The original Peter Muller article, to which this newsletter piece is a bit of an ode, is Proprietary Trading: Truth and Fiction. A personal goal of mine is to read something like that and actually know what he's talking about.

Here was a nice summary though:

Trading” profits arise mostly from structural inefficiencies, of which there are many. Some participants are institutionally required to trade at predetermined times, and in directions that intelligent participants can forecast. Other participants have funding costs and constraints that other participants can take advantage of. Certain participants have different risk appetite than others. These structural inefficiencies can arise from institutional constraints and physical limits, but even in an ideally designed market they would still exist because there are asymmetries among participants.

“Investing” profits arise mostly from informational inefficiencies. A portfolio manager reasons about the changes in the supply chain induced by AI and figures out that certain firms will benefit and others will suffer, before the information is priced by the market. Another portfolio manager remembers that an obscure tax exception for hotels is set to expire, and shorts them.