463: Market Clustering, Income & Happiness, Cloudflare NOT 4th Cloud, Amazon, EVs, Furnace Scams, SDXL Turbo, Geothermal, and Pacing

"your brain is not much different from the brains of everyone else in the market"

The only normal people are the ones you don't know very well.

-Alfred Adler

🔊🎶🎧🌊🇩🇪 The Ocean is a German progressive metal band.

But before I talk about them, I want to tell you about Wikipedia.

From around 2002 to 2004, I was pretty active as an editor on Wikipedia. I made thousands of edits on the English wiki and hundreds on the French wiki including creating pages for some pretty basic words that didn’t exist because it was so early in the site’s lifespan.

The community of editors used to argue a lot about content, and two factions formed to argue about whether Wikipedia should be more like a traditional encyclopedia, or its own thing.

The traditional camp often deleted content and sometimes whole pages, arguing that “a *real* encyclopedia” wouldn’t include XYZ because it wasn’t “notable” enough, while the other camp’s rallying cry was “Wikipedia is not paper”, shorthand to mean that the web doesn’t have the limitations of the old medium.

This brings me back to music. The Ocean* has released dual versions of many of their albums, one with vocals, and one instrumental (with a slightly different mix to fill the hole left by the vocals). If you want to check it out, listen to Pelagial (the instrumental version starts on Disc 2/track 12).

It’s a great way to take advantage of the fact that music is now unconstrained by the running-time of physical CDs or cassettes or vinyl. I wish more musicians saw these possibilities and, when appropriate, released instrumental or alternate versions of their albums.

When I’m reading or writing, I can’t listen to music with vocals — it’s too distracting. It would be great to have more instrumental albums from genres that don’t usually release much instrumental music (metal, blues, rock, folk, whatever).

* I also like the geometries on many of their album covers and the way they use geological eras as titles.

🚶🏻‍♂️♾️🔁 I have barely been able to take a walk outside in the past two weeks…

But on Wednesday afternoon, it was sunny and I walked around the neighborhood listening to Will Schoder’s Infinite Loops episode (🎧).

It was great overall, but around the middle section there’s a discussion of the concept of compression/uncompression that I thought was an unlock. It’s a mental frame that I didn’t quite have before, and it helps me better grasp certain aspects of my life that felt amorphous.

Here’s a highlight, but I recommend listening to the whole thing:

Will Schoder: You had Derek Sivers on recently, and he said this thing, "That's shallow happy and I'm interested in deep happy." And that's exactly right [...]

there's this third version of happiness that I was looking for and found, and it's a lasting one. It is meant to last weeks, months, if you're lucky, years [...] your emotions are like the waves on the ocean, but your center is actually the depth of the ocean. It's unchanged. And the depth of the ocean is what we're after with deep happiness, and then the other stuff is icing on the cake. [...]

This concept that I love called compression versus uncompression, which is basically just how free do you feel. When people are stressed their mind gets narrow and they can only think about the one thing they're stressed about. But a really uncompressed person, usually, I don't know, a hiker, a ski bum, a Buddhist monk, the world is totally open to them.

Those are the things that can actually be quite lasting for somebody, and they are a very deep happiness for that person.

Jim and Will go on to talk about how changing your environment can help you uncompress, and maybe realize that you have even been compressed in the first place (which can become like water to a fish, if you’re always that way):

it's very hard to just get your mind and compress by just staying in your desk chair. I think compression really is one of those things that comes to you when you are somewhere else.

In fact, Dan Haybron, the philosopher, one of the reasons he wrote the book is he was this professor at this really well-known philosophy department. Great success, thought he was happy, and then he went on this vacation and went surfing, and he's like, "Oh my God, I've been unhappy this whole time." And it was because he had this sudden uncompression being in a different place, surfing, just watching the birds. And he realized, "Wow, I have been so stressed out.

That’s a scary thought — to only realize much later how you felt because you had no perspective and nothing different to contrast it to 😬

🛀💭 Gotta love it when you click unsubscribe on some airline spam email and they say something like "Please allow 10 business days for processing."

Either they think I'm stupid, or they have the worst CMS software in the world.

Probably both... 🤔

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🏦 💰 Liberty Capital 💳 💴

📈📉 The Best and Worst Market Days Cluster Together 📈📉

It was the best of times, it was the worst of times…

You’ve probably seen the statistics on how missing the best X days in the market makes you miss out on most of the return, and vice versa for bad days.

This is a general argument against market timing.

Getting it wrong just a little may make you miss most of the year’s return.

What makes it even harder is that your brain (🧠) is not much different from the brains of everyone else in the market. Therefore, you’re likely to feel afraid at the same time as everyone else — if there weren’t convincing reasons to sell, the market wouldn’t be going down in the first place! 🔄 — and the same goes for feeling good about things (ie. near a top because everyone else is also feeling good).

Further complicating things is that the best days are often clustered with the worst days. But because of the psychology above, what is most likely to happen is for you to sell near the bottom, then wait a while to start feeling better about things, missing most of the rebound.

A double-whammy: you get hit by the worst days and miss out on the best days that immediately follow.

2020 is a great example of this.

I’m sure many investors freaked out in March and remained out of the market for a while after that. They were probably back in by 2021 when the mood had completely flipped, but chances are they missed out on most of the best days of 2020 (and likely sold again sometime in 2022… 😬).

I’m sure some people are great at timing — but I know I’m not. So I just ride through the waves, good and bad, as painful as it gets as long as I still believe in the specific reasons why I bought specific stocks.

Macro sentiment is one of these things that is outside my control.

Don’t get me wrong, it *doesn’t* mean that changes in macro can’t change the prospects for specific companies, and sometimes I change my mind about the stocks I own or realize I made a mistake. But I don’t want to make decisions based purely on crowd sentiment if I don’t think the long-term prospects of a business have changed.

h/t friend-if-the-show Conor Mac

How much do you need? Just a little more… 🫱🥕💸