Things to think about #2

I’ve recently come back from a week on Ibiza—the smaller and cooler of the main Spanish Mediterranean isles—enjoying what has to be one of the most fantastic climates on earth. I come back to the realisation that I could have been more spendthrift in the pool bar despite its grotesquely overpriced drinks and snacks. Stocks are flying, credit spreads are narrow and volatility has plunged to a new low for the year. My relatively defensive portfolio is currently tracking a punchy 3.8% monthly gain for May, just shy of the 4.4% rise in the S&P 500. Long may it continue. I will have more to say about this in due course, but in the first instance, my recent work suggests that this rally has one strong tailwind on its side; the cyclical picture in the global economy has improved. My measures of global cyclical activity hit a new high at the end of Q1, and into Q2, from a trough last year, and cyclical equity returns are now re-accelerating, after softening a touch at the start of the year.

Evolution in the modern world and Covid literature

Being pool side means time for reading and audiobook listening. I finished Heather Heying’s and Bret Weinstein’s A Hunter-Gatherer's Guide to the 21st Century: Evolution and the Challenges of Modern, which is a fun and informative book about the contradictions between our (slowly) evolved physical and mental apparatus and the speed with which modernity is changing everything from our reproductive life to our diet, sleep habits and all in between. Heather and Bret call it Hyper-novelty. More generally, I am big fan of Heather and Bret’s and their no-nonsense and objective worldview. More often than not, it gets them into trouble with the mainstream media and opinions of the day, but that is a badge of honour these days. They strike me as genuinely decent and good-faith interlocutors, who is able to strike up considered conversation about just about anything with anyone. That is a rare trait. They still run the Darkhorse podcast every week, which is a good listen.

I also read Zadie Smith’s essay collection Intimations and I am half-way through Niall Ferguson’s Doom: The Politics of Catastrophe. It is difficult to come up with two more different pieces of literature than these two, but they have one thing in common; Covid. Neither could, or would, have been written if we hadn’t been struck by the pandemic, and it’s fascinating to think about, and now perceive with a distance, how this event spurned the creative powers of two authors as different as Zadie Smith and Niall Ferguson.

Jim Simon passes; the end of an era

Finally, the renowned investor and philanthropist Jim Simons died last week. That is sad news, but Simons lived a rich life and did more than most in his 86 years on this earth. He spent his time well! His passing is a good occasion to recommend Gregory Zuckerman’s book The Man who Solved the Market, about Simon's rise as a quantitative investor, the funds that he ran and the people he worked with.