If you have followed this blog long enough you will know that I am an unabashed fan of the life and work of Nassim Nicholas Taleb, pugilistic social media presence and all. There is no simple way to summarize why — this post from the economist Branko Milanović is as good of an attempt as any — and reducing his Incerto series of books to a collection of One-Neat-Tricks (Ergodicity! Lindy! Skin in the game!) would not do them justice.
Having said that, here is One Neat Trick: when deciding to act, think about the best-case and the worst-case scenarios and try to pick one with known and limited downside and a potentially unlimited upside. The classic example here is buying stock options: for pennies on the dollar you purchase the right to buy stock at a certain price by a certain date. If the stock costs less than that price by the time it expires your only loss is the price of the option. But in the unlikely but possible case it skyrockets, you can pocket a good chunk of change. [Note: People misunderstand this as Taleb recommending that people from all walks of life go into options trading. Far from it. In fact, one thing he said at my first RWRI years ago which has served me well is that if you are not a professional trader and you earn money from a different profession, your priority should be capital preservation, not generation. ]
The flipside and what you should definitely not do is selling uncovered stock options. Yes, most of them will expire and be worthless and you will get to keep the modest steady income derived from the selling price. But in the unlikely but possible case it skyrockets, and you don’t actually own those stocks — that’s the “uncovered” part, and yes people actually do that — you will need to purchase them on the open market at that very high price. D’oh.
Rarely are real-life choices this clear. You usually have to pick between several bad options with the same limited upside and different downsides. Case in point — and we are finally getting to the point of the title — is what the Colorado town of Erie has to deal with. Some houses in Erie are yards away from the Draco pad, one of several new fracking projects slithering around Denver. The city council was initially against it, then one member did an about turn, changed his vote, and allowed the sale of mineral and oil rights “for up to $35 million over the next two decades” along with some 160 acres of land previously used for drilling.
Quoth the Mayor, Andrew Moore: “So when we get to the point of, ‘Hey, the state approved this’ — I can’t change that,” Moore said. “But I think we need to work to get as much as we possibly can for Erie.”
In case you missed it, his thinking was that the state approved it already, drilling is down in the next-door Weld County and Erie can’t stop it, so they might as well get something out of it, like keeping the 10/10 elementary school and building up some more of the infrastructure. The downside is that it is and the upside looks good, so what’s wrong with that?
Well, if you stopped to think about it for more than a millisecond a question may come to mind: why on Earth would a publicly traded company give anything to the town if they were going to drill and get the oil anyway, There Will Be Blood-style? Out of the goodness of their corporate hearts? Please.
First, the upside is not what it seems. This is from yesterday’s Denver Post:
Under the agreement negotiated by Owens, Erie would receive a $4.5 million upfront payment and 3% royalty interest for the life of the project, which the town projected at the time of the council’s vote could range from $19 million to $31 million. The royalties wouldn’t kick in until SM Energy has recovered 200% of its cost to develop Draco.
$4.5 million is significantly less than $35M, as there are no guarantees whatsoever that any royalties would be paid out: those development costs can skyrocket, particularly when it’s the company itself estimating how much everything cost. Fungible accounting ftw.
Worse yet, by selling their rights I can only assume that the townsfolk are giving up the opportunity to sue the company for any untoward consequences of pumping millions of gallons of pressurized fluid into a landscape pockmarked with old oil and gas wells. Paying the town $4.5 million to not have to think about would be a steal, and easily defensible to even the stingiest of the board members.
So these are the two bad, ugly, abysmal choices put forth: take the $4.5M upside in return for the unlimited downside if and when things go wrong and there is no one to hold liable; or don’t take anything but lawyer up and reserve the right to block everything in courts at the first sign of trouble while also getting some money for potential damages.
My choice would be preservation, but then one of the big reasons we are in Denver and not north of it is that we didn’t want to make choices like that.
🍿 Backrooms (2026) was the horror movie Wes Anderson would have made if he made horror movies and forgot everything he knew about plot. Fortunately, the plot was not the point — the physicality of the set and special effects more than make up for it.
I am shocked — shocked! — to find a zoomer “AI investor” caught swimming naked at the first turn of the tide:
Aschenbrenner, who had no previous trading experience before starting the fund, worked for the FTX Future Fund, the philanthropic arm of Sam Bankman-Fried’s empire before it collapsed in late 2022. He later joined OpenAI’s “Superalignment” team before being fired over an alleged leak.
With such an illustrious pedigree, how could things have possibly gotten so wrong so quickly?
And in the unlikely case you were still wondering if there was an AI bubble, even FT called it.
🍿 The Dink (2026) was a goofy blast. I knew absolutely nothing about pickleball beforehand and know marginally more having seen the movie. It still seems kind of dumb — why don’t they just take up badminton? — and therefore the perfect centerpiece for a Dodgeball/Blades of Glory-style farce.
In Silicon Valley, engineers assign their agents tasks to complete overnight, and then check the results even before their morning coffee. Some are staying up late: “The opportunity cost of going to sleep is too high,” the billionaire venture capitalist Marc Andreessen said on The Joe Rogan Experience last month. “If you go to sleep, you won’t be with your 20 AI coding agents.”
This Andreessen guy sounds like a grade-A asshole.
PSA: when making tiramisu from scratch, do not — I repeat, do not — use mascarpone from Whole Foods unless you are really into tiramisoup.
Noelle Phillips for The Denver Post, my new weekend paper now that we are out of the Financial Times’ distribution zone: Colorado’s oil and gas regulators studied health problems tied to drilling. Critics ask: Why will nothing change?
The headline does not scream riveting reading, so before you click here is a short story about our family’s recent journey that may put it in context.
We moved to Colorado in great part for more space and an opportunity to spend more time outdoors. The small towns north and northwest of Denver, in Boulder Valley County, were particularly appealing: great schools, kind-of affordable houses — their proximity to billionaire-laden Boulder got them within striking distance of DC — close enough to the foothills that a trip in the mountains does not take a full day of planning yet far enough that mountain fires should not be as big of a concern. [Note: Here, too, a caveat. There has in fact been a major fire in the area, not from wood but rather acres of dry grass in the open spaces people here are so proud of. Can’t escape climate change. ] Also a quick, non-trafficjammed commute to my new place of work northeast of Denver. What’s not to love? In fact, every single person with whom we shared our great plans nodded in agreement and expressed the appropriate mix of pleasure and envy.
So that was where we hoped to settle initially and that was where our super-kind, super-accommodating realtor showed us on our first few tours. We even made an offer, which was — and I will foreshadow with a thankfully! here — outbid. Then we noticed that another property we looked at, and got within a couple of heartbeats of making an an offer, a property whose backyard looked into one of those open spaces Coloradans are so proud of, also had some heavy machinery in that open space, digging a hole wider than it was deep but unsettlingly large in both dimensions, yellow caution tape all around it. What’s that, I asked? Oh, it’s just an old oil well being decommissioned and the company doing it found contaminated soil, probably a leak from who knows when, so they are now digging around and testing until they’ve cleaned out all the contaminants — like a Mohs procedure — before they finally plug it. People make it out to be a bigger deal than it is. Probably why the price is so good! Anyway, you can read more about it online.
And so we did. And as we did, our great plans for a big move to the wide open spaces of Colorado began to unravel.
A thing about the state that may or may not be common knowledge but it was news to us: it is full of oil and gas. The Wattenberg Gas Field is one of the largest in the US and still being exploited. Go to Colorado Energy & Carbon Management Commission’s interactive map of wells, and you will see the striking density of them at Denver and Boulder’s doorsteps, and more wells than you’d expect in the city limits. For a great overview of the Colorado gas well situation check out a substack newsletter aptly named What the Frack?. Aptly, because 99% of Colorado’s oil and gas production comes from fracking.
In fact, a quick Internet search led us to the reason why that abandoned backyard oil well was being capped and, oops, found to have been contaminating the surrounding soil for who knows how long. There will soon be a whole lot of fracking underneath Boulder Valley, courtesy of the neighboring and significantly less crunchy Weld County, which gave a permit for some crafty oilmen to perform a real-life milkshake maneuver. The Draco Pad website described where in Weld County some 26 holes will be made. Tucked in a tiny thumbnail at the bottom of the page is a depiction of what will happen underground: one of the longest horizontal drilling operations ever attempted, going for 5 miles, well into Boulder Valley County and underneath many residential neighborhoods, schools, hospitals, etc.
Another well-named website, Erie Protectors, goes into much detail for why this is a Bad Thing Indeed, even not taking into account the fact that the wells themselves will be less than the mandatory 2,000 feet away from houses (which is kind of a big deal — why even have a state law if you won’t enforce it). An important observation they make, and the reason why those oilmen felt the obligation — or was it a mandate from the local government? — to plug the abandoned wells was that there will be a lot of pressurized liquid going through those bore holes, and who knows what may pop and when, plugged or not.
Oh, and did I mention the University of Colorado study from last year — available to us during all this searching and the reason why that Denver Post article exists — which noted increased risk of childhood leukemia for those living within 8 miles of a well? But then, it doesn’t take a rigorous scientific study to understand what my grandmother (or, in the absence of a grandmother, Nassim Taleb) could have told you: avoid living close to fume-spewing industries of any kind to avoid risks known and unknown.
If ever there was a reason for a hematologist/oncologist and a pulmonologist with four children, one of whom was still an infant, to give up on an area and settle for less space and no backyard in significantly more urban parts of Denver proper, well, this was it! There is another short story about how we finally found the right place, with a couple of detours on the way, but let’s leave that for another time.
You may now, if you haven’t already, click through and read the article, because it discusses the aftermath of those results coming out.
What happened after the study was what the oil industry, like the tobacco industry before it, loves. There was a committee. It reviewed that and 2 more studies and came to the tepid conclusion that more research needs to be done, and that no changes shall be made to Colorado’s drill permit process. You know, the same process that allowed 26 wells to be drilled less than 2,000 feet from people’s homes, then under more homes, schools, hospitals, etc, etc. To quote the Post, “oil and gas industry representatives welcomed the review, saying it is important for Colorado regulators to follow science.”
Yes, yes, of course. If the science can’t tell us which cigarette, nay, which puff of the cowboy killer caused your lung tumor, well then, can we even say that smoking causes cancer? Show us the atom of benzene that got into your child’s bone marrow to cause her leukemia and we will shut this plant down, the Colorado oilmen — those champions of science — might cry.
How did it come to this?
Well first of all, didn’t you hear how important fracking was? Just in the last few months Tyler Cowen, Ed Conway and The New York Times noted this, that last one putting an accent on the Democratic Party establishment not being too keen on fighting oil and gas anymore.
Second, so many of those schools being drilled under are paid for by oil and gas! This is as true in Colorado as it is in Texas although unlike the astroturfed Colorado data the local reporting from Amarillo, Texas gives more color on how fickle that funding can be.
Third, There Is No Alternative (↬ Cory Doctorow).
Fourth, we are all human and would rather not advertise anything nefarious going on that may decrease their property values even when they couldn’t do anything about it and take the brunt of the risk. Why, this oil well here is part of regular infrastructure, just like telephone poles and traffic lights, don’t you know?
Fifth, there was in fact huge uproar about most of these projects during the permitting phase — the above mentioned What the Frack? newsletter has written about some of it — but it has had no effect. As long as the 2,000 foot-ish setback was followed and the oilmen could say with a straight face that, as far as they knew, what they did had no ill effects on human health if all the safety procedures are followed, asterisk asterisk, the permits were granted.
Sixth, even if something bad did happen, some of these oilmen run fly-by operations that are worse than Washington DC residential construction LLCs. By the time a well is found to have done damage the company that drilled it is long gone and there is no one to sue. Why did you think there were so many abandoned wells out there?
In short, plenty of reasons, none of them good.
Reason number seven hits close to home. When Rio Tinto wanted to mine for lithium in western Serbia the country was in an uproar. Never mind that the EU is very much for establishing a wholly European-based battery supply chain. Never mind that the contracts with the government were already signed. Years have passed and there is still no mine. I suspect this is because Serbia is an already small and ever-shrinking country with limited resources. Screw up one river system with mining detritus and there aren’t that many more left to go around. Screw up each and every one, and you don’t have another country to go to.
Not so with Americans, who will always have Yellowstone and other national parks to keep in reserve. The country is so vast with so much unspoiled wilderness that there is the illusion of abundance. The problem with national parks of course is that they have no houses, schools, hospitals, or really anything that would qualify as residential infrastructure. Far from ideal for a family, and even singles may have trouble settling in unless they are the Ted Kaczynski and/or Waldenponding types. Look at where people actually want to live, and you will find issue after man-made issue, created by greedy bastards, allowed in part because people who should know better thought they could always go somewhere else after the check clears.
With greed again becoming good, I have a sinking feeling that most American cities already have — or are soon to get — their own version of this fracking problem.
Derek Lowe is scandalized by the fact that 9 out of 10 drugs that get to a first-in-human trial don’t get approval or, to use some jargon, a clinical failure rate (CFR) of 91% per year. He quotes a recent paper which followed CFR over the last six decades [Note: Just to make things confusing, the paper itself calls this percentage “clinical attrition” but Lowe rebrands it to a CFR. Let’s for the sake of consistency stick with the latter, although a pedant may question whether that statistic truly is a rate. ] and noted that it was improved somewhat in the 1970s and 1980s — down to about 80% — but was consistently at or above 88% in every other decade analyzed.
Both the paper and Lowe present this as a Bad Thing. Here is a direct quote from Lowe:
But let’s think about that 91% failure rate for a moment. When I bring this up in presentations, I invite the audience to consider what the auto industry would look like if 91% of new car designs proved unable to roll out of the factory, or if 91% of new airliner models were unable to leave the ground - and if you only found that out after spending all the R&D money to build them at full size and trying to fly them. No cutting-edge restaurant could survive if 91% of its innovative dishes proved inedible or outright poisonous. What other industries operate under these bizarre conditions?
Sounds scary! The paper has a different and a somewhat less alarming spin: see how bad our preclinical testing is if so many of the drug candidates don’t make it to approval for reasons of biology. If there are bad side effects, or the drug doesn’t make it to the targeted tissue, or the liver destroys it too quickly, should we not have picked that up in cell culture or animal testing? Should we not focus our resources on developing more human-relevant preclinical tools, and maybe call them New Approach Methodologies (NAMs)?
At this point in the story I should mention that the paper in question, titled “Need for NAMs: A systematic evidence synthesis revealing over half a century of drug development failure”, was published in NAM Journal. Holy motivated reasoning, Batman.
So now let’s look at the counterfactual: what if the increased CFRs from 1980s to today came by design, from the realization by drug developers that preclinical testing isn’t the greatest at predicting toxicity and is completely useless when it comes to efficacy, so why not just get drugs to clinical as quickly as possible and be as quick in cutting them? My go-to paper outlining this philosophy is one from 2010 which a team from Eli Lilly — as successful at developing drugs as they come — published in Nature Reviews Drug Discovery. To pick out two key points from their above-the-paywall outline:
Reducing late-stage (Phase II and III) attrition rates and cycle times during drug development are among the key requirements for improving R&D productivity.
To achieve the necessary increase in R&D productivity, R&D investments, both financial and intellectual, must be focused on the ‘sweet spot’ of drug discovery and early clinical development, from target selection to clinical proof-of-concept.
Which is to say: since Phase II and especially Phase III trials are an order of magnitude more expensive than Phase Is, let’s quickly do what we must to get drugs into clinic, gather early human data, then make an informed decision. If that makes an arbitrary number go up, so be it.
You can see why the de-emphasis of preclinical efficacy data could have made some lab people unhappy, which I guess is why we now have a journal called NAM. Or was it ‘Nam?
Of course, there are tradeoffs everywhere, and the big tradeoff in the “fail fast” school of drug development is that you are tying your faith, financial and otherwise, to the health care system and contributing to the health care ouroboros. The one where Americans pay so much for health care because drugs are so expensive to develop, and drugs are so expensive to develop because health care in America is generally so expensive. But of course, no one is obligated to run their early-stage trials in the US.
Now that I am back in clinic full-time I have tried and failed to pick up on the more clinical podcasts. Both ASCO and ASH have their podcast series, but they are all so formal and scripted you can see the teleprompter scrolling in front of the speakers’ eyes.
One potentially bright note could have been Cancer Stories, which are spoken versions of Journal of Clinical Oncology’s Art of Oncology article series. Note the past tense; I have a longstanding antipathy towards “narrative medicine”, a mode of fiction in which doctors combine patient stories, or present a single patient’s story anonymously, to make a point. The fallen king of narrative medicine was the neurologist Oliver Sacks, and look at how that turned out. Social media are of course an even more fertile ground for this kind of fakery; I won’t go into the X, Bluesky, Mastodon, TikTok and YouTube accounts that are completely full of it, but there is a lot of content out there and all of it — all of it — is bullshit.
So I was hoping that these stories being published in a peer-reviewed journal would at least be closer to the truth. And I’m not saying they are not, an inch or two closer, with cases not being invented out of whole cloth. What I am saying is that JCO editors are incapable of recognizing AI slop and the very first story I listened to was full of it.
It was disconcerting to hear a professional voice narrate The Liver We Share in the April edition of the podcast. In the story, BU medical student Ryan Wexler writes about his experience as a living donor to his then-fiance now-wife who needed a new liver. Quoth Wexler: “When I learned I was a match, relief arrived not as joy, but as quiet permission to hope.” The hope was justified, for everything went well: “Her recovery, and our journey as a whole, bears little resemblance to the decisive triumph I once imagined. It is quieter, ongoing, and more powerful for it.” Yes, yes, so much quiet. Other empty metaphors and nonsensical turns of phrase abound.
Did Wexler feel bad, I wondered, when the completely credulous host and a great hematologist Mikkael Sekeres — a pre-AI book author I should add — asked him probing questions about his mental state and the specific words he used in the essay? Couldn’t you see through the AI bullshit, Mikkael, I wanted to scream out. He is a bit older than me so maybe there is an age cutoff at which people can no longer detect the slop? At least one of my parents and one in-law don’t have a clue, as they keep forwarding sloppy Instagram links despite my not having an account for more than a decade.
In any case, no, peer review is no protection against bullshit and I will not be exposing myself to any more of it. End of rant.