Attack the Week (ATW)

October 16, 2023

Monday Thoughts

I have recently bought a new coffee machine. It’s an Italian espresso beast. For most of my coffee mornings, I previously used a Japanese pour-over technique with a V-60 filter, which served me well but couldn’t match the quality I could get from my local coffee shop.

Having researched the coffee world a bit, I quickly figured out how much detail and depth some people are going into when trying to get the best drinkable cup. Input, of course, is the most obvious factor. You will want to get quality beans, and that’s up to anyone’s personal taste. I like a medium roast with deep chocolate and other sweet flavours. The other obvious but often overlooked factor is the water supplied to your machine. After all, it accounts for more than 90% of your overall drink. The espresso machine had a specific range for a few markers. To my surprise, most bottled water is not really suitable for most machines. I am using Volvic, which isn’t really tasty for drinking (I prefer Evian), but it is good for coffee. TDS (particles left after heating up the water), Total hardness (a problem in tap water in London), pH and alkalinity are the most important variables to consider. You can really geek out if you want to.

Much to my surprise, I also had to find out that my grinder wasn’t really suitable for espresso quality. Researching grinders quickly opened up another gate of amazement. In short, the grinder is probably more important than your machine. I have ordered mine, which is due to arrive in a few weeks’ time. I shall keep you posted on how that goes. So far, I am using ground beans, and I have mastered the “puck” and the distribution of the coffee around the portafilter. Weighing the perfect espresso is also more art than science. I am currently playing around with pre-infusion while I am still far away from my milk-pouring art. It’s tasty, though, and my wife is happy as well.

Source: Dall-e

Good input is generally the required element to provide a solid and consistent output. Be it in coffee making or investing, the process is what is at the heart of it. That’s where the value is. Everyone can have a good run and execute a good trade, but delivering consistency is a different ball game. That’s the game I am in, and I hope you are, too.

This, in essence, is where the recently announced Macro Book is going. Setting up a process that will hopefully deliver a good brew over time. Like a well-drilled coffee machine, once we figure out all the different levers and adjustments one needs to understand before using it. Stay tuned as we approach the next phase of the process and tackle the elements of Idea structuring. This is more art than science of taking an idea and devising a trade structure and best possible expression that will give you the highest return for the amount of risk taken. That’s not straightforward. Do you think the Fed will cut rates in March 2024? How would you play it? Long 2-year? Steepener? Short USD? Short Equities? Buying Vol or would this mean a higher EM-FX basket performance relative to developed commodity procuring pairs? Plenty of pitfalls we can fall into.

For now, let’s look at what’s ahead this week and what we want to watch for.