My take on YOLO short squeeze and volatility..

I guess much has been said/written/memed about the most recent r/WSB YOLO short squeeze, and tbh have nothing really smart to add... but i'm puzzled by the pro-investment community reaction to this (namely HFs, bank sales desks

The British Railway Mania

How a disruptive technology created the biggest speculative bubble in the history of England

/THREAD/

1/ Railways were the most disruptive technology of the 19th century, known as the "railway age", transforming England from an agricultural to an industrialized nation.

2/ The development of railway infrastructure and locomotives started at the end of the 18th century but experienced immense growth after 1830.

3/ Hundreds of railway related bills were passed every year with proposed rails totaling 10,000 miles, a third of which was never built due to poor financial planning, competition, or fraud.

4/ In the mid-1840s, the Bank of England cut interest rates rendering government bonds unattractive, and investors more willing to rush in the railway investments.

ATROCIOUS big pharma price gouging of insulin:

This crying mother can’t afford the $1000 for her son’s insulin.

📌yet, it only costs pharma $5 to produce.

📌Insulin was invented 100 years ago by Fred Banting—who donated patent for $1 to make it free for all.

Let that sink in.

2) Insulin is one of the most disgusting cases of price gouging ever.

America has long taken a free market approach to pharmaceuticals.
Drug companies haggle separately over drug prices with a variety of private insurers across the

3) “Meanwhile, Medicare, the government health program for those over age 65 — it’s also the nation’s largest buyer of drugs—is barred from negotiating drug prices. That gives pharma more leverage, and it leads to the kind of price surges of EpiPens, opioid antidotes, & insulin.”

4) In 2018:
Johnson & Johnson CEO made $30M
Pfizer CEO made $28M
Merck CEO made $18M
Eli Lilly CEO made $16M
Gilead CEO made $16M

Meanwhile:

📌Americans spent $535B on Rx drugs

📌1/4 of diabetics rationed insulin to survive

📌500K Americans went bankrupt from medical bills.

5) What’s the right price patients should pay for medications? ZERO dollars, because no copay ==> more patients get their medicine ==> saves lives and saves money. Copays decrease adherence, and copays hurt patients who actually need them.

@nivin27 Kenneth Andrade & all his interviews ever

Our intuitions often leads us astray. A good reminder: study counterintuitive math and economic results.

Here are 9 of them 🧵

The Birthday Paradox

In a room of 23 people, there's a >50% chance that 2 people share the same birthday.

This type of probabilistic thinking does *not* come naturally to many people.

The Coastline Paradox

Fractal geometry is also confounding:

The coastline of a landmass does not have a well-defined measurement. As the unit of measurement gets smaller (eg. from KMs to cm), the length increases without limit.

Winner's Curse

In an auction, the winning bid will usually exceed the intrinsic worth of an item leading to a significant overpay (and negative net profit for the winner).

Braess's Paradox

Removing an extra road can make everyone's commute time faster.

Why? The existence of a "fast" road leads to congestion because everyone uses it. If you remove the shortcut, traffic flows better.

A potential problem is looming, and the media are pursuing a new story that builds on the following chain of reasoning: 1) higher inflation is coming;2) if CBs increase interest rates debts will explode and recession may ensue; 3) CBs are caught in an impossible dilemma 1/12

It´s perhaps too complex for some tweets, but.. Registered inflation this year is bound to be higher than present forecasts, resulting from one-off price spikes and base effects That will not start a sustained high inflation process, but temporary higher inflation is possible 2/

For example, Euro Area inflation increased suddenly from several months at -0.3% to +0.9% in Jan. This jump resulted mostly from several base effects, especially the change to German VAT. Inflation expectations increasing but higher in the US than in the EA 3/

The major one-off base effect will come from oil prices that decreased abysmally in March 2020 and have recovered. Some estimates put US inflation in April reaching 4%! After vaccinations, later in the year, pent-up consumer demand will also increase prices.4/

Despite the increased spending of accumulated savings, the savings rate will remain higher than before Covid for precautionary reasons (Fig 1). No permanent spending spree will materialise. Wages will remain subdued for a while (Fig2). Higher but not high inflation is coming.5/