, what the yield curve tells investors, and more. Here is a direct video link.

The chart below (courtesy of True Insights) shows the gap between the US Fed’s stated expectations for a 5.13% policy rate through the end of this year (red line) and what the Fed fund futures market is now pricing–cuts starting in June and 3.84% by January 2024 (green line). We are about to find out which one has the correct trend. In the meantime, government bond yields have been making lower lows since last October (prices rising), so fixed mortgage rates should be heading lower too.

Meanwhile, two years into this bear market, stocks remain priced for a soft landing fantasy where profits continue to rise. The S&P 500’s historically insightful 10-year average price-to-earnings ratio (CAPE), shown below since 1950, remains at a frothy 30, far above past cycle bottoms.