DE Shaw write rarely and this piece is about what an optimizer, both used systematically and in conjunction with discretionary decision making, can teach investors.
Key lesson – focus on the portfolio as a whole not single trades.
National Institutes of Health (NIH) is currently facing chaotic cuts – this article does a decent job laying out how things like a capping indrect spending can only be done via Congress and generally the state of the NIH.
Stripe did $1.4 trillion payments volume in 2024 – it is worth reading their annual letter.
Topics include AI Economy (their data shows top 100 AI firms reach $5m ARR in 24 months vs. 37 months for their top SaaS firms in 2018), vertical SaaS, stablecoins, Europe.
“Consumers of all age groups are using around four different fragrances regularly, which is a significant change from a decade ago when they had one signature scent.“
“Some people talk about the ‘Deep Seek Syndrome,’ saying, ‘You’re overspending, you’re spending $500 billion, you’re overspending! You can save so much more by spending less.’ But I think they are looking at it the wrong way. How much percent of GDP will be replaced by a billion-dollar smart system? I would say at least 5% within 10 years. That 5% is $9 trillion—or if it’s 10%, it’s $18 trillion. So, somewhere between 5% to 10% of today’s GDP will be replaced by this superintelligence. Well, if that’s the amount of return, you shouldn’t be scared of spending a few trillion dollars. If the return is $9 to $18 trillion per year, why should you save? Why should you try to be efficient? For what? I don’t get it. Just a little difference makes a huge return on your market share.” – Softbank CEO Masayoshi Son
Source: A good smorgasbord of quotes from recent transcripts.
Fascinating paper on how fast humans throughput information, 10 bits/second, and how this is in stark contrast to our sensory system which does 10^9 bits/second.
Why this is and how is still not well understood.
“Based on the research reviewed here regarding the rate of human cognition, we predict that Musk’s brain will communicate with the computer at about 10 bits/s. Instead of the bundle of Neuralink electrodes, Musk could just use a telephone, whose data rate has been designed to match human language, which in turn is matched to the speed of perception and cognition.”
“The exit environment overall is governed by both cyclical and secular factors. Cyclical factors get a lot of airtime. Often mentioned are supportive macro, LP allocations right-sizing, and “animal spirits”. But the incentives facing sponsors get a vote. And sponsors today seeking to maximize their probability of survival face an environment that incentivizes retaining assets, lengthening their liabilities, and avoiding replacement/origination costs. This is the New Exit Game.”
