Dylan Grice, a long-time friend of Zero Hedge, is leaving SocGen and heading to greener pastures.
All good things come to an end, sadly. So it is with my time here alongside Albert, Andy and the rest of the gang at SG. I’m signing off, checking out, moving on to pastures new. It’s been a wonderful time. But after three years of trying to sound clever it’s time for me to do something altogether more difficult, and actually be clever. So early next year, I will join a small but outstanding investment practice. Naturally, I hope it will be a great success. But what makes a great success? Since there are few more accomplished species on earth than the lowly cockroach where better to start looking for an answer?
And, never one to leave without something insightful to add, here are some of his parting thoughts from his last ever Popular Delusions letter.
From Cockroaches for the long run! (pdf)
Cockroaches get a bad press. They’re pests. We don’t want them in our houses. Mainly, we want to kill them. If you call someone a cockroach, like Tony Montana did to Frank Lopez in Scarface, it’s not meant as a compliment. You might think that one of the most successful species in the long and colourful history of life on earth would enjoy more respect. But no’ Of course, you have to be careful in how you define success. Cockroaches don’t have iPhones, space stations or edible underwear. They don’t have any of the nick-nacks we have that make us think we’re so clever. They’re not ingenious, like we think we are.
But ingeniousness is over-rated. Cockroaches may not be able to build nuclear bombs, but they can withstand nuclear war. They survive. Don’t get me wrong. Thriving is great. Prospering isn’'t bad either. But neither mean much if you’re unable to survive. To my mind, therefore, capacity to survive has to be the starting point when thinking about success. It’s all about robustness really, and on this metric cockroaches are tops.
The oldest cockroach fossil is 350 million years old, which is quite remarkable when you think about it. We humans have been around for around for a mere fifty thousand years (so we’re one seven thousandth as successful as cockroaches). According to the record of the rocks, cockroaches first appeared just after the second of the earth’s five mass extinctions (defined as the loss of 75% of all species). In other words, that means they survived the third, fourth and fifth mass extinctions which followed, the last one being the Cretaceous event which wiped out the dinosaurs. They can go without air for 45 minutes, survive submerged underwater for half an hour, survive freezing temperatures and withstand fifteen times more radiation than humans.
They eat pretty much anything, including the glue on the back of stamps. And when that runs out, they can last a month without anything at all before finally starving.
But what I like best about cockroaches isn’t just their physical hardiness, it’s the simple algorithm they use to survive. According to Richard Bookstaber, that algorithm is “singularly simple and seemingly suboptimal: it moves in the opposite direction of gusts of wind that might signal an approaching predator.” And that’s it. Simple, suboptimal, but spectacularly robust ‘.
I like Ellis’ categorisation of investment as a losers’ game. We spend so much time and energy trying to be clever: what the Fed will do next; what it should do next; where oil prices will go; what the effect will be on the economy; when the recovery will come; if the recovery will come; will China see a revolution; will Russia revolt against ‘Tsar’ Putin; et cetera, et cetera. It may be better to focus instead on not being dumb. How good are we at making these predictions? Of course there is a time for going on the offensive, and the occasional opportunity to play winning shots. In moving to an investment practice I guess I’m trying to make one now. Time will tell on how sound my judgement is. But I think the principle is a sound one.
So ‘ it’s an odd feeling to be drawing the curtain on my time here with Albert and Andy at SG. The three years have flown and it’s been both educational and entertaining working with them. But I’ve known them both for years and been close friends with them for years. So while I’ll miss the day-to-day contact, we won’t stop being close friends.
But I’m going to miss SG too. I know it’s customary to thank everyone everywhere when you leave, but in all sincerity, my time at SG has also been memorable because of SG. It’s not been an easy time for banks. Eurozone banks have had a particularly rough time and SG has copped its fair share of the flak. But I’ve met some fine and honourable people here who will be life-long friends.
I’ve come across wonderful people outside of the bank too: readers, clients, journalists. But the most common question I’ve been asked in my time here has been “how do you get away with writing what you write, while working inside a bank?” Lurking beneath the question is the implicit understanding that other banks don’t allow their analysts freedom of thought and expression. Yet SG has given us exactly that freedom, along with trust that we won’t abuse it.
Such trust is unusual indeed in this industry and without it I wouldn’t have had the fun, the personal growth, the readership, or relationships that the readership has fostered over time. I am truly grateful and I will always be very fond of this place.
When I resurface on the buy side early next year I will continue to write from my new perch. Before then I will be presenting at Albert and Andy’s January conferences in London and Edinburgh. Hopefully I’ll get to catch up with some of you personally then. In the meantime, anyone who’s corresponded with me, met me, or even just enjoyed reading the odd Popular Delusions and would like to stay in touch, feel free to drop me a line here. To the rest of you, thank you and farewell!