Tony Deden on gold

What makes gold compelling are the risks we do not take by owning it.  No forecasting or guesswork is required.  The risks we do not take owning gold could fill volumes. 

With gold, there is no duration risk, credit risk, or liquidity risk.  The metal is not moved by financial instability nor threatened by national insolvency or chaos in foreign exchange markets.  There are no margin calls and no refinancing risks.  There is no risk of technological obsolescence, depletion, depreciation, or decay, nor does it require cheap energy, cheap credit, or cheap trade to remain viable.  It does not care about your national energy policy or who you buy your gas from or how many pipelines are running.  You do not have to keep the lights on or even keep it warm.  There are no financial accounts to pore over, no balance sheet to blow up, no cash flows to dwindle, no stale inventory and no margin pressures in difficult times.  There are no key manpower or supplier risks, no competitive risks, no management to squander its future.  It does not depend on the character, skill, or enthusiasm of any one.  It does not require the faith or good will of others.  It does not require you to trust anyone at all, except that you must hold it in a very safe place. 

~ Tony Deden, Edelweiss Holdings, “Gold: The Resilient Reserve," October 2024

 

Kevin Duffy on the AI bubble unwinding

The AI capex appears to be clearly unraveling, yet on CNBC this is met with complacency and buy-the-dip bravado.  This is exactly what the beginning of a bursting bubble looks like: no one wants the party to end.  Meanwhile, other parts of the market - the anti-bubble - are beginning to catch a bid.  Shades of 2000...

~ Kevin Duffy, note to subscribers, The Coffee Can Portfolio, October 26, 2026

 

Ben Bernanke on the wealth effect

Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.  Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

~ Fed chairman Ben Bernanke, Washington Post op-ed, November 4, 2010

 

Ronald Reagan on government spending

Government is like a baby.  An alimentary canal with a big appetite at one end and no sense of responsibility at the other.

~ Ronald Reagan

 

Nassim Taleb on the Problem of Inductive Knowledge

The überphilosopher Bertrand Russell presents a particularly toxic variant of my surprise jolt [like dropping an ice cube down someone's collar] in his illustration of what people in his line of business call the Problem of Induction or Problem of Inductive Knowledge (capitalized for its seriousness) - certainly the mother of all problems in life.  How can we logically go from specific instances to reach general conclusions?  How do we know what we know?  How do we know that what we have observed from given objects and events suffices to enable us to figure out their other properties?  There are traps built into any kind of knowledge gained from observation.

Consider a turkey that is fed every day.  Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race "looking out for its best interests," as a politician would say.  On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey.  It will incur a revision of belief.

[...]

Let us go one step further and consider induction's most worrisome aspect: learning backward.  Consider that the turkey's experience may have, rather than no value, a negative value.  It learned from observation, as we are all advised to do (hey, after all, this is what is believed to be the scientific method).  Its confidence increased as the number of friendly feedings grew, and it felt increasingly safe even though the slaughter was more and more imminent.  Consider that the feeling of safety reached its maximum when the risk was at the highest!  But the problem is even more general than that; it strikes at the nature of empirical knowledge itself.  Something has worked in the past, until - well, it unexpectedly no longer does, and what we learned from the past turns out to be at best irrelevant or false, at worst viciously misleading.

~ Nassim Taleb, "One thousand and one days, or how not to be a sucker," The Black Swan: The impact of the highly improbable, 2007

Steve Eisman: "private equity is going to go through a long period of very troubled times"

This industry really took off post-GFC, like exploded.  Now it its defense, one of the reasons why it exploded is because the banks had to pull back, so somebody had to replace them.  But on the other hand, there's another aspect to this which I think is really hurting them, which is:

You're an institution.  You are not previously invested in private equity.  You were in public markets.  '08 was unbelievably painful because you lost basically 40% of your money like that [snaps fingers].  You don't want that volatility anymore, so what you did was you put money into private equity because at least you could pretend that is wasn't volatile.  Now private equity is just as volatile as the public markets.  It's just that you don't get a price every single day.  So you could sleep at night pretending to yourself, "I got my money with some great professionals in private equity who are going to make me a lot of money and it's not volatile."

And I think that's one of the big reasons why that industry grew so much.  Now no one's getting monetized, rates keep going higher - this business only works on low rates because it's a leverage business.  I think the private equity business is going to go through a long period of very troubled times.

~ Steve Eisman, "Big Short Reunion w/ Danny Moses: Rising Rates, AI & Private Equity, The Real Eisman Playbook, 25:05 mark, October 19, 2026

 

George Eliot (Mary Ann Evans) on the Problem of Inductive Knowledge

The lapse of time during which a given event has not happened, is, in this logic of habit, constantly alleged as a reason why the event should never happen, even when the lapse of time is precisely the added condition which makes the event imminent.  A man will tell you that he has worked in a mine for forty years unhurt by an accident as a reason why he should apprehend no danger, though the roof is beginning to sink; and it is often observable, that the older a man gets, the more difficult it is to him to retain a believing conception of his own death. 

~ George Eliot (Mary Ann Evans) in Silas Marner (1861), Chapter 5

1861