i’m actually not 100p sure where this post will wander but the themes in it are some i’ve been thinking about quite a bit over the past few weeks & months.

traditional markets (i.e. stonk indices) peaked sometime in late december of last year, although the pain in individual stocks was felt well before that. lots of sexy tech names did a full round-trip from pre-pandemic levels; in some cases this seems warranted, in others maybe not. i know people like to shout about how revenues & user bases are [__]x larger than pre-pandemic levels and how this means price/market cap should reflect that. maybe. maybe not. sounds more like cope tbh. markets do not do what you want them to do generally speaking. let’s take a look at some of this wreckage….

ooof. i could include another 20+ charts that look exactly like these. we could debate ad nauseum the merits of the explosive growth and spectacular fall of these stocks, but that’s not interesting. what is is how quickly the narrative shifted. these were not being priced by fundamentals on the way up or on the way down. that’s fine btw. but if you talked to most tradfi people during these runs, they would have tried to convince you it was. lots of mental gymnastics. lots of acronyms.

one of the things i find funny about traditional markets is that “smart” people constantly talk themselves out of the right answer. having spent my early career in tradfi, i always felt this weird culture of needing to have some profound insight all the time. answers can’t be simple or straightforward because we are esteemed high-finance people and therefore must use second, third and fourth order thinking.

if the right answer was so obvious, the cloak of expertise & prestige disappears. much easier to justify a bloated comp & ego if everyone agrees to the rules of this game. this is obviously an inefficient way to approach problem-solving. it’s part of the reason traditional banks are decaying. a lot of my IRL friends still work in tradfi so i’m aware this ethos still exists. i’m always amazed at how confidently some people speak about the headline du jour. infectious disease expert one day. geopolitical risk expert the next. yield curve enthusiast the following.

it goes on and on. it doesn’t bother me – at this point i find it amusing more than anything else. i’ve been friends with some of these people for over a decade – i always call them on their bullshit but even to this day, sometimes they can’t help themselves. i don’t understand why so many people find it difficult to say “I don’t know”. not knowing is pretty enjoyable in my experience. at a minimum you get to learn something new. sometimes you do need to go beyond first-order thinking obviously, but a lot of times applying occam’s razor is the +EV decision. want a fun stat? did you know that ~80% of all actively managed U.S. stock mutual funds underperformed their benchmark last year? even worse when you look at sub-sectors: 85% of U.S. large-cap stock funds underperformed the S&P 500 & 99% of large-cap growth funds underperformed their benchmark. it’s either funny or sad to think there are people out there paying a premium to underperform indices. imagine paying a premium to an anon only for them to put you in ZEC or EOS instead of ETH or BTC (let alone the alt L1 trade last year).

some of this behavior happens in crypto markets as well. but not nearly as much. there’s always been an imposter syndrome complex that permeates crypto culture (it dilutes a bit more each cycle I’ll admit) which I find appealing. people are much more willing to be wrong, joke about it and then move on. don’t get me wrong, there is plenty of deeply technical, well-researched and complex thesis-driven thinking in crypto. the results of the game are not always obvious. but the players are more interested in finding the right answer efficiently rather than aspiring for some sort of weird smarter-than-thou position. the midwit meme is so popular for a reason. what i enjoy is that most of us in crypto actually believe we are the simpletons on the far left end of the curve. we are proud to be there. smooth brains. nothing would be worse than finding ourselves in the middle of the curve. i think quite often about The Michael Scott Theory of Social Class. it’s not a perfect comp to what I’m talking about here, but it definitely rhymes. crypto seems to be a space that self-selects for those suffering from imposter syndrome, among other common traits (addictive personalities, genuine curiosity, varying degrees of unhinged, not taking oneself too seriously). i hope this culture persists. it probably won’t on a long-enough timeframe. the michael scotts of the world are coming.

i’m almost done rambling here but let me try to bring this back to markets. max pain (for both traditional & crypto) is never-ending sideways chop down. the march 2020 plummet sucked, but the recovery happened too quick for sentiment to turn super sour and all of a sudden we were back to making new ATHs. the most recent crypto winter was much worse – it dragged forever, lots of people disappeared and there was no real end in sight. tradfi has to fill double-digit hours of television everyday so they will always explain why prices & yields are moving. the truth is they don’t know. but 14 hours of “not really sure what’s going on” doesn’t make for great TV. crypto doesn’t have TV (yet lol) but spend a few minutes on CT and you’ll know whether the candles are green or red. i can see why traders get chopped to death – it’s hard to be patient, especially with how active & euphoric things have been for so long. lots of people are pressing. i think there’s serious structural damage that still needs time to repair so i lean more towards goblin town atm. more downwards chop. hopefully i’m wrong. su just tweeted that ppl who subscribe to “long bear mkt thesis” are poor so there’s that. could be psyops. or maybe do kwon can infinite bid us into a new bull market. best to form your own opinion.

i’ll be reading in the meantime & talking to people who are building cool stuff in crypto. if you’ve read something interesting (about anything, doesn’t need to be crypto-related) send it to me. if you’re building cool stuff in crypto, hit my dm’s - would love to chat.

@0xsmac on twitter

if you made it this far thanks for reading my ramblings. sorry for the lack of cohesion but i chose not to spend any time editing this one