Saturday, February 24, 2024

Open AI Videos Are Here. They Are Incredible!!

Open AI released their latest product this week – Sora – which allows users to convert text to video. While it was generally expected that this would be the next step in the AI evolution, the quality of the videos and detailing is simply incredible. While this will be a problem for some in the production industry, the possibilities are immense.

Sora is still not available for public use, it will be a sensation whenever it will be out for all to use.


See it to believe it.

Wang Chuanfu: A Name Everyone Should Know

Elon Musk has almost 100% name recognition worldwide. Wang Chuanfu (传福), the founder of BYD which just beat Tesla in global electric vehicles sales, is virtually unknown in the west. Even in China, he is only well-known in the business circle and has a low profile otherwise compared to the more flashy tech entrepreneur, Jack Ma, or the more cosmopolitan investor-turned-founder, Kaifu Lee.

Whether you think China’s mass production of EVs and other renewable energy products is a net-positive for dealing with climate change, or an evil “onslaught” on the west, BYD’s global impact is hard to ignore and cannot be wished away. Its batteries have been powering millions of cell phones long before it started making cars. Its EVs can be now seen on the streets of every Chinese city, and quite a few European and Latin American cities. Its battery-powered buses are transporting commuters in Hyderabad, Bogotá, and the Los Angeles International Airport. It is also making electric SkyRails (subway in the air) that may soon appear in São Paulo’s skyline. Oh, and it supplies batteries to Tesla too.


Wang Chuanfu, the pudgy-faced chemist-turned-entrepreneur, is the main, if not the sole, reason why BYD, which meant literally nothing when the company was incorporated in 1995, became BYD, which now means “Build Your Dreams.” The late Charlie Munger called him a “genius”. Yet, there is no comprehensive biography (that I’m aware of) about the man. (Musk, on the other hand, has at least three about him.)  

Since BYD took the global throne of EV sales from Tesla, there has already been more ink spilled in the western media on BYD in the last month than in the last 10 years. And predictably, much of the narrative is becoming political, from The Economist characterizing it as a threat to the west, to the U.S. Commerce Secretary calling Chinese EVs export a national security concern.

Before things get politicized further, Wang Chuanfu’s American-esque, rags-to-riches journey ought to stand on its own. So here is my telling of the Wang Chuanfu story. 

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The Difference Between Cycle And Bubble

According to various media sources we now have at least 14 bubbles:

A new real estate bubble.

A bond bubble.

A tech bubble.

A VC bubble.

A startup bubble.

A stock bubble.

A shale oil bubble.

A healthcare bubble.

A dollar bubble.

A college tuition bubble.

A Canadian housing bubble.

A central bank bubble.

A social media bubble.

A China bubble.

(crypto can get added to the list now)


One economist recently gave up and just said “Everything Is A Bubble"

At a conference I attended a few years ago, Yale economist Robert Shiller said something amazing: The word “bubble” wasn’t even in the economic lexicon 25 years ago. Not in textbooks, not in papers, not in schools. But now we have bubbles everywhere.

How did that happen?

The good news is, I don’t think it did happen.


Markets have been rising and falling for centuries, but the term “bubble” is new. Since it’s new, there’s no official definition of what it is. Since there’s no definition, anyone can classify anything they want as a bubble and no one can prove them wrong. What began as a serious topic among economists has become a job-security loophole for pundits.

Shiller, in his book Irrational Exuberance, tried to solve this problem.

He says spotting a bubble is like diagnosing a mental illness. “The American Psychiatric Association’s diagnostic and statistical manual, which defines mental illness, consists of a checklist of symptoms” he once said.

He used this as a template to come up with his own checklist of bubble symptoms:


Rapidly increasing prices.

Popular stories that justify the bubble.

Popular stories about how much money people are making.

Envy and regret among those sitting out.

Cheerleading by the media.


It’s so simple, and so smart.

But it’s far from perfect. Just as someone in a bad mood isn’t necessarily depressed, a lot of assets can give off the scent of a bubble without actually being one.


My favorite example of this is Microsoft in the early 1990s.

Shares tripled from 1988 to early 1990. People were telling stories about how computers would change the world. Bill Gates was celebrated on magazine covers as one of the youngest billionaires of all time.

Then, after years of hype, shares fell 31% in the middle of 1990.

It checked every box of being a classic bubble, down to the crushing loss of losing a third of your money in a few months.

But Microsoft wasn’t a bubble in 1990. It wasn’t anything close. Even if you start from the peak, shares increased six-fold over the next five years, and 74-fold over the next ten years. It’s only obvious in hindsight, but shares were massively undervalued at a time when they looked like a clear-cut bubble.

We see this so often.

Was Amazon a bubble in 1999? It checked all the boxes, but it wasn’t. Shares are eight times higher today than they were back then. Same with Facebook in in 2012, and GM in 1960. Was China a bubble in 2007? It looked like it, and then its economy hit a wall. But then it came roaring back just as fast. So who knows? The number of bubbles we predicted with foresight is an order of magnitude larger than the number of bubbles we now acknowledge with hindsight.

In my experience, most of what people call a bubble turns out to be something far less sinister: A regular cycle of capitalism.

Cycles are one of the most fundamental and normal parts of how markets work. They look like this:This cycle is self-reinforcing, because if assets didn’t get expensive they’d offer big returns, and offering big returns attracts capital, which makes them expensive. That’s why cycles are everywhere and we can never get rid of them.Screen Shot 2016-09-27 at 6.07.54 PM

To me a bubble is when this cycle breaks. I have my own definition: It’s only a bubble if return prospects don’t improve after prices fall. It’s when an asset class offers you no hope of recovery, ever. This only happens when the the entire premise of an investment goes up in smoke.

That was true of a lot of dot-com stocks, which weren’t bargains after they fell 90% because there was still no tangible company backing them up. It was true of homes in the mid-2000s, because you stood no chance of enjoying a recovery if you were foreclosed on. It was true of Holland’s 1600s tulip bubble, as the entire idea that tulips had any value went up in smoke.


But it wasn’t true of stocks in 2007. Yes, the market fell 50%. But that made it so cheap – particularly compared to the alternative of bonds – that buyers instantly came rushing back in. Prices hit a new all-time high by 2013.

It wasn’t true of the crash of 1987, when stocks fell 25% in one day, but were back at all-time highs within 18 months.


I don’t even think it was true for stocks in 1929. Yes, shares fell almost 90% by 1932. But business wasn’t broken, and valuations had never been cheaper after the crash. Adjusted for inflation and dividends, stocks were back at a new all-time high by 1936, seven years after the peak.


I wouldn’t call those bubbles. Prices went down and then came back up in a few years. What did you expect them to do? Go up 1% a month forever? Ha! It never works that way, and it never will. What we experienced were cycles, albeit huge ones.

This is an important distinction to make, because whether something is a bubble or not impacts how you invest and respond to market changes.


Bubbles should be avoided, because you risk widespread permanent loss of capital. Cycles, by and large, shouldn’t, because all they imply is that you have to be patient and humble to earn long-term returns, which is par for the course for successful investing.


If you find an asset whose price looks expensive and is probably going to fall, you likely haven’t found a bubble. You’ve found capitalism. Excesses will correct, recover, and life will go on.

But that raises a question: If we know cycles are regular, why not try to get ahead of them by buying and selling before they turn?

Because regular does not mean predictable.

We can say, in hindsight, that you should have sold stocks in 1999 and repurchased them in 2002. We can say, in hindsight, that you should have gotten out of the market in 1929 and bought back in in 1932. But not one person in a million actually achieved this, which should make us question how feasible it is do it in the future. Look at the returns of macro hedge funds, which try to ride the ups and downs of cycles and bubbles. You would not wish them upon your worst enemy.


The investing world becomes a lot less scary when you view most booms and busts as cycles rather than bubbles. Will things ebb and flow, sometimes by a lot? Well, yeah. That’s what you signed up for as an investor. But is everything with a valuation above its historic average a civilization-shattering bubble? Not by a long shot.


Three years ago Robert Shiller won the Nobel Prize in economics for his work spotting bubbles. He shared the prize with Eugene Fama, who emphatically states that bubbles can’t be spotted, and are only obvious with hindsight.


A lot of people thought this discrepancy was crazy. But it’s not.


Fama doesn’t think bubbles can be spotted. Shiller thinks they can, but they’re rare and we can never have precision on how high markets will go or exactly when they’ll turn.

What both men share is a call for humility, patience, and context. And those, more than anything, are what the history of bubbles tell us we need more of.


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Friday, January 5, 2024

33 Life Learnings from 33 Years

Today is my 33rd birthday.

Every year, I try to spend some time reflecting on what I've learned along the way.

Historically, this list of life learnings was just for me—a private accounting of my own journey, growth, failures, and missteps.

But this year, I'd like to share it with all of you. My hope is that one of my learnings connects with you and positively impacts your life.

Here are 33 life learnings from my 33 years of life...

1. Life is hard, but fortunately, you get to choose your hard.

It's hard to build deep, meaningful relationships. It's also hard to live on the surface with everyone. It's hard to build the body you want. It's also hard to see your body atrophy from lack of use. It's hard to build a life of purpose. It's also hard to live without one. Choose your hard.

2. You don't owe it to anybody else, you owe it to yourself.

You get one chance at this. One body, one mind, one life. Take advantage of it. Test the limits of your capability. Do the thing that scares the hell out of you. Get after this life.

3. No one has it all figured out.

No one knows what they want to be when they grow up. It’s comforting as a young person to know that you aren’t really supposed to “figure it out” when it comes to your future. Just focus on pointing your compass in the right direction, embracing curiosity, and getting around great people. If you do that, good things will happen.

4. Life is more fragile than you think (even when you account for that statement).

You never know when it will be the last time you get to hug that friend, tuck your kid in for bed, kiss your wife, take a walk with your parents, or see that crazy family member. Hug your people with everything you have. Always make them let go first.

5. Someone is either holding you back or powering you forward, there is no in between.

Your environment creates your entire reality. Surround yourself with people who are constantly talking about the past, you'll be stuck in it. Surround yourself with people thinking big about the future, you'll build a beautiful one. Build a tribe that encourages you to think bigger. Get rid of the boat anchors holding you back and watch your entire life change in a year.

6. The word "yet" will completely change your life.

"I'm not good enough" becomes "I'm not good enough...yet." "I don't know how to do it" becomes "I don't know how to do it...yet." "I'm not capable of that" becomes "I'm not capable of that...yet." "Yet" is your one word reminder that you can achieve anything that you set your mind to. You are dynamic and capable of so much more than you realize. Embrace the "yet" and change your life.

7. Life has seasons (and each must be embraced for the good and bad).

Most of the pain and struggle we encounter comes from wasting energy complaining about the prior season or worrying about some future season. When we embrace the current season for its imperfections and opportunities, we find a way to thrive.

8. Identity is the real thing we're all searching for.

Everyone thinks they're looking for money, fame, or success, but what they're really looking for is identity. Embrace it in the present, diversify to lower your risk, and seek out new perspectives to challenge yourself along the way.

9. No plan has ever survived first contact with the enemy.

Mike Tyson famously said, "Everyone has a plan until they get punched in the mouth." He was right. Plans are fine, but just know they're going to get thrown out the window. Learn to embrace chaos. Man Plans, and God Laughs.

10. Success always follows interest.

Most people focus too much on being interesting and not enough on being interested. Being interested is how you become interesting. When you pursue your genuine interests, you are prone to deep focus, which cultivates a depth that is impossible to fake. That depth is a necessary ingredient of success.

11. Insecurity is a natural human condition.

When I was younger, I used to think that achieving some external rewards would rid me of my insecurity—that getting promoted, making more money, or winning some awards would suddenly make me feel perfectly comfortable. But I've come to realize that the feeling is natural. Opening up about these insecurities, rather than trying to mask them with bravado, is the key to managing their influence on our lives.

12. You really have no idea what you're capable of.

The only way to find out is to push yourself out of your comfort zone. To take that risk. To embrace that pain. Sometimes you'll crash and burn. But sometimes you'll find that you were capable of much more than you ever thought possible.

13. Fall in love with the ordinary.

An amazing life is built through tiny, ordinary, boring things. Get comfortable growing slowly and you'll build the life of your dreams.

14. Most people overestimate what they can do in a day and underestimate what they can do in a year.

Your entire life can change in one year. Not ten, not five, not three. One. One year of focused daily effort. Start today.

15. Avoid compound mistakes and you'll always find a way to win.

A compound mistake is when you follow one mistake with another one. We can't always control the first mistake, but we are in control of how we let it impact us going forward. If we avoid compound mistakes, we win.

16. Freedom is the real goal.

The ability to do what you want, with who you want, when you want is what everyone prizes above all else. Conflating money and freedom is the mistake that people seem to make. Money is a tool that can be used to gain freedom, but more often, it becomes a tool that keeps us running for more.

17. People will call you weird—and that's a good thing.

When you start living differently and transforming your life, some people won't like it. They'll call you crazy, lame, and different. Well, being normal is vastly overrated. The world doesn't need more normal people. Be abnormal.

18. You should always cringe at your former self.

If you look back at yourself from a year ago and you don't cringe at your output, habits, behaviors, or actions, you should be worried. That "cringe" sensation is a sign of your growth. It should always exist.

19. Optimism is not about ignoring obstacles, it's about viewing every obstacle as an opportunity rather than a permanent roadblock.

In life, you get rewarded for the number of obstacles that you successfully navigate around. You get rewarded even more if the solution is creative and scalable. Remember: Pessimists sound smart, optimists get rich.

20. Unproductive walks are the most productive activity.

Hot take: No one has ever changed their life listening to a podcast on 2x speed. I've generated more life-changing ideas on silent walks without my phone than I have in all of my desk time, podcast listening time, and "productive time" combined.

21. There is no such thing as the "right moment" for a big decision.

Having a kid, taking that professional risk, moving to a new place—these are all big, scary decisions. The best you can hope for is to do the work to make the leap of faith as comfortable as possible. But after that, you just need to open the door, jump out of the plane, and trust that you packed the parachute tight.

22. Find someone who you love doing nothing with.

Life isn't the glamorous Instagram-worthy moments. Life is mostly just sitting around doing nothing. When you find the person you love doing nothing with, you've found your life person.

23. When something isn't working, fight the urge to add and ask what you can subtract instead.

Whenever we're in a tough spot, our tendency is to add something new to the system (a new workout, a new supplement, a new project, a new person, etc.). Usually, the solution is found in removing something that is holding us back, not adding something new.

24. "Less, but better" is a mantra that applies to everything.

From work to health to relationships: We don't need to do more, we don't need to have more. We need less, but better.

25. Stop trying to change people who don't want to change.

People don't change because we want them to—they change because they want to. If someone has consistently shown an unwillingness to change, stop trying to change them. Save your energy and move on.

26. Every single person you see is fighting a battle you'll never know anything about.

Think about that before you judge anyone on the basis of some tiny sliver of information. It will help you live a more positive, empathetic life.

27. Everyone needs a few Foreign Prison Friends.

One of the main goals of life is to have a few friends who you could reliably count on to break you out of a foreign prison if it came down to it. At a minimum, you need a friend who would figure out how to call the relevant high-ranking authorities to make it happen.

28. Someone believing in you may promote consistency, but someone betting against you will always spark intensity.

There's nothing like the push to prove someone wrong. It will always light an intense fire under your life. If you've been betting against me, you should see about getting a refund.
29. Authenticity always stands out.

When someone is authentic, they become a magnet for the highest quality people. It's hard to explain, but in a world of fake, we're all attracted to what is real.

30. Focus on actions, not words.

What you say doesn't matter. You may impress people with your words in the short run, but all that matters are your actions in the long run. Be a man or woman of action.

31. Never bet against the person who just keeps getting back up.

The world belongs to the people who get punched in the face and have the courage and grit to get back up.

32. We all get more embarrassing with age (or we're just mature enough to embrace it).

When I was growing up, I used to wonder why parents were so embarrassing. I assumed that our parents just had more embarrassing personalities. I was wrong. We get more embarrassing with age—or, more likely, we just grow up enough to get comfortable with being ourselves.

33. Cherish your Front Row People.

Close your eyes, you're dead (sorry!). Imagine you're at your own funeral. People are walking in, crying, hugging each other. Everyone sits down. Who's in the front row? Those are the people that really matter. What are you doing today to cherish them?

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