on finding inflection points; geopolitics/technological disruption; difficulty of conviction>
One time in my junior year, I was talking to the head of a global macro hedge-fund in London. At some point in our conversation, I asked about some specific Asian carry trade that they may have been involved in. Rather than getting the validation from this exotic options fund manager, I was met with a retort that I think about now on an almost daily basis. It was something along the lines of: "You're interested in global macro. That's great! But you're a Stanford computer science student in 2023. Druckenmiller isn't up this year because of niche carry trades, it's because they fucking bought NVIDIA! That's global macro. Don't miss the fucking forest for the trees".
Obviously, in this anecdote and to this fund manager, the forest was AI and compute. But the pastoral message of that retort was that good, long-term macro thinking is often seduced and murdered by the allure of the sexy idea, the desire to feel smart, and signal that you are smart. But you risk missing the forest. The best trade in the last decade was holding onto FAAMG. But many people didn't do this, because conviction is hard. But this is not an essay about [[Essay - Portfolio Building]]. I want to lay out what the forests are in which I believe I should/can excel and build in.
Two broad inflections that I think will define, at minimum, the next decade:
The ways I have spent my free time (and my studies) in the last four years have largely derived from these two verticals. In the latter case, reading a lot of [[People - Zoltan Poszar]] reports, and asking the question of who captures the most upside from volatility created my interest in physical commodity traders (and Latin America, which I believe is also well positioned). While working at Trafigura, and after, I have always been primed with the question of how cheap and ubiquitous compute/renewable energy changes this?
It is important to caveat the danger of the forest - it's a hammer which can make everything look like a nail. That being said, these are two forests that are highly interconnected. Take for instance the enormous recent success of European power traders. The increasing lucrative nature of arbitraging power has been enabled largely by increased volatility in energy prices, which itself is a function of intermittency of green energy sources and geopolitical instability, but also the software stack that makes algorithmic detection and execution of these opportunities feasible.
Please reach out if you want to discuss this!