Geopolitical Alpha
Marko Papic  

Summary

Good frameworks to think about geopolitics and how the world is rapidly shifting away from what we've been used to the last few decades

Rating: 3/5

Notes

The era of geopolitical ignorance is over

The training and experience of the past 35 years have woefully under prepared the West’s financial and corporate communities for the paradigm shit coming

The story of the rise and fall of empires: stability breeds collapse

The 2020 financial industry is poorly prepared for the geopolitical and political paradigm shifts afoot

Investors need to focus on constraints rather than policy makers preferences and beliefs

Gold is a hedge for inflation but when disaster strikes, investors want cash, which is why king dollar appreciated at the height of Covid

‘If something blows up, just close your eyes and buy’

Geopolitics were integral to most major economic trends the last 60 years

‘The ideas of economists and political philosophers both when they are right and when they are wrong, are more powerful than is commonly understood’ - John Keynes

The material world is the concrete foundation on which other things ultimately rest

Material conditions create human reality. Thought systems develop around this material condition and are a derivative of it

The world is at an unsustainable extreme between the share of the economy going to corporate profits and the share going to labour

More information does not necessarily help one’s forecast. The quality of data matters 

Diagnositicity is the second pillar of the constraint framework (the first is material dialectic)

3rd pillar is the idea of fundamental attribution error - the person vs. the situation

The situation is a better indicator of the outcome than the person

Preferences are optimal. And subject to constraints whereas constraints are neither optional nor subject to preference

Policy makers talk their own book so don’t always trust them

Always beware of the talking heads

Talk to academics if trying to become knowledgeable on a topic

Power is the most important constraint for individuals, especially policymakers

The medium voter is a more powerful indicator of market behaviour than an individual policymaker so follow what issues the median voter cares about

Markets are not arational and rather driven by narratives

Bond yields can be more powerful than missiles

The key to harnessing geopolitical alpha is betting against the spread, not trying to predict who wins the game

Never tie personal ideology to outcomes when thinking of geopolitics

Laissez faire politics are done in the West

Leave ideology and unfounded bias out of policy discussions

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