You might want to read Antifragile by Taleb, plus do a search on my posts with the word convexity over the past few months. I have been rambling on it for a while, it would take quite some time for me to explain. But Taleb offers a good introduction in the topic
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But as a rule of thumb when I use the word convexity, I mean situations where your risk is limited but you might make a huge, almost unlimited amount of profits
When I say that New York can be a bad influence on a investor due negativity, perhaps I can explain myself better.
I'm sure people there are plenty positive, maybe even average relative to other cities. Perhaps even the numbers show that they own plenty of stocks. But they are also known as having big egos, especially people on Wall Street. When you have that big ego you can talk yourself into selling positions (like Eckhardt says its already a natural tendency for people), you can talk yourself into shorting some stocks (because you think you are so much smarter than everyone else, like Ackman on HLF), you can talk yourself into trading in and out of positions. The latter is pretty much the business model of most hedge funds (which are usually located in NY).
So even if the people themselves are positive, they are lead to BEHAVE as if they were pessimists. Kinda like my mistake on Ethereum, I was positive on it but BEHAVED as if I was negative when I took profits too quick and used a too close of a trailing stop, actions matter more than intentions.
From my observations, I just happen to think that NY (the city, the books, the media and all the culture that comes from Wall Street) will lead people to behave in ways that hurt convexity (be it because of transaction costs, selling winners too soon, shorting selling, being out of stocks because they are "too high", being a contrarian etc), so even people that are optimistic will behave in ways that are pessmistic and are anti-convexity
A lot of the people influenced by NY get saved by Warren Buffett, that's what helps to 'balance' them back and increase their optimistic behaviors. They read about him, watch interviews, etc and end up learning the folly of the ego approach of thinking you can outsmart your way to exponential profits through high turn over, shorting, selling positions because of 'brilhant' valuation research, etc. As a result, they become better investors
This might just be the greatest achievement that Buffett ever pulled. He saved so much people from anti-convexity nonsense
I'm sure people there are plenty positive, maybe even average relative to other cities. Perhaps even the numbers show that they own plenty of stocks. But they are also known as having big egos, especially people on Wall Street. When you have that big ego you can talk yourself into selling positions (like Eckhardt says its already a natural tendency for people), you can talk yourself into shorting some stocks (because you think you are so much smarter than everyone else, like Ackman on HLF), you can talk yourself into trading in and out of positions. The latter is pretty much the business model of most hedge funds (which are usually located in NY).
So even if the people themselves are positive, they are lead to BEHAVE as if they were pessimists. Kinda like my mistake on Ethereum, I was positive on it but BEHAVED as if I was negative when I took profits too quick and used a too close of a trailing stop, actions matter more than intentions.
From my observations, I just happen to think that NY (the city, the books, the media and all the culture that comes from Wall Street) will lead people to behave in ways that hurt convexity (be it because of transaction costs, selling winners too soon, shorting selling, being out of stocks because they are "too high", being a contrarian etc), so even people that are optimistic will behave in ways that are pessmistic and are anti-convexity
A lot of the people influenced by NY get saved by Warren Buffett, that's what helps to 'balance' them back and increase their optimistic behaviors. They read about him, watch interviews, etc and end up learning the folly of the ego approach of thinking you can outsmart your way to exponential profits through high turn over, shorting, selling positions because of 'brilhant' valuation research, etc. As a result, they become better investors
This might just be the greatest achievement that Buffett ever pulled. He saved so much people from anti-convexity nonsense
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I'm listening to the audiobook Understanding Trump by Newt Gringich, I'm surprised by the quality of the book so far. Its helping me understand better some of the behaviors from Trump and relax a bit about the risks associated with his presidency. Here is an interesting part of the book
Essentially, the media and a lot of commentators are so biased against Trump than pretty much any of his 'no nonsense' decisions will be interpreted as being a bad decision. And its important to be aware of that because otherwise you get a false impression of what he is doing and (more importantly) HOW HE IS BEING PERCEIVED BY VOTERs. That leads to the idiocy of the media being shocked when he won
People can see through idiotic crap from the media and egoic "experts" and they like honesty and straight forwardness
Essentially, the media and a lot of commentators are so biased against Trump than pretty much any of his 'no nonsense' decisions will be interpreted as being a bad decision. And its important to be aware of that because otherwise you get a false impression of what he is doing and (more importantly) HOW HE IS BEING PERCEIVED BY VOTERs. That leads to the idiocy of the media being shocked when he won
People can see through idiotic crap from the media and egoic "experts" and they like honesty and straight forwardness
Here is another good example:
Yet when Trump does some of that, he is portrayed by the media as having ADHD, having the attention span of an ant, only caring about his ego etc
That's one way to interpret things, another is the lion analogy and his 'no nonsense' approach. But of course, the media will only talk about one side. Readers are left with the impression that no other possibility exist which is wrong
Yet when Trump does some of that, he is portrayed by the media as having ADHD, having the attention span of an ant, only caring about his ego etc
That's one way to interpret things, another is the lion analogy and his 'no nonsense' approach. But of course, the media will only talk about one side. Readers are left with the impression that no other possibility exist which is wrong
Here is one realization I'm flirting with as I read the book, Trump might get reelected DESPITE the fact that he might fail to accomplish key parts of his agenda (like the Mexico wall or infrastructure). The reason is that he will be straightforward about it. If people feel like he really tried but didn't get it because of a miniority of Republicans or the Democrats, its quite possible that people will 'forgive' him and reelect him. He was able to turn around the 'grab them by the pussy' comment weeks before the election, he can take shit and neutralize it well because people feel like he is not bullshiting them like people from the establishment
I don't know if that will happen but the chance is a lot higher than what the egoic experts think
I don't know if that will happen but the chance is a lot higher than what the egoic experts think
Amazing move on BTC. When it was down to $1800, the bears were all out calling for a colapse of the 'bubble'. Then, convexity happened
I found another convexity mistake to me. When BTC went from 2300 to 2550, I bought Ethereum on the thought the they both tend to move in tandem but ETH was off a lot from the highs, so it was a better "value". Well, it turns out that it was a mistake, an exponential mistake. I guess I was "afraid of heights" again and looked for a proxy. Should have just bought BTC instead, I'm still in a small ETH position but its lagging so much, the thesis was wrong. It looks like this rally is on the back of the idea that BTC will take market share from ETH as the market decides on what to do about the fork. Its tough this trading game
I found another convexity mistake to me. When BTC went from 2300 to 2550, I bought Ethereum on the thought the they both tend to move in tandem but ETH was off a lot from the highs, so it was a better "value". Well, it turns out that it was a mistake, an exponential mistake. I guess I was "afraid of heights" again and looked for a proxy. Should have just bought BTC instead, I'm still in a small ETH position but its lagging so much, the thesis was wrong. It looks like this rally is on the back of the idea that BTC will take market share from ETH as the market decides on what to do about the fork. Its tough this trading game