“So, geopolitics really is more about defining possibilities and getting ready for any possibility so that if the crazy thing happens, ah, I've thought about it before. And I know what I'm going to do when that happens, rather than I'm going to perfectly be able to identify the scenario.” - Jacob Shapiro, Cognitive Investments

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This week’s episode features a future regular guest of Taylor Made Macro, Jacob Shapiro, from Cognitive Investments. Jacob is a true neutral geopolitical analyst that approaches the world and the markets with humility and back-breaking labor to arrive at his conclusions. Chase and Jacob discuss current events in global elections, the importance of finding original news sources, paying attention to news that seems strange, and implementing a ranking system for the avalanche of information one needs to get through to do this work each day. This helps you with the most important takeaway of the episode: scenario planning. Thinking about what could happen helps you prepare if it does happen.

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Timestamps:

(00:00) – Intro

(01:38) – Charity: William and Anne Monroe Shapiro Endowment

(02:16) – Mexican Elections: Shienbaum is a Scientist

(08:13) – Modi’s Age and Charisma Have Their Limits

(11:29) – South Africa’s Apartheid History Overshadows the Geopolitical Potential

(14:39) – Individual Leaders Can Have a Great Amount of Agency in the Right Moment, with the Right Circumstances

(17:54) – Milei’s Economic Changes Could be Trading Short-Term Pain for Long-Term Meaningful Change

(25:23) – Mexican, Brazilian, and Saudi Arabian ETFs Are (as of recording) Mispriced.

(27:16) – Between Two Pines

(32:43) – Scenario Imagination and Admitting You’re Wrong are too Important When Money is on the Line

(36:32) – Google Translate Your Way to More Accurate, Ground-level News, and Dissect the Piece of Info that Seems Strange

(44:04) – Spanx vs. High Nutritional Reading

(46:07) – Jacob’s Books: All the King's Men by Robert Penn Warren & Psychology of Intelligence Analysis by Richards Heuer [Jr.]

(47:14) – Notion Helps Organize Information

(51:44) – Finding the Original is the Most Important Task

(53:37) – High Level Meeting Summaries: Pay Attention to Divergence

(56:10) – Don’t Put on a Trade Unless You Can Get to Confidence

(58:40) – Geopolitical Analysis is not a Hard Science

(1:02:14) – Swim to Connect Dots

(1:03:10) – Half-Holocaust Survivors / Half D.C. Socialites – Bridging the Various Classes Perspectives for Better Political Analysis

(1:06:36) - Plugs

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This Episode's Charity:

In honor of Jacob’s parents, an endowment for First Generation American citizens has been established at Oxford College of Emory University. Please donate here.

Jacob and Chase raised $20 for charity this week!

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Referenced in the Show:

Cognitive Dissidents (Soon The Jacob Shapiro Podcast): Depreciable Line of Information

Movie:

“I can generally, take an issue and argue both sides...ultimately you've got to weigh all the evidence and be honest with yourself and come up with the right answer… the ability to take an issue, see both sides, argue both sides, build a case for both sides…and that causes you to just dig and read and turn over stones and understand underlying processes and things like that.” - Warren Pies, 3Fourteen Research

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This episode features Warren Pies of 3Fourteen Research. Chase and Warren dig deep into construction data, Warren’s process, models, and why he finds construction so important for macro. Warren teaches us how to research trades like a lawyer, but also how important saying, “I don’t know” is for your credibility…unless you’re at a cocktail party. He argues that sticking to what you know and picking high quality businesses will keep you alive in the markets. We also learned that Gothic Western Fiction is an actual genre (!?). Enjoy this meeting of the minds and learn how to balance granularity with accuracy.

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Timestamps:

(00:00) – Intro & Plugs

(01:20) – Warren’s Charity: BridgeALife

(02:57) – Warren’s Framework on Housing, Construction, and Construction Employment

(16:07) – Argue Both Sides of a Trade Like a Lawyer

(18:49) – A Behavioral Edge Creates an Informational Edge

(19:37) – Preempt a Bad Trade Through Research and Process

(21:26) – Learn How To Say, “I Don’t Know” Unless You’re at a Cocktail Party

(23:59) – Stick to Investing in What You Know & Pick Quality Businesses

(27:45) –Speed Read Until AI Can Do it For You

(31:13)— Exercise Your Nervous System to Help Connect the Dots

(33:36) – Having to Rescind a Prediction Made Publicly is Tough

(38:45) – Blood Meridian – Gothic Western Fiction??

(42:22) – Understanding Modern Money – A transformation for Warren

(42:34) – Between Two Pines

(47:48) – Are Higher Rates Stimulative?

(50:52) – Self-Reinforcing Loops to the Downside

(55:01) – Malinvestment in the 2020s

(56:39) – Yellowstone is “Too Popcorn”

(59:40) – Thank You Listeners

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This Episode's Charity:

Bridge A Life Charity – Local group in Sarasota Area, Florida that provides resources to foster families.

Donate here: https://www.bridgealife.com/get-involved/donate-2021

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Referenced in the Show:

1. Warren’s Market Huddle Interview
2. Books: Blood Meridian by Cormac McCarthy & Understanding Modern Money: The Key to Full Employment and Price Stability by Randall Wray
3. David Einhorn – The Long and Short of Investing
4. Warren Mosler – This Guy Says the Fed Has Got Everything Precisely Backward, 2022, NYT Article

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Guest Plugs:

Warren’s X :

“But I'm buying stuff where, revenue’s growing rapidly. I'm buying stuff where value creation is happening rapidly. I'm buying, you know, growth momentum names. I’m buying them before anyone else realizes that they’re growth momentum names...they're still valued like uh, value stocks. If you look at this sort of stuff we're doing, we call it--, I call it inflection investing for lack of a better word, but they tend to be industries that have destroyed a lot of capital that have bored people to death, that give people PTSD.” -Kuppy, Praetorian Capital

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Kuppy has been a great friend to Chase since he started PMR. This week they discuss position sizing, what inflection investing really means, how to spot the convergence of cyclical and secular tailwinds, and most importantly, how getting away from the markets allows you to express your trades more effectively. Kuppy's approach to investing is bold, well researched, and decisive. We also discussed how he decided to stop missing stuff with the inception of Kuppy’s Event Driven Monitor (KEDM).

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Timestamps:

(00:00) - Intro

(01:46) – Kuppy is a value investor that makes money

(02:58) – Charity of Choice: Sugar Pine Foundation

(04:09) – Roman History isn’t a real major

(06:03) – Inflection investing is momentum investing with a value overlay

(09:28) – Middleman companies provide the best value?

(09:46) – Cyclical sectors with secular change

(12:02) – Find ways to be out of the office

(12:46) – Kuppy makes the chart

(12:55) – Fundamental Momentum

(13:42) – Exit criteria: When something better comes along

(15:40) – Sizing of trades: There’s not enough good ideas to trade small positions

(19:54) – Get away from granularity unless it’s earnings season

(24:42) – Massive events still take weeks to figure out

(26:25) – Surfing – no phones allowed

(28:20) – Good food and good weather for good living

(29:13) – Being wrong isn’t personal. Get out before you change your mind

(31:39) – Between Two Pines

(35:21) – Sidestep the politics and sales pitches of corporate management leadership

(40:45) – KEDM – Kuppy got tired of missing stuff

(46:16) – Tomorrow’s Gold by Marc Faber & Reminiscences of a Stock Operator by Edwin Lefèvre and Roger Lowenstein

(47:00) – Sleepwalking into YCC

(48:04) – Kuppy reaches out the finance circle for “smell tests”

(49:23) – Luck in trades because of long timeline horizons

(51:46) – Plugs

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This Episode's Charity:

The Sugar Pine Foundation began in 2004.They are dedicated to restoring sugar pines in the Lake Tahoe National Forest in California.

Donate here: https://sugarpinefoundation.org/get-involved/donate

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Referenced in the Show:

Kuppy’s Book Recommendations: Tomorrow’s Gold by Marc Faber &

Reminiscences of a Stock Operator by Edwin Lefèvre and Roger Lowenstein

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Guest Plugs:

Kuppy’s X : https://twitter.com/hkuppy

Praetorian Capital : https://pracap.com/

Kuppy’s Event Driven Monitor (KEDM) :