S2N spotlight

I am going to spare you the pseudo-intellectual BS of acting like I know anything meaningful about Venezuela. Unlike the sudden explosion of “experts” on Israel and the Middle East, Ukraine and Russia, Taiwan and China, and every other geopolitical hotspot—people who knew nothing, or very little if I’m being generous, now chiming in as if they have a hotline into the situation room.

We all have the internet. We all have AI tools. Pulling together a coherent soundbite, a timeline, or a list of talking points should not be mistaken for knowledge. Data is not understanding. Fluency is not wisdom. And repetition is not insight.

True knowledge is slow, costly, and uncomfortable. It comes from living with a subject over time—wrestling with contradictions, sitting with uncertainty, changing your mind, and accumulating scars from engaging honestly with opposing views. It’s less like reading a briefing note and more like a UFC fighter grinding through rounds: taking hits, adjusting strategy, discovering weaknesses, and learning where theory breaks down under pressure.

Most commentary today skips that process entirely. It confuses access to information with authority, confidence with competence, and moral certainty with comprehension. And the louder and faster the commentary, the more likely it is that none of the real work has been done.

One of my favourite authors, Fyodor Dostoyevsky, offers a haunting response to the idea of utopia. I was late to discovering him—Crime and Punishment is one of the greatest books I have ever read—but few writers have understood the human mind as deeply. Good and evil are not opposites in Dostoyevsky’s world; they are layered, entangled, and permanently at war inside us.

So, Berman, I ask you—through tears in my sleep-deprived eyes—what the hell does this have to do with the macro world of investing on this beautiful, hot, sunny day in Sydney?

I write this from a café overlooking Bondi Beach. The setting matters. It tells you I am not tapping away from the sand while suffering heatstroke. I’m lucid. And I’m feeling slightly combative toward those who insist that the extraordinary advances in AI will not have profound—perhaps devastating—effects on the global economy and society. Think good and bad, just as Dostoyevsky so masterfully synthesised.

Yes, this is a theme I’ve been returning to for some time. But it’s the start of a new year, and it bears repeating. This will be a dominant force for decades, and I want us prepared for what is likely to unfold.

Over the holiday period I read commentary from some of the giants in the AI space. What struck me most was not their confidence, but their surprise—almost all of them underestimated the speed of progress. I’m increasingly convinced we are on the verge of revolutionary change in the workforce. AI, generative AI, and their robotic cousins will not assist labour; they will replace large parts of it.

Profit margins will explode. The rich will get much richer.

The popular narrative is that work will become optional—a hobby—and that we will all live off universal basic income. These are not fringe ideas. They come from Elon Musk, a man plausibly on track to become the world’s first trillionaire. When 99% of people would be thrilled to become millionaires and we are already discussing trillionaires, something is deeply out of balance.

In Dostoyevsky’s loose framing, if you give humanity a perfect utopia—abundance, comfort, no struggle—we will destroy it out of sheer boredom. We will manufacture chaos simply to prove that we are not piano keys played by the laws of nature. We choose hardship to confirm our free will. We suffer to remind ourselves that we are alive.

My job is to take the virtual-reality sunglasses society prefers to wear—and replace them with a pair of well-designed spectacles for navigating reality.

S2N observations

Here are some of the big-name performances for 2025:

Bridgewater’s Pure Alpha fund posted a 34% gain. Ray, we got this. D.E. Shaw’s Oculus fund returned 28.2%. Balyasny’s multi-strategy platform gained 16.7%. Citadel and Millennium finished lower at 10.2% and 10.5%, respectively.

I just came across this Bloomberg article today about Michael Platt’s 7,858% fund performance over the last decade since he gave his clients their funds back. Talk about free-balling it.

When looking at silver on a log scale, it doesn’t seem as overbought as the linear picture presents. Two different perspectives One Truth.

S2N screener alert

Yesterday saw 2 massive days, with silver futures producing a 7-sigma up day and platinum 6. These are very rare price movements; if you believed traditional finance, then you should experience these once every 1.4 billion years. See ya next time.

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