I'll throw out a couple of book suggestions in line with today's books:

* "Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street" by William Poundstone. All about the Kelly criterion.

* I'm currently reading "A Man for All Markets", the autobiography of Ed Thorp, who is a figure in the first book. Really interesting and really smart guy... I'm currently reading it aloud to my 14- and 16- year old boys and they love it.

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great books, as a former wall street quant, I may add The Man Who Solved the Market, the story of Renaissance Medallion fund.

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Mandelbrot's work is not that opposed to Fama. The latter's PhD thesis was partly on efficiency but also on the distribution of stock returns, confirming Mandelbrot.


A market being efficient is different from not being volatile. It's a matter of incorporating information such that you can't beat it. Scott Sumner points out that if LTCM had succeeded, that would have instead been evidence against the EMH:


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Indeed, the EMH flamewar is mostly people attacking strawmen and shouting past each other.

One may recall Schiller's moderate comment that EMH is "mostly right", but has no reason to be always absolutely right.

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"As of now, American interest rates are at a generational peak."

You hope. I have been worrying about going over the fiscal cliff for some time. I have seen withing the past few days articles about Chase Bank CEO Jamie Dimon (as close as we get to a modern J.P. Morgan) and Fed Chairman Jerome Powell worrying about it too.

Neither party wants to do a damn thing about it. The sad truth is that Congress has already committed us to massive tax increases by using debt financing to pay for all of their hare brained schemes. The debt is far in excess of our ability to grow the economy fast enough to pay it down. There will be tax increases. the question is whether they will be imposed on bond holders by default and inflation or spread across the economy by passing broad based taxes, such as a VAT or a real carbon tax.

Given the fecklessness of our politicians, I think hyperinflation is the way to bet. The problem is that hedges are difficult to impossible.

Crypto -- don't make me laugh. It will be banned from the financial system to protect the dollar. Besides it will be useless when the power grid and the internet collapse.

Gold is a classic. but ETF's and commodities contracts are bets on the financial system not the underlying asset. Accumulating meaningful quantities of gold and storing it is literally a herculean task.

Diamonds are a bad bet. there is no difference between mined and manufactured. The latter are already undermining (get it) the market for the former.

Guns, ammo, and freeze dried food. Sure protect your family, but they won't give you capital to rebuild after the collapse.

Herbert Stein (1916-1999) was chairman of the Council of Economic Advisers under Presidents Nixon and Ford. He propounded Stein's Law: "If something cannot go on forever, it will stop,"

My corollaries to Stein's Law are:

"Something that can’t go on forever, won’t.

Debts that can’t be repaid, won’t be.

Promises that can’t be kept, won’t be.

Make your plans accordingly."

My son-in-law says:

Things that can't continue on forever won't.

Things that are unsustainable can keep going longer than you thought possible, and fall apart faster than you imagined.

The end result will be more bizarre than anything anyone projected.

My financial advisor said:

The market can stay irrational longer than you can stay solvent.

Lord have mercy on us poor sinners.

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Not an endorsement. i saw a review on Friday and thought you might be interested. The review makes it sound a bit hippy dippy:

"The Naked Neanderthal: A New Understanding of the Human Creature" by Ludovic Slimak (2024)


"For over a century we saw Neanderthals as inferior to Homo Sapiens. More recently, the pendulum swung the other way and they are generally seen as our relatives: not quite human, but similar enough, and still not equal. Now, thanks to an ongoing revolution in paleoanthropology in which he has played a key part, Ludovic Slimak shows us that they are something altogether different -- and they should be understood on their own terms rather than by comparing them to ourselves. As he reveals in this stunning book, the Neanderthals had their own history, their own rituals, their own customs. Their own intelligence, very different from ours. Slimak has travelled around the world for the past thirty years to uncover who the Neanderthals really were. A modern-day Indiana Jones, he takes us on a fascinating archaeological investigation: from the Arctic Circle to the deep Mediterranean forests, he traces the steps of these enigmatic creatures, working to decipher their real stories through every single detail they left behind.

"As Ludovic Slimak tells us in “The Naked Neanderthal: A New Understanding of the Human Creature,” this image has persisted for nearly a century, “put forth by successive generations of scientists” who theorize that this distant ancestor of Homo sapiens continues to travel “incognito” among us. It’s a seductive idea, a welcome change, on its surface, from earlier conceptions of the Neanderthal as a beast or savage, and it implies that we wouldn’t even notice this modern Neanderthal if he walked past us on the subway. Such theories project more than they understand, Mr. Slimak argues. Neanderthals, he tells us, are not “ersatz Sapiens.” And scientists have a duty to recognize this “lost otherness,” not to re-create it in our own image."

‘The Naked Neanderthal’ Review: A Humanity of Their Own Why it’s misleading to view our closest extinct relatives as ‘other versions’ of present-day humans. By Brandy Schillace Feb. 2, 2024


"Despite the fact that some Neanderthal DNA remains entwined with our own, Mr. Slimak, a paleoanthropologist at the University of Toulouse, argues against comparing our humanity to the Neanderthal’s. He bases his claim on more than 30 years of work in the field and insists that Neanderthals should not be thought of as less than us; instead, they must be understood as having a “fundamentally divergent consciousness.” To see them properly requires that we strip away our own biases. “The last Neanderthals take us to an unknown universe,” Mr. Slimak writes. These “other consciousnesses haunt abandoned wastelands,” both of our earth’s northern reaches and of our imaginations. They cling on “at the world’s extremities, on islets, in valleys, continents, places of refuge, scrubland, liminal spaces.” They were “never other versions of us—not brothers, not cousins” but instead “an utterly different humanity.” ... The book debunks the supposed discoveries “proving” that Neanderthals thought like us, made art like us, even went to war like us. Some punctured shells uncovered in Spain and feathers found in Italy, for instance, were once considered evidence that Neanderthals made art. In fact, Mr. Slimak reveals, the holes in the shells were the work of crabs; he also suggests that the feathers were not used for art or adornment but for food. ...

“I’m not trying to be cynical,” Mr. Slimak writes about his efforts to debunk theories about the Neanderthal. Rather he’s “trying to understand” by setting aside his own desires and projections. But he also asks us to consider why we have such desires in the first place. Why do we want to say that the Neanderthals are us and therefore not really extinct at all? The answer, he suggests, is that if we believe that Neanderthals are still among us, we can assuage the guilt that comes of knowing that we replaced them—suddenly, assuredly and completely. “The Neanderthals did not die a beautiful death,” Mr. Slimak reminds us, and pretending that they still carry on comes from a sort of survivor’s guilt.

"Given our impenetrable differences with Neanderthals, it may seem as though Mr. Slimak’s mission to “understand” them is bound to fail. But that would miss his point. We Homo sapiens “belong to an over-normative society,” he reminds us. “Difference is frowned upon and only superficially tolerated at the periphery.” The art on our walls follows a method; the tools we make are to a pattern. Meanwhile, no two Neanderthal tools are alike; each is a “creation in itself.” The Neanderthal maker doesn’t repeat a standardized design but creates anew for each situation. There is, writes Mr. Slimak, “an absolute artisanal freedom” and “probably a very rich freedom of thought about the world.” This, too, is conjecture—but it is based on what the Neanderthals themselves left behind. Perhaps the Neanderthal creative sensibility even transcends our own “egocentric products,” because for them “art, symbolism and the sign are simply not separable” from everyday creation. Is it too much to suggest that, in eschewing standardization, they embraced difference? Perhaps. At the very least, we can admit that we “are not very good” at embracing difference ourselves. We see our identities in terms of contrasts—a humanity of limits, lines, rules, structures and sameness, as opposed to one that, while not possessing the same symbolic understanding or even the same individualism, allows difference to thrive. The naked Neanderthal refuses to be defined, maintaining a different humanity that allows us to question our own."

I don't feel the least bit guilty.

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Razib, I believe you wrote an essay being published today in Palladium Magazine about ancient DNA in Americas.

Will you be also eventually send it out to your substack subscribers?

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well it's free so you can read it there

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I just finished "The Ascent of Money". I second the nomination.

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