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What I Learned from Losing $200M (2015)

nautil.us

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Re: What I Learned from Losing $200M (2015)

#91

Post by yters »

kinkrtyavimoodh wrote: post #82
yters wrote: post #29

Earlier quoted context omitted.

If that student flipped 200 heads in a row it isn't survivorship bias. That student has a two headed coin.

Even if the class had 200 students the winner didn't need to flip 200 in a row. On average, half the students of the class would get Heads in each iteration, which means that this experiment would go on only for lg(200) iterations, which is only 7. Flipping 7 Heads in a row is not all that difficult to imagine.

My point is large enough amounts of success cannot be attributed to survivorship bias.

Re: What I Learned from Losing $200M (2015)

#92

Post by inthewoods »

dba7dba wrote: post #72
CalChris wrote: post #6

I crewed on a sailboat in YRA races leading up to and during the 2008-9 crash. It was mostly people from Lehman and Barclays. I was the only SV guy on the boat. No one partied harder than those guys but then they really only partied with themselves. It was kinda like Boiler Room. The Dot Com boom is the stuff of legends but these guys left nothing on the table. Barclays had a riff and ordered a string of cabs to take…

Someone from Korea (S. Korea of course) told me this story that he read in a South Korean newspaper. When Lehman was trying desperately to sell themselves in order to get more funding in 2008, one place they tried it was in S Korea. Lehman's ex head of Korean office was in a high place in Korean banking industry at the time. Supposedly some local press was painting it like it was going to be a great chance for a Kore…

There should be a special place in hell for Dick Fuld. It is amazing to me that he, above anyone else, didn't go to jail considering he directly lied to shareholders regarding Lehman's leverage.

Re: What I Learned from Losing $200M (2015)

#93

Post by seanmcdirmid »

yters wrote: post #85
the_cat_kittles wrote: post #73

Earlier quoted context omitted.

lol @ u spouting nonsense. i think your trying to say you can use bayes to adjust for small sample sizes, like with beta-binomial models, or comparing posterior distributions for different models and params.

Two sequences of coin flips: HHHHHHHHHHHHHHHHHHHHHHHHHHHHHH THTHTHHTHTHHHHHHHTTTHTHHHTHHTT Which was generated by fair coin, which by 2 headed? How did you decide?

HHH.... is possible from a head fail fair coin, just improbable. If it happened, I would be astounded, but I wouldn’t feel like logic or the laws of the universe were being violated (I would look for a reality reset button though to pick out the improbable but not impossible occurrence).

Re: What I Learned from Losing $200M (2015)

#94

Post by mrchicity »

martin1975 wrote: post #43
anonu wrote: post #10

As a junior trader navigating the markets during that time I noticed that nobody has a clue about anything. Pundits, researchers, analysts, Junior guys, Senior guys... They all pretend to know. I'm not suggesting the markets are truly random. Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. I suppose it's those guys th…

> But only to the select few who are in the right product or looking at the market in the right way. like RenTec/Medallion... who sometimes look too good to be true, then again, if they were doing something illegal for 30+ years, you'd think by now they'd be caught. The only alternative explanation is they indeed have a unique model of the markets they continuously refine that allows them to outperform most everyone.

Most money in Medallion is from employees with a bit from friends and family. You can't invest in it at all, because they don't need or want your money. If they're fooling anyone, they're just fooling themselves, or maybe using it as marketing for their other funds.

In absolute terms Renaissance isn't even spectacular. There are capacity constrained traders whose Sharpe Ratios and return on capital are multiples of RenTech's. What's impressive is that they manage to do it with a billion dollar AUM. That's small compared to some of the biggest HFs, but far more than a typical high turnover strategy can put to use.

Re: What I Learned from Losing $200M (2015)

#95

Post by oaijdsfoaijsf »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

Those are all your stock picks in the last fifteen years? No losers at all?

Re: What I Learned from Losing $200M (2015)

#96

Post by the_cat_kittles »

yters wrote: post #85
the_cat_kittles wrote: post #73

Earlier quoted context omitted.

lol @ u spouting nonsense. i think your trying to say you can use bayes to adjust for small sample sizes, like with beta-binomial models, or comparing posterior distributions for different models and params.

Two sequences of coin flips: HHHHHHHHHHHHHHHHHHHHHHHHHHHHHH THTHTHHTHTHHHHHHHTTTHTHHHTHHTT Which was generated by fair coin, which by 2 headed? How did you decide?

assuming you want a bayesian approach? take a flat prior and look at the MAP? though you know its just going to be the observed rate. if you know you only have a fair coin or a double head coin just compare their likelihoods? what is the point you are trying to get at?

Re: What I Learned from Losing $200M (2015)

#97

Post by noonespecial »

tryingagainbro wrote: post #27
ChuckMcM wrote: post #19

Earlier quoted context omitted.

Apropos of nothing, health care before age 65 in the US (prior to the ACA, and possibly again) peaked at about $36K/year (age 64). That leaves you with $24K of your $60K to live on. Not saying it isn't doable, but it isn't as much as it once was. All I'm saying is that retirement planning is a bit weird because if you do it when you're 20 you might miss some expenses that older people have that you are not yet aware…

peaked at about $36K/year So leave USA for a while or forever, if you need to pay $3000 a MONTH for insurance. WTF? Unless you have a very, very specific disease everything will be solved in many other countries, at a lot less. By paying cash if needed.

Having to pay $3k per month for health reasons sounds like the very disaster buying health insurance was supposed to guard against.

If that $3k were paying a mortgage debt, it would be servicing more than $600,000!

Re: What I Learned from Losing $200M (2015)

#98

Post by phlipski »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

How'd you miss on Domino's Pizza? Could have picked it up for about $5/share back in November of 2008. Closed at $178 today. You'd be up about 3460% in 9 years. Google (+574%), Amazon (+2000%), or Chipotle (+350%) can't touch that - assuming you bought all three in November of 2008 and sold today.

Re: What I Learned from Losing $200M (2015)

#99

Post by JBlue42 »

CalChris wrote: post #6

I crewed on a sailboat in YRA races leading up to and during the 2008-9 crash. It was mostly people from Lehman and Barclays. I was the only SV guy on the boat. No one partied harder than those guys but then they really only partied with themselves. It was kinda like Boiler Room. The Dot Com boom is the stuff of legends but these guys left nothing on the table. Barclays had a riff and ordered a string of cabs to take…

And all the movies about those folks show the same right? We, the norms, get to live vicariously through their partying, dishonesty, stupidity, etc then the fall comes and we get to laugh at them too. But secretly, we all think we can beat the fall part and have the fun, right? Or at least, in the US.

Re: What I Learned from Losing $200M (2015)

#100

Post by sokoloff »

kovek wrote: post #67
Danihan wrote: post #36

Earlier quoted context omitted.

I'm sure you're correct, all stock picking is dangerous though. I'd assert that my style is the least dangerous. > look around your little bubble I didn't (and don't) have a bubble. In fact, I frankly despise the Bay Area and SV because it constantly tries to put you in a liberal / wealthy bubble. >If you can see signs that Chipotle is doing well, so can everyone else. Apparently not, though. They doubled on IPO but…

> That should make you want to invest in the #1 company that manufactures satellite components. I understand the idea, and I might agree. I just wanted to point out that in the book "The Intelligent Investor", there was the idea that you could think about investing into the second best player in a certain space. I think the reasoning was that there is more opportunity for growth for a second-grade company than a firs…

I'm not sure I'd want to invest in the second-place search engine or second-place social network.
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