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Ask HN: What are examples of activities/bets with asymmetric upside?

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Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#71

Post by defrost »

lostapathy wrote: post #56
defrost wrote: post #25

Earlier quoted context omitted.

I throw ~ $10 a fortnight at the State Lottery with zero expectation of winning (ie. lower than the formal E() chance of winning) > We're extremely fortunate in Western Australia to have the only lottery in the nation, and one of the few in the world, where all profits are returned back to the community. In the past year they've taken in a #billion and put out some $323 million in community grants and the rest in pri…

The lottery just an optional tax on people who either like to dream ... or are bad at math :).

I occasionally tag in to check their procedures | results (ongoing math consulting group job) so I know what my chances are and have no serious thought of winning big - I "play" because I can afford it, because I approve of where the money goes, and because between small ongoing "wins" (it does a good trickle payout), past grants, and salary from checking their books it's been an essentially break even venture to date with an outside chance of millions ..

TBH I don't think I'd play any other lottery - this one's pretty much about the proceeds staying local for me.

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#72

Post by redox99 »

thunky wrote: post #68
redox99 wrote: post #30

Earlier quoted context omitted.

I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor. So basically invest in things where there is a big information a…

It's really that easy? Care to share another stock pick today with asymmetric upside?

Not financial advise

It's not really that easy because

1) There aren't at least to my eyes that many opportunities, maybe people with domain specific knowledge in other domains, will find their own opportunities. I've only made in the last 10 years maybe 3 or 4 investments in which I was extremely confident that they would succeed.

2) These investments are medium-long term, at least 2 or 3 years.

> Care to share another stock pick today with asymmetric upside?

This will not be liked by the typical HN audience, but the investment where I currently see massive information asymmetry is Ethereum.

Most people who were into crypto were oblivious that the merge was actually coming. A couple of months ago you would see in crypto forums/reddit everybody memeing that it would be delayed again and again for years. But if you were actually knowledgeable of it's development, you would know that it was coming for real (information asymmetry #1). Now that it became widely known that it's coming, ETH/BTC ratio went from 0.06 to 0.08. Easiest 33% ever.

The same way, most people are unaware of the triple halvening. Ethereum miners currently get paid ~20M USD worth of ETH per day. A big chunk of that must be sold to pay for their mining bills. After the merge, that's almost 20M USD of DAILY sell pressure that will be gone (information asymmetry #2). After some months that massive reduction in sell pressure will have an impact on price. In addition, staking rewards cannot be withdrawn until a future update (shangai). Then it will be a limited withdraw queue.

Ethereum at 1000 USD just a month ago was free money in my opinion. Now at 2000 USD I still believe it's a good deal.

To be fair, there is a lot of information asymmetry in the negatives too. There are many things that are quite bad about Eth that most people into it aren't knowledgeable of either.

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#73

Post by _e4mv »

Asymmetric downside - sharing ideas that you could potentially personally benefit from just because somebody gave you some inspirational hippie BS wisdom like “we’re all working for the progression of humanity”. Wake the f up, welcome to capitalism, the snakes just took you for all the creative brain power you had.

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#75

Post by [deleted] »

_e4mv wrote: post #73

Asymmetric downside - sharing ideas that you could potentially personally benefit from just because somebody gave you some inspirational hippie BS wisdom like “we’re all working for the progression of humanity”. Wake the f up, welcome to capitalism, the snakes just took you for all the creative brain power you had.

[deleted]

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#76

Post by mikewarot »

Develop a technology that helps people convey complex ideas using narrative trails and other techniques on top of massive local storage, as portrayed by V Bush in "As We May Think" in 1945. It still hasn't been done yet, despite the problem of efficiently conveying complex information as being one of the most important challenges facing mankind (more than 75 years ago!)

If you can help people convey complex ideas, with all the context and nuance, you've created a new level of expressivity and productivity that could help us all in ways we can't even currently imagine.

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#77

Post by insightcheck »

13of40 wrote: post #52
ada1981 wrote: post #14

Earlier quoted context omitted.

The lottery seems like a really dumb thing.

Compare it to something like voting. There's a vanishingly small chance that your personal vote is going to sway any issue. The benefits of voting are only felt at a societal level rather than a personal one. Lotto also has societal benefits, like funding schools and keeping organized crime out of the casual gambling market. Plus it's fun, on the order of, say, eating a mini bag of Doritos while you're stuck for thre…

My view is that voting can still have a significant impact, even if you lose an election. A district seen as "safe" for one party that suddenly becomes more contested after one election (which happened many times recently) can inspire more attention to the district and its issues by more parties.

A narrow win or loss, in many contexts, can also lead to different decisions by the winners (especially if they seek re-election later) compared to a massive win or massive loss. In addition, voting is free (except for the time spent), whereas the costs from lottery tickets can add up.

I agree with you, though, that the lottery can actually have societal benefits. A notable example is that in Georgia, USA, a scholarship program for university is funded entirely by the state's lottery system (source: https://en.wikipedia.org/wiki/HOPE_Scholarship).

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#78

Post by enos_feedler »

thunky wrote: post #68
redox99 wrote: post #30

Earlier quoted context omitted.

I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor. So basically invest in things where there is a big information a…

It's really that easy? Care to share another stock pick today with asymmetric upside?

easy peasy.. nvidia assyemtry to the downside. short

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#79

Post by refurb »

dionidium wrote: post #70
refurb wrote: post #67

Earlier quoted context omitted.

I'm not sure why "unrealized losses" would make anyone feel better? People need to move, get divorced, lose their jobs. "Just stay in the house and keep paying the mortgage" is not an alternative available to everyone. Look at Las Vegas. It only recovered to the 2008 peak last year. It's been a terrible investment.

This is more of an argument against investing at all than it is specifically about housing. Obviously, if you want upside, then you have to tolerate some level of risk. If the argument is just, "things could go badly in your life at exactly the time you're in the red," then that's true of anything.

The argument was buying a home using debt is a "high upside/low downside" bet. It's not. Leverage works both ways.

Leverage amplifies upside and downside.

Re: Ask HN: What are examples of activities/bets with asymmetric upside?

#80

Post by vivegi »

Just expanding on the call options, one can even take a neutral hedge position by buying PUTs and CALLs at the same strike price. So, in essence you are betting that the price won't stay at the same level and would either rise or fall. Your net option premium is higher (approx. 2x of just buying a CALL opt or PUT opt only) but your long-term risk is much lesser (considering a sequence of bets) as scrips tend to be on an uptrend or downtrend in a given window and much less frequently get stuck in a range bound behavior.

Moreover when the assymetric event occurs (i.e., a meteoric rise or an abysymal crash), the loss is limited to the premium paid whereas the upside is huge.

Combine that with the Kelly Criterion (discussed widely here: https://hn.algolia.com/?q=Kelly+Criterion) you have a strategy.

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