Tom's Top 3: August 6, 2024
Recessions, World Wars, and Self-Limiting Beliefs (Oh My!)
Hi everyone! Welcome to this week’s installment of Tom’s Top 3 Tuesdays, where I highlight three pieces of content (Podcasts/Shows/Songs/Articles/etc.) that I found interesting or noteworthy from the prior week.
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Let’s get into it:
[Podcast] Plain English with Derek Thompson - Market Meltdown FAQ
Maybe you saw the headlines on Monday. Global equity markets plummeted, and the S&P 500 was down nearly 4%. The VIX (a signal of market volatility) spiked to levels not seen since COVID and 2008. Trump didn’t hesitate to point the finger, dubbing this the “Kamala Crash.” Is this the start of the prophesied recession? The one we’ve been waiting for?
Turns out, probably not. Well, maybe. I don’t know.
But what even happened?
This podcast from Derek Thompson does a good job of breaking down Monday’s madness, coming to the conclusion that this downturn may be due to idiosyncrasies in the financial system, not an omen of economic collapse.
Let’s go over the main plot points:
Last week, the Federal Reserve decided to not cut interest rates, as mainly believed/hoped they would.
A few days later, the Bureau of Labor Statistics released a lackluster jobs report, with unemployment rising to 4.3% (almost 1% higher year over year).
In response, stocks dropped on Monday.
Which… doesn’t look great, admittedly. But there is more to the story. Turns out, investors have been enjoying a “Yen Carry Trade” as of late. Due to the spread between interest rates in Japan and the US, investors have been able to borrow yen for cheap and then use that to buy US stocks.
Since stocks, typically tech stocks, appreciate at a higher rate than the cost to borrow yen, investors made easy money. However, The Bank of Japan announced it would raise rates, which would compress the spread, leading investors to sell out of US stocks.
So the selloff could be due to investors getting a little over their skis (which has never happened before, of course). Another explanation is that we are in some kind of AI bubble, where overeager spending on GPUs with no clear path to monetization is starting to catch up to tech companies. Neither explanation portends a national recession.
I guess we will have to wait and see. The good news is that over the long run, the stock market usually goes up. Since its inception, the S&P 500 has risen about 10% a year on average. If you keep your wits about you, try not to time the market, and hold for the long term, these kinds of blips don’t matter.
[YouTube] Stanford Graduate School of Business - Last Lecture Series: How to Live your Life at Full Power — Graham Weaver
I’m a big fan of Graham Weaver. He is a successful private equity investor and respected professor at Stanford GSB. But he also just seems like a cool dude. In this presentation, he discusses the conflict between our inner truths and inner critics and provides three promises anyone can make to get unstuck and find their voice.
Promise 1: Take the Nail Out of Your Head
Weaver uses this old YouTube video to illustrate how there are typically very obvious problems in our lives that we know about and refuse to address. These “nails” could be bad habits, unresolved past experiences, self-limiting rules/assumptions, or fear.
Be honest, I’m sure something immediately came to mind in your own life. Weaver implores that we deal with these nails head-on, saying “everything you want is often on the other side of worse first.”
Promise 2: Follow Your Energy, Not Your Passion
“Follow your passion” has become trite. It implies that you only have one passion, know what it is in your 20s, and are prepared to do it for the next 40 years. Weaver believes that the better advice is to follow whatever is giving you energy.
Once you’ve identified many things that excite you, you can either a) Find a way to pull some of those things into your current life, or b) Pursue the thing you would most want to do if you knew you wouldn’t fail. Weaver suggests that option b ultimately leads to the greater satisfaction, which brings us to…
Promise 3: Go All In
We often live our lives one foot in, one foot out. “I’ll start when…” are the three most dangerous words. Waiting for the stars to align is rarely a good strategy.
Weaver even believes that things get easier when you fully commit, because your identity shifts. You become the person who does X, and that self-belief is reinforcing.
[Podcast] The Plot Thickens - The Search
This series of The Plot Thickens attempts to decode the enigmatic John Ford. Ford is one of the most influential filmmakers of all time, having directed hit films such as The Grapes of Wrath and The Searchers. He won six Academy Awards (but was present to receive none) and popularized the American Western, launching the career of John Wayne in the process.
One lesser-known fact of Ford is that he was a commander in the Navy during WWII, documenting much of the ugly nature of the war. I first learned of this from the Netflix documentary Five Came Back, which I highly recommend. Ford was even present to film the Battle of Midway, and Roosevelt thought the movie was so impactful that he ordered that every American must see it as soon as possible.
This particular episode in the series involves the search for the holy grail of war films. According to Ford himself, he was on the beaches in Normandy during D-Day and had captured footage from the front lines. A film of one of the most infamous and impactful battles in American history, by John Ford no less, would obviously be priceless.
Unfortunately for everyone, there are no records of such a film existing. The podcast team embarks on a journey around the world in an attempt to track down the missing movie. I am a sucker for WWII history, treasure hunts, and film, so I loved this episode.
That wraps up this edition of Tom’s Top 3 Tuesdays. If you know anyone who would like this newsletter, please consider sharing. I’ll be back next week. ✌️