The Pomp Letter

To investors,

The US national debt is over $31 trillion and US GDP is just under $26 trillion. This gives the largest economy in the world a debt-to-GDP ratio of ~ 125%. Not exactly an ideal situation.

The proposed solution for this problem by the majority of individuals and organizations is to reduce the United States’ debt. This would be incredibly difficult to do. Federal income tax revenue has been higher every single year since 2009 (except for 2020), yet the federal deficit has continued to expand each year.

The deficit has not been expanding by small single-digit percentages in the last two years, but rather by double-digit numbers. The problem is getting worse and there is no solution in sight.

This is the equivalent of a business capturing more revenue each year, but the losses remain. Eventually shareholders will ask the question — “can we ever stop losing money?”

That answer is unclear. On the other hand, in an effort to be fair to all sides of the conversation, there are many people would would argue that a government is not a corporation and profitability is not a goal. That is a tough perspective for me to get onboard with because I believe a balanced budget is important.

If we dig deeper into some of the statistics, we can see that GDP per capita continues to grow like a rocket ship in the US.

If GDP per capita is growing, then GDP growth should be in a good place too, right? Well, it depends on how you look at it. GDP in the United States had been growing at ~2% per year from 2010 to 2019, which was followed by negative growth in 2020 and then a banner year of 5.7% growth in 2021.

The sub-5% GDP growth has basically been the standard since the 1970s with only a few outlier years over the decades. This looks incredibly slow compared to a country like India where over 5% GDP growth has been the standard during the same time frame.

This isn’t a huge surprise. US GDP was $23 trillion in 2021 and India’s GDP was just over $3 trillion. It is much harder to grow year-over-year when you are a double-digit trillion dollar economy.

India’s economy is expected to slow down in 2023 to only 7% growth, which will take them out of the #1 spot globally for major markets in terms of annual GDP growth. They are being replaced by Saudi Arabia, who is expecting 7.6% GDP growth this year.

The reason I bring up US debt-to-GDP and India’s GDP growth is that we may have been looking at the US problem incorrectly. We have two options — count on politicians to stop running a deficit or encourage the private sector to spur economic growth. That is really it. Stop making the problem worse or grow your way out.

Majority of the US citizens that I speak with on a weekly basis have little confidence that the US government will return to spending surplus in any short timeframe. This is where the private sector must step up. We either grow our way out of this problem or we force the hand of the Fed to continue devaluing the currency, so they can monetize the debt.

This leads to the multi-trillion dollar question — how do we potentially double the GDP growth of America?

There is really only one viable path in my opinion. We have to double and triple down on technology and innovation. We have to create new products and services. We have to be the leader across artificial intelligence, bitcoin, space, genome sequencing, psychedelics, and much more. If the idea is fringe and potentially disruptive today, the United States must pour immense resources into the sector.

Many things won’t work. That is perfectly fine. The venture capital model is proven for driving innovation. If the US government, and private investors, can unilaterally pursue a similar strategy of funding innovation, we may have a shot of turning this problem around. If not, the United States will continue to erode away as every great nation has done in the past.

Grow or die. That is the motto for America over the next 80 years. History tells us what happens if we fail at the mission. Hopefully we are smart enough to avoid that fate.

Hope everyone has a great weekend. I’ll talk to you on Monday.

-Pomp

Announcement: I am hosting a conference at the Miami Beach Convention Center on March 4, 2023. The goal is to bring together people from different walks of life to debate important ideas that impact our society on a daily basis. The speakers are many of the most popular guests from the podcast over the last few years, along with a few surprises. If you’re interested in attending, you can read about the event details here: https://www.lyceummiami.com/

Reader Note: It feels good to be back writing longer letters to each of you. I have set up my personal schedule in 2023 to spend more time each morning putting these together. My goal is to provide the highest quality information and content possible. I don’t aspire to merely regurgitate the news you can read elsewhere, but rather present unique ideas and opinions that will make you think more critically about various business and investment topics.

If you are interested in reading these letters more often, and want to support the work that our team does, please consider subscribing as a paid member of The Pomp Letter. We appreciate you reading.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The Federal Reserve used low interest rates and quantitative easing to create one of the largest asset bubbles of our lifetime. They didn’t do it on purpose, but they were the leading contributor. In an effort to redeem themselves, and bring inflation under control, the US-based central bank has been on a mission of destruction for over a year now.

The goal is to destroy demand from consumers. If consumers are still buying houses, cars, products, and services, then inflation will persist. No economy can thrive in a meaningful way if the official inflation metrics are compounding annually at 7%+.

There is a big problem though — the Federal Reserve only has two major tools in their toolbox. They can manipulate interest rates and they can buy or sell assets off their balance sheet. These tools are more like shotguns, than sniper rifles. Although you can point the tool in the right direction, you can’t guarantee pinpoint accuracy.

Here is an example: the Fed would love to get consumer spending to cool off. If there is less demand for general products and services, then market forces take over and price increases start to slow down. It doesn’t mean that the aggregate prices will return to their previous levels. The year-over-year price increases will slow though, which is ultimately the metric that the central bank will measure their success.

The Fed is leveraging both tools — interest rate hikes and quantitative tightening — to “destroy demand.” As I mentioned, this shotgun approach can’t be applied with any level of precision in the economy. The tighter financial conditions hit the entire economy like a sledge hammer.

This is why you see asset prices falling across markets. There is carnage everywhere. The Fed claims to not care about asset prices, especially the equities market, but their change in policy has led to immense demand destruction among investors. The S&P 500 is down 20% over the last 12 months. The QQQ is down 33% in the same timeframe.

So why does this matter?

Real people are hurt when equity prices fall. Let’s take a look at public pension funds in the United States. They collectively hold over $4.5 trillion with just under 50% of those assets invested in equities.

Of the more than $2 trillion that is invested in equities globally, the majority is invested in the US stock market as well.

This means that US public pension funds, and the pension recipients who are counting on these funds, are losing 20-30% on their multi-trillion dollar exposure to the US stock market. That is an unintended consequence of the Fed’s pursuit of getting inflation under control.

The Fed would bring inflation down and prevent pain for pension funds if they could. They don’t have that ability though. Remember — shotgun, not sniper rifle. This issue is compounded by the fact that public pension funds in America are less than 80% funded compared to where their actuarial expectations are for funding future obligations. Not a good situation.

It is easy for people to gloss over the connection between the Fed’s monetary tightening and pension recipient pain because there is a long time frame until the damage is realized. Additionally, the pension recipients aren’t holding these assets directly so they likely aren’t paying too much attention on a day-to-day basis.

This brings me to my second example — US home prices.

It is estimated that the average American citizen has upwards of 70% of their net worth tied up in their home. More than 30% of Americans have a net worth of zero or negative if you were to remove their home equity from their personal balance sheet.

The easy way to think about this is when home prices go up, the average American becomes wealthier. When home prices go down, a significant number of Americans become drastically worse off financially.

So how has the Fed’s tighter financial conditions affected home prices in America?

The short answer is that it is complicated. Lance Lambert from Fortune put it well when he wrote:

Across the country, mortgage brokers and builders are scrambling as millions of potential buyers sit on the sidelines after last year’s historic mortgage rate shock. The numbers aren’t pretty: On a year-over-year basis, mortgage purchase applications are down 36.4% and existing home sales have fallen 35.4%.

While home transactions went into free fall in the second half of 2022, home prices have felt less of an impact. Through October, seasonally adjusted U.S. home prices were down just 2.4%, as measured by the Case-Shiller National Home Price Index. On one hand, that marks the second biggest home price correction of the post-WWII era. On the other hand, it’s mild compared to the 26% peak-to-trough U.S. home price crash from 2007 to 2012.

It is obvious to most that the number of transactions, and mortgage applications, have been falling aggressively, but the actual home prices have held up decently well considering the environment. Some critics of this view will argue that the national average is skewed due to some markets being more popular than others, so here is a breakdown of the various cities and regions as well.

As a friend told me this morning, this chart simply shows that people are leaving the West Coast for the East Coast. He was kidding but it made me laugh :)

The fact that transactions are falling and home prices are holding steady tells us that the market has very little liquidity. Robert Frank over at CNBC has a new article out this morning about the “frozen market” of Manhattan apartment sales. The city saw a 30% drop in transactions during Q4.

So why am I writing about public pension equity exposure and US home prices?

The Federal Reserve continues to reaffirm their goal of bringing inflation under control. Although they have raised interest rates at a historic pace, inflation has been much stickier than they anticipated. The tighter financial conditions become, the more pain that investors will feel.

One of the big questions for 2023 is whether US home prices, which make up a majority of US citizen net worth, will follow the 2022 trend of US stocks? If we see the current 2-3% drop extend to 10% or more, there will be immense pain ahead.

There is already talk of a “lost decade” in the stock market (where the next 10 years won’t produce any meaningful returns due to the stagflation environment we are experiencing). It is unlikely that a lost decade would occur in real estate, but it is more possible today than in previous years.

Lastly, some investors are warning of future inflation spikes due to the central bank intervention being executed right now. Michael Burry, the investor from the movie Big Short, put it bluntly:

Hopefully Burry is wrong. History tells us that free markets do a better job of finding equilibrium points and solving problems. It is hard to argue that the US economy, and the related asset markets, are free markets at this point. The old adage “don’t fight the Fed” has stuck around for a reason. The Federal Reserve is in control. They are intervening with the hopes of creating solutions. Unfortunately, they may actually be doing the opposite. No one can tell the future, but let’s hope they know something we don’t.

-Pomp

Reader Note: It feels good to be back writing longer letters to each of you. I have set up my personal schedule in 2023 to spend more time each morning putting these together. We have also made a number of changes to the audio podcast and YouTube videos that we put out as well (see video below). My goal is to provide the highest quality information and content possible. I don’t aspire to merely regurgitate the news you can read elsewhere, but rather present unique ideas and opinions that will make you think more critically about various business and investment topics.

If you are interested in reading these letters more often, and want to support the work that our team does, please consider subscribing as a paid member of The Pomp Letter. We appreciate you reading. Have a great day.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

I have been reading one book per week this year. This past week’s book was Empire State of Mind written by Zack O’Malley Greenburg. Highly recommend reading it. If you are interested in the individual highlights that I made in the physical book, you can read those here. Hope you enjoy these notes every Monday morning.

Book’s main argument:

Jay-Z is one of our generation’s most notable music artists, but he has also established himself as one of the world’s best entrepreneurs. This book chronicles his rise from street corner to corner office, including the wins, losses, and lessons learned. There are stories that you have never heard before and behind-the-scenes decisions that highlight how a kid from the Bronx was able to become a billionaire in two decades.

6 Big Ideas:

💡 Idea #1 — Evolution is the mark of every great success. Jay-Z started out selling drugs to make a living, but was able to evolve into a music artist and then a businessman. This ability to re-invent himself was essential to his accomplishments. Greenburg writes:

Rather than stop and marvel at his own creation, he has continued to evolve personally and professionally.

One of the main reasons for this continued success is Jay-Z’s ability to build and leverage his personal brand.

One of the critiques of Jay-Z early on was that he was changing his music to appeal to the mass audience, which some considered an act of “selling out.” These critiques didn’t go unnoticed and Jay-Z said the following:

“I dumbed down for my audience, doubled my dollars. They criticize me for it, yet they all yell, ‘holla.’” - Jay-Z in Moment of Clarity track

💡 Idea #2 — Hard work is essential to achieving anything great. Jay-Z had natural talent for a number of different activities, but he still understood from an early age that he would have to work diligently to turn talent into profit. One of his childhood mentors, Jaz-O, said the following:

“I taught him that in order to be the best, you don’t have to outwardly hone your craft. But in privacy, hone your craft. People don’t have to know how hard you work to get something.” - Jaz-O on what he taught Jay-Z

This hard work can be seen in the late 1980s when Jay-Z was willing to work for free to learn the craft. Greenburg writes:

Though Jay-Z today grosses millions per show, he spent four months in 1989 working the hip-hop equivalent of an unpaid internship - rapping for room and board, which consisted of a spot on the tour bus floor and a free pass at the buffet.

💡 Idea #3 — Necessity is the mother of invention. Jay-Z and his friend Damon Dash wanted to sign a record deal but no one would take them on. This forced them to create their own label, Roc-A-Fella Records. The rest is history. Greenburg writes:

With Jay-Z’s debut album nearly complete, he and Dash shopped it to all the major record labels, but there were no takers.

So Jay-Z and Dash pooled their resources with a silent partner, Kareem “Biggs” Burke, to start their own record label, Roc-A-Fella Records. They picked the name to signify wealth on the level of John D. Rockefeller, the world’ first billionaire, and to evoke images of the Rockefeller family’s enduring dynasty.

It is telling that they named the record label after the world’s first billionaire and then Jay-Z potentially became hip-hop’s first billionaire. Another lesson that he learned from Damon Dash was that it would pay to have ownership in ventures outside of music. Greenburg writes:

Roc-A-Fella Records soon expanded beyond music, thanks to two of Dash’s guiding principles: “We shouldn’t let other people make money off us, and we shouldn’t give free advertising with our lifestyle.”

Rocawear was the cross-promotional title of the urban clothing line that Dash dreamed up shortly thereafter. The venture started with three sewing machines in the back of Roc-A-Fella Records office; early offerings were limited to t-shirts with the Roc-A-Fella logo stitched to the front.

Within eighteen months of its birth, Rocawear had pulled in $80 million in revenues.

💡 Idea #4 — Constantly understand your goals and lay out a plan to increase the odds of achieving them. Jay-Z realized that his music was going to slow down his business pursuits, so he walked away. Jay-Z came out of retirement later but it is obvious that he wanted to focus when he set his mind to something. Greenburg writes:

Jay-Z’s main motive for retirement was business. He wanted to shift from the music side to the management side of the recording industry.

It was clear Jay-Z’s desire to be seen as a legitimate businessman trumped his need to be seen as a big spender.

A key component of Jay-Z’s plan for a new area of expertise was to find mentors he could learn from. Greenburg writes:

In each case, Jay-Z absorbed the best qualities of his mentor, applied his own considerable talents to the subject at hand, quickly surpassed said mentor, and moved “on to the next one.”

💡 Idea #5 — You have to constantly ask questions and try to learn new things. Jay-Z mastered this. He was never afraid to sound stupid or ask the simple question. Greenburg writes:

Those who crossed paths with Jay-Z in the boardroom noticed his inquisitive nature. “One of the things I like about the guy is that he wants to learn. He has a thirst for knowledge. And even when he was younger, he was always asking questions. If it was backstage or in a studio or a business meeting, he wasn’t afraid to say ‘Hey, how does this work?’ Or, ‘What’s the structure of that kind of deal?’ He was always very curious about business deals. Which lends itself well to someone who would like to transition from being an artist to being a business impresario.” — Bernie Resnick (entertainment lawyer) on Jay-Z

Learning isn’t the only ingredient needed for success. You have to be a risk-taker and be willing to bet on yourself. Jay-Z did this when he bought back his music contract as he left Def Jam. Greenburg writes:

Jay-Z had to pay Def Jam $5 million to buy out his contractual obligation to make one final album. “I wanted to have it back for a number of reasons, the most important being that it wasn’t consistent with the type of business I planned. It was more so the principle that the amount of money. It was about owning my own masters and owning my own companies, but you have to pay for the privilege.”

💡 Idea #6 — The person you marry is one of the most important life decisions that you make. Jay-Z and Beyonce were the ultimate partnership. They compliment each other incredibly well and the results speak for themselves.

“In terms of the entertainment industry, it’s the biggest merger [Jay-Z and Beyoncé] you could possibly imagine. It’s two superpowers coming together. It’s sort of Microsoft and Apple deciding they can be literally in bed together.” — music historian Jeff Chang

It is obvious that both Jay-Z and Beyonce knew the benefits that they brought to each other.

“We exchanged audiences. Her records are huge Top 40 records, and she helped ‘Bonnie and Clyde’ go to number one. What I gave her was a street credibility, a different edge.” — Jay-z on Beyoncé

Memorable quotes:

* One of the main reasons for this continued success is Jay-Z’s ability to build and leverage his personal brand.

* From a business perspective, moving toward the mainstream was the right decision.

* [Jay-Z] making himself synonymous with the New York Yankees — the winningest team in the history of professional sports.

* When it comes to business, Jay-Z is a cold pragmatist. 

* New albums had become necessary only as means to stay relevant, best used as canvasses for artistic statements or vessels for commercial partnerships — or in Jay-Z’s case, both.

* By 2011, he’d amassed a fortune of $450 million; it seemed he was spending more time with billionaires — Warren Buffett, Bill Gates, Michael Bloomberg, Mikhail Prokhorov, and Oprah Winfrey, for example — than with other rappers.

* Public perception can take a long time to shift — though Jay-Z tried early and often to transform his persona from cocaine kingpin to music mogul and tastemaker, it took more than a decade to get most people to believe he had changed.

* Jay-Z managed to propel himself from street corner to corner office without the benefit of a college degree not because he wanted to, but because he had to.

Pomp’s Takeaways:

The first big takeaway is that many of the hip hop artists from the 1990s/2000s timeframe ended up being great entrepreneurs. Jay-Z is the perfect example. He has continued to reinvent himself and eventually became a billionaire. When you unpack this evolution, you notice that some of it was out of necessity and some of it was strategic. There is a theme of pursuing the larger market opportunity as well. It helps to constantly ask yourself “what should my next act be?”

My second big takeaway was how Jay-Z followed the same principles of learning, asking questions, and seeking mentors just as so many of the entrepreneurs and investors I’ve read about over the years. Even though Jay-Z is notorious for not writing down his lyrics and has a natural talent for music, he still persistently worked to turn that talent into a global opportunity. Nothing of scale and sustainable success is by accident — hard work is always a key component.

My third big takeaway is how cyclical the themes of “betting on yourself,” “going direct,” and “solopreneur” seem to be. These are themes that people use when discussing newsletters, podcasts, and other digital media forms. It is exactly what Jay-Z and his friends were doing 20 years ago though. Owning your business and products has also stood the test of time as a strategy. Be willing to take a risk!

My fourth big takeaway was how important Beyonce was to Jay-Z’s life. He seems to have matured after meeting her and their marriage has been a big part of his ability to stay relevant over a few decades. Marriage is a big decision so don’t take it lightly. It makes me happy and proud to have married Polina, who appears to have unintentionally done many of the things that Beyonce did for Jay-Z.

My final big takeaway was how much the business world can learn from the hip hop community. We know that hip hop sets culture in America, but there are an unlimited number of business lessons available as well. You can learn something from anyone you encounter. Even if industries don’t appear to be related, they are usually more similar than you realize. Look hard. Be curious. Ask questions. Find one thing that you can import to your work, your career, your industry, or your business. This is the way.

As I mentioned, this past week’s book was Empire State of Mind written by Zack O’Malley Greenburg. Highly recommend reading it. If you are interested in the individual highlights that I made in the physical book, you can read those here. Hope you enjoy these notes every Monday. Feel free to leave a comment - I read all of them.

-Pomp

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This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

I have read approximately one book per week during 2022. It started off as a personal challenge — could I stay disciplined enough to read consistently? But as with most things in life, the benefits of the personal challenge ended up being much more than I originally anticipated.

The main benefit that I discovered was an inverse relationship between reading and wasting time on social media. Many of you have heard me talk about it, but a friend gave me a physical book to read over the summer. I found it difficult to sit down and read without checking my phone every 30 seconds. The digital addiction was smacking me in the face. I committed myself to reading only physical books for the rest of the year and I haven’t looked back. Increasing my ability to focus for long periods of time has been a very rewarding benefit.

As I have increased my ability to focus, I’ve spent more time reading and less time on social media. My overall productivity has shot through the roof and I also feel much more calm mentally. It is hard to describe, and I probably would think it was woo-woo nonsense if I didn’t experience it personally, but we are different animals when are our brains are on social media.

Lastly, the more reading that I’ve done, the more learning that I’ve achieved. This is probably the most fun part for me. Below I have compiled a list of my favorite 10 books that I read in 2022. I’ve linked to the book notes that I produced where appropriate — if a book doesn’t have a link to notes, I’ll be publishing the notes in the coming weeks.

Let me know in the comments or by replying to this email with your book recommendations. The best books that I find are always through others.

Here are the best books I read this year:

#1 — Mastery by Robert Greene

The mastery of a subject has become an outdated idea. Most people associate mastery with genius or natural skill. The truth is that mastery is almost always accomplished by intense focus and hard work over a decade or more. This book explains how to build mastery in the modern world. (Pomp’s Notes on Mastery by Robert Greene)

#2 — A Curious Mind by Brian Grazer

Curiosity is a superpower. We often don’t talk about, nor think of, curiosity as an endeavor worth pursuing on its own. Many people talk about creativity and innovation, but Grazer argues that curiosity is the more important pursuit. He uses his personal experience with “curiosity conversations” to highlight the benefit. (Pomp’s Notes on A Curious Mind by Brian Grazer)

#3 — Discipline Is Destiny By Ryan Holiday

The description on Amazon summarizes this book perfectly: “To master anything, one must first master themselves–one’s emotions, one’s thoughts, one’s actions. Eisenhower famously said that freedom is really the opportunity to practice self-discipline.” Ryan Holiday delivers again with a book that is hard to put down and makes you seek self-improvement. (Pomp’s interview with Ryan Holiday)

#4 — Being Mortal by Atul Gawande

No one wants to talk about the experience of dying, nor the days, months, and years that lead up to that moment. Old age used to be a revered status in a society — technology changed that. Rather than require our elderly to live the last days in institutionalized care away from their families, we now have a better path forward. Atul Gawande shares personal stories, and many different studies, that will make you think more deeply about medicine’s role in aging and the end of your life. (Pomp’s Notes on Being Mortal by Atul Gawande)

#5 — Good Profit by Charles Koch

Prosperous societies depend on freedom, both for the market and the individual, so Charles Koch argues prosperous companies should follow a similar strategy. He uses Koch Industries (one of the world’s most valuable private companies) as his example of Market-Based Management. This book includes the perfect combination of tactics, entertainment, and humor. It has become one of my favorite business books. (Pomp’s Notes on Good Profit will be published in next 2-3 weeks)

#6 — Empire State of Mind by Zack O’Malley Greenburg

Jay-Z rose from the streets of New York City to become one of the most successful businessmen in the world. This book unpacks the rapper-turned-business mogul’s life story, including the wins, losses, and lessons learned. The author does a great job of highlighting the macro trends, while exposing details of the story that really hammer home the point. (Pomp’s Notes on Empire State of Mind by Zack O’Malley Greenburg will be published in the next 2-3 weeks)

#7 — Creative Selection by Ken Kocienda

Apple is not only one of the most valuable companies in the world, but it is also widely considered one of the most creative and innovative. Ken Kocienda spent approximately 15 years working on numerous Apple products that you use on a daily basis, including the Safari browser and the keyboard on your iPhone or iPad. He uses anecdotes and analysis to unpack what made Apple special.

Ken is refreshingly honest throughout the book - sharing his accomplishments, failures, and the inside baseball of many major product decisions over the years. If you are an entrepreneur or investor, this book will be part inspiration, part education, and part entertainment. There are few companies like Apple, and even fewer leaders like Steve Jobs, so this behind-the-scenes look is worth reading. (Pomp’s Notes on Creative Selection by Ken Kocienda)

#8 — Freedom by Sebastian Junger

Freedom is a topic that we constantly talk about, but very few people stop to think what it actually means to be free. The pursuit of freedom is a concept as old as time - people have died fighting for it, others cherish it, and many enjoy its benefits without noticing. Sebastian Junger, who has traveled the world, walks hundreds of miles along the East Coast railroads with friends, while contemplating the concept of freedom. They are alone, dependent on only themselves, and forced to figure out how to survive. This is a quick read that will make you think more deeply about one of life’s most important topics. (Pomp’s Notes on Freedom by Sebastian Junger)

#9 — Paper Belt on Fire by Michael Gibson

Higher education is a massive bubble. Students are taking on tens of thousands of dollars in debt for a chance to be awarded a piece of paper, but colleges and universities are no longer testing for mastery of knowledge - they have become a status filter for those willing to sacrifice years of their life to get a job. This focus on status, rather than measurable value creation, is pervasive from Washington DC to Boston, which is what author Michael Gibson calls the Paper Belt.

After working for Peter Thiel and helping to steer the now famous Thiel Fellowship program, Michael and his colleague, Danielle, left to start a venture capital fund that would effectively short the higher education bubble. They have backed a number of companies that you have probably heard of, but their investment comes with a twist - you have to be a college dropout or never stepped foot on a college campus. (Pomp’s Notes on Paper Belt on Fire by Michael Gibson)

#10 — The Practice of Groundedness by Brad Stulberg

We live in a hyperconnected world where you are one notification away from a dopamine hit. Too many people are focused on productivity, self-improvement, and being “always on.” The solution lies at the intersection of ancient wisdom and modern science in what Stulberg calls “groundedness” — or the art of being present every day as you take the long-term view of your work and accomplishments. (Pomp’s Notes on The Practice of Groundedness by Brad Stulberg)

BONUS: The 50th Law by Robert Greene and 50 Cent

This book is a must-read, but everyone I suggest it to ends up thinking I’m joking. It addresses fear in a compelling way. Greene writes in his usual style, but overlays the lessons with 50 Cent’s life. The book comes in leather like a bible. I know it sounds crazy, but just trust me on this one :)

Those are my top 10 books for 2022. I hope that you find them valuable. My wish for all of you is that you find time to do more reading during 2023 — it will help you break your social media addiction, it will help you become smarter, and it will force you to be more interesting.

- Pomp

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This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

One of the most surprising data points over the last few weeks has been bitcoin’s stability against the uncertain and chaotic macro backdrop. The asset, which is historically considered highly volatile by legacy investors, has surprised many people. I asked Will Clemente, co-founder of Reflexivity Research, to write a guest post about this lack of volatility. Below is Will’s analysis.

With a tremendous amount of macroeconomic uncertainty overhanging markets, it may be quite surprising for some to see Bitcoin maintain stability in the $18K-$19K range that its been in for several months now. Bitcoin volatility continues to compress near record lows, expressed by the Bitcoin Historical Volatility Index:

When comparing Bitcoin’s volatility to equities volatility via the VIX, we see that the ratio of the two is at all-time lows.

Comparing BTC’s 10 day realized vol to that of the Dow Jones, we can see that this has set new lows.

Also comparing the Bitcoin Volatility Index to MOVE (Treasury market volatility index), we can see that this ratio is also at new lows.

The Bitcoin options market is pricing in low volatility, with implied volatility across the spectrum approaching yearly lows.

Meanwhile, Bitcoin futures open interest has screamed to new all-time highs along with the ratio of adjusting open interest for market cap size. With CPI this morning and plenty of potential macroeconomic catalysts over the coming weeks, there is a high likelihood for a substantial move in BTC price with the combination of volatility near all time lows and futures open interest at all time highs. 

The quick takeaway is to ensure that you pay attention in the coming days. The last few weeks are not necessarily indications of the next few weeks, although it has been a positive development to see the low volatility from Bitcoin.

Hope each of you enjoyed this quick analysis. If you would like to receive in-depth reports and research from the team at Reflexivity Research, you can subscribe here.

-Pomp

THE RUNDOWN:

‘This is serious’: JPMorgan’s Jamie Dimon warns U.S. likely to tip into recession in 6 to 9 months: JPMorgan Chase CEO Jamie Dimon on Monday warned that a “very, very serious” mix of headwinds was likely to tip both the U.S. and global economy into recession by the middle of next year. Dimon, chief executive of the largest bank in the U.S., said the U.S. economy was “actually still doing well” at present and consumers were likely to be in better shape compared with the 2008 global financial crisis. Read more.

Ark’s Cathie Wood issues open letter to the Fed, saying it is risking an economic ‘bust:’ The Federal Reserve likely is making a mistake in its hard-line stance against inflation Ark Investment Management’s Cathie Wood said Monday in an open letter to the central bank. Instead of looking at employment and price indexes from previous months, Wood said the Fed should be taking lessons from commodity prices that indicate the biggest economic risk going forward is deflation, not inflation. Read more.

Paul Tudor Jones Tamps Down Bitcoin Bullishness: "I still have a minor allocation to bitcoin," said Paul Tudor Jones during a CNBC appearance on Monday morning. It wasn't exactly a rousing endorsement of the crypto given Jones' major bullishness two-plus years ago. At the time, in mid-2020, the hedge fund giant said he had allocated 1%-2% of his multibillion-dollar portfolio to bitcoin. He later said he could see allocating as much as 5% of his assets to bitcoin if the U.S. Federal Reserve continued on its path of monetary debasement. His remarks at that time helped pump crypto prices – then already in a bull market – even higher. Read more.

Congress is still considering changes to the retirement system, including catch-up contributions: There’s still a decent chance that changes to the U.S. retirement system will be enacted before the end of the year. Despite there being just a few months left before the next Congress convenes Jan. 3 — the midterm elections will be Nov. 8 — the push to improve Americans’ ability to save for retirement is supported by both Republicans and Democrats. Read more.

Geoff Woo is an entrepreneur, investor, and a partner with Jake Paul at Anti-Fund.

In this conversation, we discuss the rise of creators, how creators are now private equity firms, Geoff's investment strategies, building vs. investing, and human optimization. We also talk about some of Geoff's companies including HVMN, betr, Archive.com and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Geoff Woo Explains Why MrBeast & Jake Paul Will Be Billionaires

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Alto IRA can help you invest in crypto in tax-advantaged ways to help preserve your hard earned money. There are no setup or account fees, and it’s all you need to do to invest in crypto tax free. Open an Alto CryptoIRA to invest in crypto tax-free by clicking here. 

* Eight Sleep is the most advanced solution on the market for thermoregulation by pairing dynamic cooling and heating with biometric tracking. Click here to check out the Pod Pro Cover and save $150 at checkout. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide here today. 

* SiGMA is the bridge between iGaming, online sports betting, and emerging technology, such as Blockchain, NFTs, fintech, GameFi, metaverse, and AI, is loud and clear. The largest global summit of this kind is heading to Malta from November 15 to 17. Log on to AIBC.WORLD or SiGMA.WORLD to see all our upcoming global summits! 

* Bullish is a powerful exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Click here to learn more. 

* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

PayPal published a new policy towards the end of last week that was set to go into practice in November. Companies do this all the time and there is never any fanfare. But this policy update was quite different.

PayPal explicitly stated that they would target anyone “sending, posting, or publication of any messages, content, or materials” that “promote misinformation.” How would they do this? The company would deduct $2,500 from your PayPal account if they deemed you were in violation.

Unbelievable.

To ensure that we have no misunderstanding here, let me break this down in the most simple terms. A private company was prepared to financially penalize their customers if they posted any message on the internet that the company believed was “misinformation.”

Naturally, the internet had a field day with this. The backlash was loud and swift. Everyone from Elon Musk to former PayPal President David Marcus spoke out against this egregious encroachment on personal freedom, individual liberties, and free speech.

This kind of lunacy from a corporation reminded me of the George Orwell line from 1984:

“The ideal set up by the Party was something huge, terrible, and glittering—a world of steel and concrete, of monstrous machines and terrifying weapons—a nation of warriors and fanatics, marching forward in perfect unity, all thinking the same thoughts and shouting the same slogans, perpetually working, fighting, triumphing, persecuting—three hundred million people all with the same face.” - George Orwell

The beauty of America, and humanity at large, is that we all think different ideas. We question the status quo. People used to think that the Earth was flat and some individuals who spoke out against the idea were killed. People used to think it was perfectly fine for medical staff to refrain from washing their hands between seeing different patients in hospitals. People used to think that the light bulb could kill them.

None of those ideas remain today because someone was willing to think differently. Someone was willing to ignore the talking points. They were willing to run the experiments, pursue the scientific method, or ask questions until they were satisfied.

While PayPal may be the first private company to float this idea (which they are now claiming was by accident (lol) and never intended to have published), there are plenty of dictators of the past who wished they could have this type of control. Back to Orwell:

“By comparison with that existing today, all the tyrannies of the past were half-hearted and inefficient…Part of the reason for this was that in the past no government had the power to keep its citizens under constant surveillance. The invention of print, however, made it easier to manipulate public opinion, and the film and the radio carried the process further.” - George Orwell

Technology has been a very large net positive for humanity. It has led to incredible economic prosperity and progress. But it has also created an environment which allows technology companies, and governments, to violate the rights of the individual. It positions the everyday citizen at a disadvantage when companies want to do dumb things like this “misinformation” proposal.

It is during these times that we must remember that there is a better way. The world doesn’t have to end in surveillance, censorship, and dictatorships. Freedom is a viable option. Orwell pointed this out as well:

“To the future or to the past, to a time when thought is free, when men are different from one another and do not live alone—to a time when truth exists and what is done cannot be undone: From the age of uniformity, from the age of solitude, from the age of Big Brother, from the age of doublethink—greetings!” - George Orwell

The PayPal news was a good reminder that weird, nasty things are on the horizon. There will be more proposals around combatting “misinformation.” It reminds me of the use of the term “terrorism” or “insurgent.” For nearly 20 years, almost anything was fair game for a government to do if they were doing it in the name of stopping terrorism. The same thing will be true for misinformation for the next 20 years.

Private companies and governments are going to try a lot of things. The individuals will only be able to resist these overreaches if they are willing to band together and speak out. That is what happened over the weekend. PayPal quickly backpedaled. It didn’t come without cost though - many of my friends deleted their accounts already.

The scariest situation wasn’t even the PayPal proposal though.

Take the idea of PayPal’s banking authorization. They are allowed to debit your bank account, so if you had $0 in your PayPal account and this policy had been put into action, does that mean PayPal could have deducted $2,500 out of your personal bank account if they didn’t like something you said on the internet? That sounds horrific.

No thank you.

The second situation is central bank digital currencies (CBDCs). What happens when it isn’t a company with these capabilities, but rather a government? It is likely to be a real scenario if CBDCs gain mainstream adoption. That is a slippery slope with unclear guardrails, which historically has led to far overreaches that are later regretted.

PayPal just rang the alarm bell. We must proceed with caution. No one wants malicious market participants openly sharing known false information to the detriment of innocent people. But there are quite a number of organizations claiming that information is known and/or accurate, which later turns out to not be the case.

We have to encourage the questioning of authority. In fact, Benjamin Franklin said “It is the first responsibility of every citizen to question authority.” We have to understand that truth is not decreed from mountain tops, but rather it is discovered from rigorous evaluation and relentless testing. Social media has optimized our world around speed and decisiveness, which can have its advantages in certain situations, but that doesn’t necessarily ensure we always get the right answers on the first few tries.

Things are getting weirder. We must continue to hold curiosity and skepticism in high regard. We probably don’t want corporations or governments regulating what everyday citizens say on the internet outside of the extreme cases (encouraging violence, etc). This whole sector is going to be worth paying attention to in the coming years. If we aren’t careful, we won’t even be able to talk about it by then.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: AG1 by Athletic Greens is the single best option for easy optimal nutrition. Not only do I take AG1 every day, but I liked the product so much I became an investor in the business.

AG1 delivers 75 vitamins, minerals and whole-food sourced nutrients. That’s the equivalent of 9 other products: your probiotic, your multivitamin, your daily supplement (you get the picture)—all in a single serving that you mix with water. If you’re looking to fill nutritional gaps and have more energy, it’s an absolute no-brainer.

Sign up for an Athletic Greens subscription today and they’ll throw in a FREE one-year supply of Vitamin D and 5 travel packs for Pomp Letter subscribers!

Braeden Anderson is an Attorney at Kirkland & Ellis and Author of the book "Black Resilience".

In this conversation, Braeden gives us the latest updates on regulation in the crypto space and when we might see progress on these important decisions. We also discuss Braeden's background and his tough upbringing that led him to become the success he is today.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Weekly Bitcoin Recap

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Alto IRA can help you invest in crypto in tax-advantaged ways to help preserve your hard earned money. There are no setup or account fees, and it’s all you need to do to invest in crypto tax free. Open an Alto CryptoIRA to invest in crypto tax-free by clicking here. 

* Eight Sleep is the most advanced solution on the market for thermoregulation by pairing dynamic cooling and heating with biometric tracking. Click here to check out the Pod Pro Cover and save $150 at checkout. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide here today. 

* SiGMA is the bridge between iGaming, online sports betting, and emerging technology, such as Blockchain, NFTs, fintech, GameFi, metaverse, and AI, is loud and clear. The largest global summit of this kind is heading to Malta from November 15 to 17. Log on to AIBC.WORLD or SiGMA.WORLD to see all our upcoming global summits! 

* Bullish is a powerful exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Click here to learn more. 

* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

There is a famous quote from Angela Bassett that I often think of:

“It's important to surround yourself with good people, interesting people, young people, young ideas. Go places, learn new stuff. Look at the world with wonder - don't be tired about it.”

Interesting people. Young people. Young ideas. This simple concept is a surefire way to preserve the plasticity of your brain. As we all get older, we tend to get set in our ways. We confuse experience for knowledge. We start to see the world as a static environment, rather than the dynamic, ever-changing reality that we all live in.

This is true in life and investing.

Over the years I have tried to keep a pulse on what young people are building, what content they are consuming, and what ideas they are most excited about. These conversations sometimes lead me to the discovery of young talent that I think has the opportunity to go far in their career.

When I find these individuals, I try to ask myself two questions:

* Is this person rapidly improving their skills and knowledge at an impressive rate?

* Do I learn something from this person every time I talk to them?

Whenever the answer to both questions is “yes,” I try to spend more and more time with the young person. My most recent example over the last 18 months is Will Clemente. Many of you probably recognize him from the various interviews and on-chain analysis that we have done in the past, but Will continues to impress me on a daily basis.

One of the advantages of being a young person is that you have an abundance of time. Some people use the extra time for social activities. I definitely did in college. But there is a select few who spend countless hours reading, learning, and improving.

This is Will.

He spends all day reading any book suggested to him or talking to older investors who are willing to share their perspective with him. Will has more information, more understanding, and more questions every time I talk to him. His unlimited curiosity has transformed the 18 year old kid that I met a few years ago into one of the brightest young analysts in the bitcoin and crypto industry.

As Will and I have gotten to know each other, it became obvious that we would enjoy working together in a more formal capacity. It also became obvious that his network and personal interests would be highly valuable to the professional investment community that I frequent.

This week we announced that Will is starting Reflexivity Research, an institutional-grade research firm focused on bitcoin and cryptocurrencies. The company is co-founded by myself and Inflection Points Inc. This is not just another research firm though. For most of you reading this, you are not the intended audience.

Reflexivity Research is specifically built for hedge funds, institutional capital allocators, and family offices. The larger pools of capital have been underserved with crypto-native research, but we plan to change that.

Will has assembled a team of young people that live and breathe the crypto market. Some of them use their real identities and some of them are pseudonymous. All of them are great at what they do though. This team is obsessed with understanding what is happening in the fast-moving industry that continues to produce an astounding amount of economic value.

I’ve had the pleasure of surrounding myself with young, interesting people for awhile now. I learn from them every day. It is humbling and energizing. And now, we have figured out a way to bring this experience to the institutional audience.

If you’re interested in signing up for Reflexivity Research, you can sign up here. The first research report will go out on Monday and the first client call will be on Tuesday afternoon. Hope to see each of you there.

Have a great weekend. Talk to you Monday.

-Pomp

Danny Jones is on a mission to talk to the world's weirdest people.

In this conversation, Anthony Pompliano and Danny Jones discuss Danny's podcast, Koncrete, how he finds strange people, talking to members of the cartel, Charles Manson, scientology, censorship, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

The Fed Is Promising Pain For Everyone

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Alto IRA can help you invest in crypto in tax-advantaged ways to help preserve your hard earned money. There are no setup or account fees, and it’s all you need to do to invest in crypto tax free. Open an Alto CryptoIRA to invest in crypto tax-free by clicking here. 

* Eight Sleep is the most advanced solution on the market for thermoregulation by pairing dynamic cooling and heating with biometric tracking. Click here to check out the Pod Pro Cover and save $150 at checkout. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide here today. 

* SiGMA is the bridge between iGaming, online sports betting, and emerging technology, such as Blockchain, NFTs, fintech, GameFi, metaverse, and AI, is loud and clear. The largest global summit of this kind is heading to Malta from November 15 to 17. Log on to AIBC.WORLD or SiGMA.WORLD to see all our upcoming global summits! 

* Bullish is a powerful exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Click here to learn more. 

* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Everyone is in the talent business. Whether you are an entrepreneur, investor, or an employee of a large corporation, we are all trying to find great people to work with. This activity is fairly opaque, so most people rely on their intuition. If you ask them “are you good at finding great talent?,” they will quickly say yes.

But is that really true? How do you know you are good? What does it take to find the best talent in the world?

These questions led me to read a new book over the weekend from Tyler Cowen and Daniel Gross called Talent: How to Identify Energizers, Creatives, and Winners Around the World. As we all know, non-fiction business books can be dry and hard to read, but this one was very well done. It was concise, full of examples, and clearly communicated a number of powerful ideas.

I took pages of notes from the book, but here are some of the main ideas that may help you in your day-to-day job:

First, talent search is key to everything we do.

* “Talent search is one of the most important activities in virtually all human lives.”

* “The practical value is that identifying underrated talent is one of the most potent ways to give yourself a personal or an organizational edge.”

* “Talent search is a fundamentally optimistic endeavor, based on the premise that there is always more value to be found in our world. But finding this talent is itself a creative skill, akin to music or art appreciation. It cannot be done by boilerplate interviews, groupthink, algorithms, studying PowerPoints, or simple formulas.”

* “Any move to become a better appreciator of the talents and virtues of others probably also will improve your skills at ruthlessly identifying the causes of human failure.”

Second, a key idea throughout the book is that you can usually tell more about someone from what they do outside their work hours.

* “Daniel recalls that he first learned from Tyler this question for prospective hires: "What is it you do to practice that is analogous to how a pianist practices scales?" You learn what the person is doing to achieve ongoing improvement, and perhaps you can judge its efficacy or even learn something from it. You also learn how the person thinks about continual self-improvement, above and beyond their particular habits. If a person doesn't practice much, they still might be a good hire, but then you are much more in the world of "what you see is what you get," which is valuable information on its own. If the person does engage in daily, intensive self-improvement, perhaps eschewing more typical and more social pursuits, there is a greater chance they are the kind of creative obsessive who can make a big difference.”

* “Personality Is Revealed During Weekends.”

* “Especially for higher-level jobs, the question of spare time is a critical one. The very best performers don't stop practicing for very long, and if you hear or sense that a person doesn't do much practicing and skill refining in his or her spare time, they probably are poorly suited to assume a top position or to meet very high expectations.”

Third, Sam Altman who used to run YCombinator has a quote in the book that describes one of the key differences between the program’s most successful founders and everyone else.

* Sam: There was a big difference in “how quickly our best founders, the founders that run billion-dollar-plus companies answer my emails versus our bad founders. I don't remember the exact data, but it was mind-blowingly different. It was a difference of minutes versus days on average response times.”

Daniel and Tyler saw this as interesting and important because “this quality of speed of response is picking up on how much the individual is focused on being connected to the world and responding to plausibly important queries.”

Fourth, the book hammers home the point that most interview questions are actually very bad.

* “A good rule of thumb is this: if you found your question in a job interview book or on a website, it is likely you are simply testing the candidate's preparation level.”

So what exactly are Tyler and Daniel suggesting an interviewer should try to evaluate during the interview? It boils down to whether the person can do the job well. This leads to a discussion around the Big Five Personality Traits, how to conduct interviews, and the differences between in-person and remote interviews.

Fifth, a very interesting point in the book surrounds the idea of intelligence. Most people would tell you that they are looking for an intelligent person when searching for talent. But the book lays out a strong argument that intelligence may not matter as much as you would think for most roles, but it could matter more than you think for the highest achievers.

* “After a long back-and-forth, we've concluded that intelligence usually is overrated, most of all by people who are smart.”

* “Intelligence can help a person find new ideas and put the pieces together where others cannot, and extreme intelligence may be required to be credible when exhibiting the highest levels of leadership skills, especially when you are leading other very smart people.”

* “If you are looking for inventors, IQ is by far the most significant of all the measurable variables we have. Furthermore, at higher levels of measured IQ the probability of becoming an inventor rises all the more.”

* “The data for that population show that personality and conscientiousness matter most at the bottom of the distribution. For instance, in the bottom tenth of earners, non-cognitive skills which include, for instance, features of personality matter two and a half to four times more than do cognitive skills.”

* “Smart people can feed off each other and make each other better, within companies and even within nations.”

Lastly, there are two key concepts introduced by the book that I found helpful. The first is stamina and the second is rate of improvement. On stamina, they say:

* “We see stamina as one of the great underrated concepts for talent search, especially when you are looking for top performers and leaders and major achievers.”

* “Because stamina can matter a good deal, and because stamina can be so hard to read in a short interaction, this is yet another reason to interview a person's references. Remember our saying "Personality is revealed on weekends"? Well, a person's references often have a pretty good idea of what that individual is up to on weekends, or weekdays for that matter. A judgment of stamina in particular may require observation over longer periods of time, and so your skills as an interviewer need to be multifaceted and directed toward the references as well.”

And next, on rate of improvement, Tyler and Daniel write: “Consistent with the import of stamina, as discussed in the previous chapter, look to see if a person shows signs of improvement each time you meet with them. Does the person have an obsession with continual self-improvement? Let's turn again to the words of venture capitalist Sam Altman:

“It's easiest if you get to meet people in person, several times. If you meet someone three times in three months, and notice detectable improvement each time, pay attention to that. The rate of improvement is often more important than the current absolute ability (in particular, younger founders can sometimes improve extremely quickly).”

The power of compound returns is important for human talent, just as it is for your stock portfolio.”

They punctuate this point by writing “one of your most significant skills as a talent evaluator is to develop a sense of when people are moving along a compound returns curve or not.”

Whether you think you’re a good evaluator of talent or not, I recommend checking out Tyler Cowen and Daniel Gross’ new book. You can buy it here (I am not affiliated in any way, nor receive no financial benefit). I found it informative and have already identified a few changes that I will be making to the interview processes that I run.

I would love to hear your thoughts on talent identification and interview process. What questions do you like to ask? What qualities do you look for? Leave a comment on this post and I’ll respond to as many as I can later today. (if you’re reading this on email, click the title and it will take you to a browser page)

Hope each of you has a great day. I’ll talk to everyone tomorrow.

-Pomp

🚨 SPONSORED: AG1 by Athletic Greens is the single best option for easy optimal nutrition. Not only do I take AG1 every day, but I liked the product so much I became an investor in the business.

AG1 delivers 75 vitamins, minerals and whole-food sourced nutrients. That’s the equivalent of 9 other products: your probiotic, your multivitamin, your daily supplement (you get the picture)—all in a single serving that you mix with water. If you’re looking to fill nutritional gaps and have more energy, it’s an absolute no-brainer.

Sign up for an Athletic Greens subscription today and they’ll throw in a FREE one-year supply of Vitamin D and 5 travel packs for Pomp Letter subscribers! 🚨

David Puell runs On-Chain Research at ARK Invest.

In this conversation, we discuss Bitcoin's recent performance, how the macro economy is affecting Bitcoin, long-term vs. short-term holders, Ethereum's merger, and what risks are associated with this move.

Listen on iTunes: Click here

Listen on Spotify: Click here

Weekly Bitcoin Update

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Alto IRA can help you invest in crypto in tax-advantaged ways to help preserve your hard earned money. There are no setup or account fees, and it’s all you need to do to invest in crypto tax free. Open an Alto CryptoIRA to invest in crypto tax-free by clicking here. 

* Eight Sleep is the most advanced solution on the market for thermoregulation by pairing dynamic cooling and heating with biometric tracking. Click here to check out the Pod Pro Cover and save $150 at checkout. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide here today. 

* SiGMA is the bridge between iGaming, online sports betting, and emerging technology, such as Blockchain, NFTs, fintech, GameFi, metaverse, and AI, is loud and clear. The largest global summit of this kind is heading to Malta from November 15 to 17. Log on to AIBC.WORLD or SiGMA.WORLD to see all our upcoming global summits! 

* Bullish is a powerful exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Click here to learn more. 

* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Investing is a game of demographics. You want to select markets that are ascending, not descending. Data points like population growth, percent of young people, and life expectancy are key indicators of where the world is going. Pick the right market and you can make the trend your friend. Pick the wrong market and you’ll have a strong headwind.

I want to spend our time today focused on life expectancy, which is simply “the average period that a person may expect to live.” You would anticipate that the most developed nations have the highest life expectancy, but that is not necessarily the case. We’ll use the United States as an example.

Max Roser and the team at Our World In Data point out that the United States has a lower life expectancy than other rich countries. Why is this? Roser explains:

“Americans suffer higher death rates from smoking, obesity, homicides, opioid overdoses, suicides, road accidents, and infant deaths. In addition to this, deeper poverty and less access to healthcare mean Americans at lower incomes die at a younger age than poor people in other rich countries.”

This is kind of crazy to think about. America, likely the most developed nation in the world, is worse off than other developed nations. But it gets even wilder when you add in how much Americans spend on healthcare in comparison to these other countries.

The United States is in a league of its own. There is no other wealthy country in the world that has a life expectancy below 80 years old, nor is there another wealthy country that has a health expenditure per capita above $7,000. The US checks both boxes.

These statistics alone would be concerning, but unfortunately there is another story that is capturing the attention of people who pay attention to national demographics.

Wait, what is going on here? According to Mary Hui from Quartz:

“The US’s life expectancy continued its decline from 2020 to 2021, dropping sharply to 76.1 years.

With the latest decline, US life expectancy is now at its lowest since 1996, according to new data from the Centers for Disease Control and Prevention’s (CDC’s) National Center for Health Statistics. It also means that the gap in longevity at birth between people in the US and China has now widened to a full year.”

This is not exactly shocking when you understand the reasoning. Hui writes:

“The biggest driver in the drop in US life expectancy is covid, accounting for 50% of the decline, according to the CDC. Government figures show that as of Aug. 31, over 1.04 million deaths in the US have been attributed to covid.

“Unintentional injuries”—which include opioid overdoses and motor vehicle crashes—were the second-largest contributor to the drop in life expectancy, making up 15.9% of the decline.”

This begs the question — will the US life expectancy recover or will the US buck the trend of wealthy nations as it sees a further decline in future years?

No one knows the answer. But we better hope that a quick reversal occurs, because other demographic data points like fertility rate aren’t going to make up for the loss. Data from Census.gov states:

“Fertility rates in the United States gradually declined from 1990 to 2019. In 1990, there were about 70.77 births each year for every 1,000 women ages 15-44. By 2019, there were about 58.21 births per 1,000 women in that age group. While broadly stable, annual births in the United States declined from about 4.1 million to 3.7 million from 1990 to 2019.”

So we are seeing US life expectancy recently drop for the first time in decades, and the fertility rate is on a three decade decline, so the demographics in the United States are not looking too hot right now. This doesn’t guarantee the leading democracy while fail, nor does it mean that investors should pull all of their capital out of US markets.

It simply highlights that the future may not look like the past. Investing is all about demographics and there is a strong, data-driven argument to highlight the US could have some of its most compelling trends left in the past. There are few countries that have been able to thrive for decades in the face of deteriorating demographics, so this is worth continuing to watch in the coming years.

Demographics are complex. There is plenty of debate and controversy around data collection, measurement methodologies, and what is actually important. Let this letter serve as inspiration for you to dig further and start doing your homework. Your future portfolio will probably thank you.

Hope everyone has a great start to the week. I’ll talk to each of you tomorrow.

-Pomp

If you are not a subscriber of The Pomp Letter, join 225,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

THE RUNDOWN:

MicroStrategy Files to Sell Up to $500M of Stock to Fund Bitcoin Purchases: MicroStrategy, a software developer that has become a corporate bitcoin vault, plans to sell up to $500 million of stock to fund more purchases of the cryptocurrency. A Friday filing with the U.S. Securities and Exchange Commission revealed the stock offering, which will be for “general corporate purposes, including the acquisition of bitcoin.” Read more.

Blockchain.com to Open Dubai Office After Securing Preliminary Regulatory Approval: Blockchain.com has won provisional regulatory approval to operate in Dubai, according to a Reuters report. The London-based exchange has signed a contract with Dubai’s Virtual Assets Regulatory Authority – the city’s new digital assets regulations agency – to open up an office in the emirate, the story said, though it remains unclear when hiring for the office will begin. Read more.

US Senators Press Meta Platforms CEO Mark Zuckerberg to Combat Crypto Scams: Six Democratic members of the Senate Banking Committee have sent a letter to Meta Platforms CEO Mark Zuckerberg asking what the company is doing to fight cryptocurrency scams on its Facebook, Instagram and WhatsApp platforms. The group of senators is led by Bob Menendez of New Jersey and includes Sherrod Brown of Ohio, chairman of the Banking Committee, and Elizabeth Warren of Massachusetts. Read more.

JPMorgan Hires Former Microsoft Executive to Its Digital Assets-Related Payments Group: JPMorgan has hired former Microsoft executive Tahreem Kampton as a senior payments executive within the bank’s payments group. His focus will be on the future of payments, including blockchain technology and the digital ecosystem, according to a statement sent to CoinDesk. “Tahreem Kampton has joined J.P. Morgan Payments as a senior payments executive with a focus on driving thought leadership to help the payments industry and therefore clients, to evolve, thrive and grow,” said JPMorgan. “Specifically, he will lead co-innovation with key partners in payments, blockchain and the digital ecosystem where JPMorgan has already built a strong foundation.” Read more.

Andrii Baryshpolets is a Chess Grandmaster and has a PHD in Economics.

In this conversation, we discuss the path to becoming a grandmaster, machine learning, cheating, Bitcoin & Crypto, and books and resources to become better at chess. Andrii also gives us insight into the Russia / Ukraine war as a Ukrainian and shares his thoughts on the macro economic environment.

Listen on iTunes: Click here

Listen on Spotify: Click here

Weekly Update on Bitcoin

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* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visithttp://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

There seems to be a lot of conversation around my Twitter profile over the last day or two. It started with this viral tweet:

And there are more tweets from other individuals in the crypto community. I even got phone calls and text messages from people I have great respect for. They wanted to know if I changed my mind on bitcoin? Did I sell my bitcoin? What was going on?

The truth is that I haven’t changed my mind on anything. Not only do I still have deep conviction in bitcoin and its future potential, but I have also been buying more bitcoin, both personally and professionally, over the last few months.

While my conviction in bitcoin is deeper than ever, there are a number of things that have changed though.

The first is that bitcoin will humble anyone. I have been one of the loudest and most public proponents for the digital currency for half a decade. It allowed me to amass a large online audience, it gave me the opportunity to travel the world, and it opened up opportunities that I could have never dreamed of. It has been amazing. And I am incredibly thankful.

But there are two essential rules of the internet — never believe your own b******t and never become the main character.

In June 2019, with bitcoin sitting around $12,000, I predicted that the asset would rise to $100,000 within 2.5 years. Rather than the ~8x increase, bitcoin only went up ~6x in that time frame. Some people would argue that the difference doesn’t matter, but at the end of the day I was wrong. It was a great reminder that humans can’t predict the future and price predictions are a fool’s game. Bitcoin helped to humble me.

As for the main character, this is a lesson that I have learned more recently. The internet is a weird, wild place. You can be a nobody and quickly become a somebody. But, as with everything in life, too much of a good thing can ruin it. When you start to become the main character, you can fool yourself into believing that you know more than you do. People start to see you as the teacher.

But that is not who I am. I’ve always relished the student role. I know nothing and am hungry to learn. It is really hard to ask dumb questions and learn when people expect you to have the answers. “You are on television. You are speaking at conferences. You must have the answers!” Well, I don’t. I want to learn. This is a journey that never ends.

The second point of conversation is around identity. I’ve always preached that you should avoid tying your identity to any company or organization, but rather, the most powerful thing is to tie your identity to your own name. Be self-sovereign. But I violated my own advice over the last two years.

Laser eyes. #bitcoin in my Twitter bio. It is all noise.

The truth is that it is really hard to be an independent person who thinks critically if your identity is tied to a financial asset. How can you seriously evaluate an asset if you have it in your bio? Are you really willing to change your mind if you receive new information if your entire identity is tied to something? Maybe. But it definitely makes it harder. As I told a friend months ago, it is hard to see with laser eyes on.

The third point is around building. Anyone who has been around the bitcoin ecosystem for a few years knows that bear markets are the time for building. This is when the real work gets done. And that is exactly what I have been trying to do.

My team and I have been building products and services across the various companies that I own and operate. The most public one is Inflection Points Inc. We have built the largest employment business in crypto over the last 18 months, where we have helped more than 1,000(!) people get a new job, and we are now scaling a corporate training product that will likely bring bitcoin to hundreds of thousands of people within the next 12 months. (NOTE: If your team needs to learn about bitcoin and crypto, reach out here)

Twitter is not real life. There is an inverse correlation between the amount of time someone spends on that website and actually getting s**t done. I love larping and doom scrolling as much as anyone, but bear markets aren’t the time for that. It is time to build. Tweeting isn’t conviction, building is.

To make sure I am abundantly clear — my views on bitcoin haven’t changed.

I have deeper conviction than ever that a finite asset, with a programmatic monetary policy, will serve as the single best store of value in a world full of undisciplined monetary and fiscal policy. I don’t need laser eyes or hashtags in my Twitter bio to hold those views. I express them by purchasing more bitcoin.

I am an independent person who tries to think critically. I am willing to change my mind if I receive new information. But my conclusion is that bitcoin will continue to gain global adoption and will be much more valuable in the future.

And to the haters and trolls, I love you. Every single one of you.

You motivate me to learn each day. You drive me to get better. I wouldn’t have the conviction I have without you. So, thank you. Please keep the critiques and feedback coming :)

Hope everyone has a great day. I’ll talk to you on Monday.

-Pomp

If you are not a subscriber of The Pomp Letter, join 225,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

Andrii Baryshpolets is a Chess Grandmaster and has a PHD in Economics.

In this conversation, we discuss the path to becoming a grandmaster, machine learning, cheating, Bitcoin & Crypto, and books and resources to become better at chess. Andrii also gives us insight into the Russia / Ukraine war as a Ukrainian and shares his thoughts on the macro economic environment.

Listen on iTunes: Click here

Listen on Spotify: Click here

My Conversation With A Chess Grandmaster

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Alto IRA can help you invest in crypto in tax-advantaged ways to help preserve your hard earned money. There are no setup or account fees, and it’s all you need to do to invest in crypto tax free. Open an Alto CryptoIRA to invest in crypto tax-free by clicking here. 

* Eight Sleep is the most advanced solution on the market for thermoregulation by pairing dynamic cooling and heating with biometric tracking. Click here to check out the Pod Pro Cover and save $150 at checkout. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide here today. 

* SiGMA is the bridge between iGaming, online sports betting, and emerging technology, such as Blockchain, NFTs, fintech, GameFi, metaverse, and AI, is loud and clear. The largest global summit of this kind is heading to Malta from November 15 to 17. Log on to AIBC.WORLD or SiGMA.WORLD to see all our upcoming global summits! 

* Bullish is a powerful exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Click here to learn more. 

* Valour represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. For more information visit valour.com

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visithttp://exodus.com/pomp today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe