Haymaker Friday Edition
Haymaker Friday Edition
Simon Mikhailovich: ‘Leaving the Billiard Room’
Hello, Subscribers:
Back in June 2022, just a few months after Russia invaded Ukraine, we published a piece called Recalling the Obvious (At Our Leisure). It wasn’t about taking sides or offering easy answers. It was an attempt to call out a kind of misplaced confidence we noticed — particularly in how the West responded to the war, economically and rhetorically.
At the time, there was a strong belief that financial sanctions alone could bring Russia to heel. The thinking went: if Russia’s GDP is smaller than those of Italy and France (geographically tiny countries by comparison), how long could Putin really sustain, let alone win, such a large-scale land war? But that kind of logic tends to overvalue numbers and undervalue reality. Land, energy, and military force don’t get erased by balance sheets. And geopolitics rarely follows neat economic models.
Sanctions can absolutely matter — they signal intent, shift alliances, and create pressure. But they’re not a magic lever. They operate within a framework that assumes everyone is playing by the same rules. And when that’s no longer true, the effects are often more symbolic than strategic.
Looking back, we felt the need to voice that perspective early on. It wasn’t the dominant narrative, and it didn’t win applause. But it still felt important to say — especially as sweeping declarations about economic dominance started to drown out more grounded assessments of the situation on the ground.
Simon Mikhailovich touched on a similar idea earlier this year in Fin de Siècle, published by Grant Williams. His piece, Leaving the Billiard Room (which we’ve republished below), draws from James Bond to describe a world that once felt structured and familiar, but now feels unstable and unpredictable.
Grant summed it up well: the old rules — the ones many of us assumed were fixed — are fading. We’re not playing the same game anymore. And it’s worth adjusting our assumptions accordingly.
So what does this mean for investors?
It means we’re operating in a world where the traditional levers — GDP comparisons, coordinated sanctions, interest rate policy — no longer carry the same weight they used to. Markets that rely on models assuming rational actors playing by shared rules are at growing risk of mispricing reality.
This has real investment consequences.
- 1. Hard assets matter again.
If sanctions can’t halt tanks and GDP can’t measure resolve, then resource-rich nations and commodity-linked businesses may carry more strategic weight — and more pricing power — than the market currently acknowledges. This favors energy producers, defense contractors, and firms with exposure to scarce materials (especially outside the G7 orbit). - 2. The “exorbitant privilege” is not infinite.
The dollar may remain dominant, but it’s no longer unchallenged. Watch moves by BRICS+ nations, energy trade settled in yuan, and any shift in reserve allocation behavior. Over time, this could favor gold, select foreign equities, and alternative monetary anchors — not in a panic, but as a quiet repositioning. - 3. Expect more policy volatility.
In a world where economic orthodoxy takes a backseat to geopolitical necessity, don’t be surprised by inconsistent rate moves, politically driven stimulus, or fiscal actions that defy standard playbooks. That likely means higher volatility, a steeper risk curve, and more frequent regime shifts — a tailwind for global macro and long-vol strategies. - 4. Rethink your safe havens.
Sovereign debt of highly indebted nations — once a ballast in portfolios — now comes with directional risk. Consider whether assets like short-duration Treasurys, commodity producers, or cash-flowing infrastructure businesses might serve as better anchors.
-The Haymaker Team
(Originally published in Grant Williams’ Fin de Siècle, February 2025)
“When the facts change, I change my mind. What do you do, sir?”
—Attributed to John Maynard Keynes
Normally, one doesn’t expect to find wisdom in a James Bond caper but, in the words of The Grateful Dead, “once in a while you get shown the light in the strangest of places if you look at it right.” Consider this passage from Ian Fleming’s book (not movie) From Russia with Love in which an older and wiser MI6 colleague warns Bond against betting everything on an outcome that only appears to be a sure thing. Predictably, the 007 throws caution to the wind and, also predictably, it all goes very, very wrong.
“This is a billiard table. An easy, flat, green billiard table. And you have hit your white ball and it is travelling easily and quietly towards the red. The pocket is alongside. Fatally, inevitably, you are going to hit the red and the red is going into that pocket. It is the law of the billiard table, the law of the billiard room. But, outside the orbit of these things, a jet pilot has fainted and his plane is diving straight at that billiard room, or a gas main is about to explode, or lightning is about to strike. And the building collapses on top of you and on top of the billiard table. Then what has happened to that white ball that could not miss the red ball, and to that red ball that could not miss the pocket? The white ball could not miss according to the laws of the billiard table. But the laws of the billiard table are not the only laws (…) in this particular game.”
Indeed, over the past several decades, Western investors and politicians have been operating inside a ‘billiard room’—a climate-controlled safe space that had its own rules and was well-insulated from the vagaries of free markets and outside interference. Whenever the gamblers (aka investors) have over-reached, politicians would up the credit lines and tilt the tables so that the gambling ‘whales’ could recoup losses and keep the games going. Once failure became ‘not an option,’ ‘whatever it takes’ was adopted as the sole guiding principle and the debt pile up became irrelevant. Such were the wages of financialization—once the system came to rely on the perpetual ‘wealth effect’ rather than real wealth, free markets with their propensity for “creative destruction” became simply unaffordable.
Subscribe to Haymaker to read the rest.
Become a paying subscriber of Haymaker to get access to this post and other subscriber-only content.
A subscription gets you:
 | Subscriber-only posts and full archive |
| Post comments and join the community |
IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
David Hay shall have no responsibility for: (i) determining that any opinion, forecast, projection, risk assumption, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinion, forecast, projection, risk assumption, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinion, forecast, projection, risk assumption, or commentary discussed herein to any particular reader’s investment objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that David Hay has an advisory agreement, oral or otherwise, with any reader.
David Hay serves on the Investment Committee in his capacity as Co-Chief Investment Officer of Evergreen Gavekal (“Evergreen”), registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Evergreen in no way implies a certain level of skill or expertise or that the SEC has endorsed the firm or David Hay. Investment decisions for Evergreen clients are made by the Evergreen Investment Committee. Please note that while David Hay co-manages the investment program on behalf of Evergreen clients, this publication is not affiliated with Evergreen and do not necessarily reflect the views of the Investment Committee. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
20250524
