The psychology of a successful short seller involves immense patience and the willingness to be wrong most of the time. The ultimate reward is not just financial but psychological: the 'delicious' feeling of being proven magnificently right for a brief period when the consensus fails.
When private equity firms begin marketing to retail investors, it's less about sharing wealth and more a sign of distress. This pivot often occurs when institutional backers demand returns and raising new capital becomes difficult, forcing firms to tap the public for liquidity.
Drawing on economist Wilhelm Röpke, Jim Grant reframes inflation as a moral and societal issue, not just a monetary one. It represents an economy's reaction to a 'riot of claims'—demanding more than can be produced—where money becomes the weak organ that ultimately fails under the strain of collective hubris.
A guest offers a more precise alternative to the cliché that history rhymes: Voltaire's observation that "history never repeats itself, man always does." This insight pinpoints human nature—greed, fear, and FOMO—as the constant driver of speculative manias, even as the specific assets and technologies change.
The current AI spending spree by tech giants is historically reminiscent of the railroad and fiber-optic bubbles. These eras saw massive, redundant capital investment based on technological promise, which ultimately led to a crash when it became clear customers weren't willing to pay for the resulting products.
The failure of Long-Term Capital Management, run by Nobel laureates, serves as a stark reminder that extreme intelligence doesn't prevent catastrophic failure. A Goldman Sachs quant observing the crisis was struck by how the failed partners were intellectually superior to their rescuers, highlighting the limits of raw intellect in markets.
Despite widespread institutional adoption and soaring prices, veteran financial editor Jim Grant maintains a deeply skeptical view of Bitcoin. He considers it a fundamentally valueless asset propped up by hype and questionable promotions, dismissing its utility and concluding its most efficient and logical price is zero.
David Rosenthal, NVIDIA's first-ever hire, argues that Bitcoin's security premise is vulnerable. He posits that future quantum computers could relatively easily crack the private keys for the roughly 20% of 'lost' or unclaimed Bitcoins, fundamentally undermining the cryptocurrency's claim of being a secure asset.