Letters to a Young VC: Letter Five
A collection of letters encompassing simple insights and recognition of foundational shifts that any bright minds trapped within the old norms of a VC mindset can use to break free, whether they are just starting their journey or reflecting back on what they wish someone had told them in their early days.
Letter Five in the Letters to a Young VC series is now live.
Read the full piece on Mirror here.
Short Excerpt:
From seed, to crop, to harvest, to market, to plate.
High yield arbitrage is so much cooler and tastier than just swapping seeds for other seeds forever.
If you think seed 2 seed asset flipping bubble economics is all you need, take another hit of that sinsemilla before this self-medication antidote dose of real primary wealth creation from decentralization sin cap shakes the cargo cult faithful.
Waiting faithfully at the doorway to the sky.
That self-encircling fake money theatre flight’s been cancelled.
They’re essentially making robots do the work, do the life, do the live trades, spam the nostalgic artifacts of the PFP brigades.
Ultimately on Wall Street and in applied economics (Beyond academic theory and pretend government policy) fundamentally since at least 1970, there have been 3 main strategies employed:
- Long, short, neutral — The base layer go to trade of the typical hedge and ibanker, plain vanilla snow snorting problem bro. It always loses out when any uncertainty strikes the market, but it’s the easiest way for them to funnel capital into SPACs and other convolutional financial trappings constructed for maximum misdirection, while the bros pass around and leverage the fuck out of them. It’s why the same bankers where getting bonuses in the billions after the GFC.
- Main portfolio with a hedge — These Ray Dalio simps caricature the illusion of a hedge that never works because they aren’t really shorting the other side. It’s another Ponzi.
- The variance swap — Only, give or take, 3 people in the world have ever actually done this one all the way through. Number go up or down, no more bets in the casino economy. Instead, set up the dynamic mechanism to benefit from market asymmetries and convexities, producing new wealth as the source. A variance swap is a primary market generator.
