454: Biggest Bond Crash in 150 Years, Microsoft + Activision, ARM, Wikipedia, Jimmy Buffett, Semiconductors, and Tokyo Digital Twin

"150 years ago Ulysses S. Grant was president"

In an universe full of inanimate material, sentient beings are gods.

—user Spire3661, comment on a Slashdot post

🧑‍🎨✍️🧠🔑 Sometimes when you get stuck creatively, the best thing to do isn’t to keep pushing in the same direction, but rather to try a fresh path for a while.

It doesn’t necessarily mean dropping the idea you’re working on altogether. You can change things up by looking at new techniques, styles, or tools.

Here’s a small example from my life. I love a good lighthouse, so I’ve been creating images of them using generative AI. I’ve used some of them as phone lock screen backgrounds — if you want to see, I posted a few in Edition #368.

I hadn’t made any new ones in a while because I didn’t know what else to do with that concept to keep it interesting. I was stuck, in a rut…

…until I saw a technique I wasn’t familiar with. This inspired me to play around with it, and I ended up making some of my favorite lighthouses:

I love a good lighthouse 💚 🥃

That, in turn, inspired me to experiment with a different idea. I also like the result:

I’d live there 💚 🥃

You never know what will get you unstuck — but you have to be open to the fact that the key to that lock could come from any direction.

Do lots of small experiments. Many will suck, but occasionally, something will work.

🗣️🎤🎸🎶🎧 When I was a kid, many of the bands I listened to seemed like wise old men & women. Their lyrics and interviews seemed so deep and full of hard-won life experiences.

Most of them were in their mid-20s or early 30s…

Now that I’m older than they were, it can feel a bit strange to listen to the same songs and find them immature, or have the kind of delusions about the world that a young adult may have before experience teaches them otherwise.

All that is not necessarily bad — it reflects a part of the human experience — but I definitely find it an interesting phenomenon to go through that perspective shift.

I kind of miss being able to be naive about it all, it makes some of that music not as good as when it seemed deeper!

What will I find immature about my current self when I look back in 20 years? 🤔

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🏦 💰 Liberty Capital 💳 💴

📉 The biggest bond market rout in 150 years 💣

Niall Ferguson writes:

In terms of total returns, this is the biggest bond market rout in 150 years. 

Last year was in fact US bond investors’ worst year since 1871, with a total return of minus 15.7%, even worse than the annus horribilis of 2009. 

For 2023, the year-to-date return has been almost minus 10%; annualized, that’s minus 17.3% — even worse than 2022. We are looking at bond investors’ two worst years in a century and a half.

To give you an idea, 150 years ago Ulysses S. Grant was president of the U.S., Lewis Carroll was publishing ‘Through the Looking-Glass’, and it was the year of the Great Chicago Fire 🔥

Also, the mention of 150 years isn't because something significant occurred in 1871, but rather because that's the extent of the available dataset... 😬

🗓️🕰️ Once-in-a-century events happen constantly?! Here’s why👇

Looking at this, you may wonder why we seem to be constantly going through “rare” events (doesn’t it seem like we’ve had a ton of those in the past 15 years?).

The phenomenon where "once-in-a-century" events appear to occur more frequently than their name implies (right?) makes sense when you consider a combination of statistical misunderstanding, evolving baselines, and increased detection and reporting.

• Independence Across Domains: A ‘once-in-a-century’ athlete, flood, earthquake, economic collapse, and pandemic are independent of each other. If each of these is a 1-in-100-year event, it's statistically likely that one of them will happen much more frequently when considered collectively.

• Conditional Probability: There's a non-zero probability of the same ‘rare’ event happening again the next year, or even twice in the same year. The terminology is more about long-term averages than specific predictive utility. With very large numbers of fair coin flips, you’ll move toward 50/50, but there can be low-probability clusters of heads and tails in a row in any part of the sample.

• Evolving baselines: Things that used to be once-in-a-century, possibly for a very long time, may not be anymore. It can take a while to have a large enough sample to update the baseline, but it could nonetheless have changed. For example, many weather events have to take into account a warmer planet, some economic events have to take into account a more globalized world, some health events should take into account modern diets, etc.

• Increased detection/reporting. These days, we have a firehose of news because of the internet. A few decades ago, news of the same events may not have reached nearly as many people, so their perception would be that they are rarer than they actually are.

There may be other factors that I’m not thinking of right now, but I think these four taken together help explain a lot of why you shouldn’t rely on ‘rare; events *in general* to be rare in your life.

h/t my friend MBI (💎🐕)

🦗 ARM’s Crickets 🦗