Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How to increase your luck surface area (2010)

codusoperandi.com

Post reply on HN
Print view View original

191–200 of 207 posts

Re: How to increase your luck surface area (2010)

#191

Post by tertius »

ghaff wrote: post #94
throwaway2245 wrote: post #84

Earlier quoted context omitted.

> Your observation about young people... equivalent of those living paycheck-to-paycheck “investing” in the lottery. You're so close to uncovering something here...! Why do you think so many people play the lottery?

I'm sure there are many reasons. But many boil down to: I (rightly or wrongly) think a few lottery tickets don't really matter to my ability to eat/make rent/etc., it's fun to dream, and it's the only way I'll ever have even a remote chance to be "rich."

Spending your whole life betting on options won't get you anywhere compared to index funds.

Re: How to increase your luck surface area (2010)

#192

Post by [deleted] »

stouset wrote: post #54
motohagiography wrote: post #31

Taleb talked about this with his recommendation to get exposure to randomness that has asymmetric upside, and is analogous to luck is preparedness meeting opportunity. What I like about the OP's model is it also explains the asymmetry of social media where people do very little at all and talk about is a lot because the kind of non-linear success we are aiming for is a function of exposure. When you have wealth of an…

Your observation about young people with four-figure net worths thinking it’s rational to gamble it all on options is pretty much this week’s equivalent of those living paycheck-to-paycheck “investing” in the lottery. The bigger problem is that this is rarely just a one-time decision to gamble. And repeatedly doing this is statistically pretty certain to lose you significant amounts of money—particularly when compare…

[deleted]

Re: How to increase your luck surface area (2010)

#193

Post by [deleted] »

Shared404 wrote: post #6
umvi wrote: post #3

Earlier quoted context omitted.

> A theory that only works for people who are lucky enough to be surrounded by supportive people. It's possible to change who surrounds you. By socializing in new bubbles, making new friends, or just plain moving to a new location.

With enough bad luck, it's possibly to never have the opportunity to make those changes.

[deleted]

Re: How to increase your luck surface area (2010)

#194

Post by hazeii »

jonnycomputer wrote: post #59
villasv wrote: post #56

> When you pour energy into a passion, you develop an expertise and an expertise of any kind is valuable I don't disagree with the overall spirit, but these Paul Graham aphorisms always turn me off. > To satisfy my mathematically oriented brain I've gone one step further and formalized the concept into the equation L = D * T, where L is luck, D is doing and T is telling. See? There's no passion here. It really isn't…

It is funny, because D * T suggests that it can all be done with D with just a smidgin' of T, or that you can just do a lot of talking with just a smidgin' of D. But I guess I forgot about the Trump Presidency. So maybe D * T is the right model.

D == T maximises the area, and note it's not linear.

If you've got 12 units to split between D and T, total return is:-

  1D 11
  2D 20
  3D 27
  4D 32
  5D 35
  6D 36
So inefficient to be at the smidgen end on either axis, but anywhere roughly equal is fine.

Re: How to increase your luck surface area (2010)

#195

Post by pdimitar »

salty_biscuits wrote: post #112
tylerhou wrote: post #83

Earlier quoted context omitted.

Expected utility is positive implies that people have discontinuous utility functions wrt. money. That is, utility will jump significantly after reaching a certain net worth. Another explanation that is consistent with gambling behavior is that people have inaccurate risk functions; that they overestimate positive upside and underestimate downside. I am not familiar with the economic literature. But I believe that th…

The obvious discontinuity is "never have to work". People talk about this all the time when they talk about this stuff.

Maybe I am missing something obvious but isn't watching stocks, analyzing news and predicting stock prices so you can multiply your money, an actual work?

You do spend time and energy chasing an income, no?

Re: How to increase your luck surface area (2010)

#196

Post by pdimitar »

tylerhou wrote: post #160
salty_biscuits wrote: post #154

Earlier quoted context omitted.

It really depends on an individuals displeasure at work though right? To take a ludicrous example my utility function for eating a sandwich is has a sharp discontinuity as a function of how much Polonium is in the sandwich. So too with some people for money and work, especially when it is far away from your current state. I don't think this is an experiment that a real economist (TM) has ever performed on an individu…

> To take a ludicrous example my utility function for eating a sandwich is has a sharp discontinuity as a function of how much Polonium is in the sandwich. Well, in the real world, every sandwich likely has a little bit of polonium in it; maybe an atom or two. If that increased to three or four, you would be slightly unhappier, but not sharply so. Every little increase in polonium slightly decreases your utility unti…

> Imagine you had a "life changing amount of money," whatever number that means to you. Call that number $X. Now imagine that you instead had $X - $1. And then $X - $2. Even $X - $1000. How much less happy do you feel in those imagined scenarios? A lot less happy? I bet you feel marginally less happy and not sharply.

Talking only about myself and not claiming anything about humanity at large:

There is a particular number of USD that, if I have in my account, I feel calmer and non-chalant about losing a job. Let's call it $20000. If I have $19900, it's the same. But if I have $15000 then I'd start feeling uneasy and would revert to trying hard to refill that minimum leisure savings amount.

So IMO it's not a gradual linear function. It's more like, for values between X1-X2, Y remains relatively constant. Then for values X2 to X3, Y is a higher value compared to the previous bracket of X values but also stays relatively constant for the current range of X.

Again, just what I observed about myself.

Re: How to increase your luck surface area (2010)

#197

Post by jonnycomputer »

hazeii wrote: post #194
jonnycomputer wrote: post #59

Earlier quoted context omitted.

It is funny, because D * T suggests that it can all be done with D with just a smidgin' of T, or that you can just do a lot of talking with just a smidgin' of D. But I guess I forgot about the Trump Presidency. So maybe D * T is the right model.

D == T maximises the area, and note it's not linear. If you've got 12 units to split between D and T, total return is:- 1D 11 2D 20 3D 27 4D 32 5D 35 6D 36 So inefficient to be at the smidgen end on either axis, but anywhere roughly equal is fine.

Good pont.

Still that's more or less assuming that the costs and returns of D and T are roughly similar. But talk is cheap, and it is not clear that the returns earned are the same.

if we are intent on maximizing u(d, t) = u(d) * u(t)

we still need u(d) and u(t) to know what quantities of d and t will do the job (assuming that there is a maximum, or not more than one...)

Re: How to increase your luck surface area (2010)

#198

Post by stouset »

Judgmentality wrote: post #144
stouset wrote: post #139

Earlier quoted context omitted.

n(billionaires) > 1.

Okay. So when you say: > Billionaires can remain solvent longer than you can remain irrational. It just sounds really disingenuous when we're talking about Melvin Capital and you agree they're going to lose all their money. Nobody is claiming all billionaires are going away because of this trade. The point is some billionaires will lose money on this trade.

That's the point you're making.

The point I'm making is that Melvin is going under, a few Redditors will make money if they get out in time, but the eventual impact of this will be a different set of billionaires gets richer while most Redditors are going to be stuck holding the bag.

Which isn't exactly the "Reddit gets rich off of evil billionaires" narrative that's being sold. And it makes the diamond hands strategy all the more foolish when literally the only way Redditors will actually stick it to the billionaires is if they all manage to get out in time. Diamond hands as a strategy just makes WSB the eventual suckers donating their money to the funds who shorted at $400.

Re: How to increase your luck surface area (2010)

#199

Post by stouset »

throwaway2245 wrote: post #180
rubicon33 wrote: post #162

Earlier quoted context omitted.

My advice: - Never sell. Ever. (Until retirement). [1] The natural extension of this is... always buy. Buy now. Buy. - Keep a pool of cash on the side (whatever you can afford) to be ready to capitalize on any "fire sale" of stocks. This should be about 10% of your portfolio as a very liquid non-volatile asset (cash). [1] Obviously life hits you hard sometimes and you HAVE to sell to cover unexpected bills. I am obvi…

I think this is fine advice for anyone who has money that they don't and won't really need. Positive expected value is positive expected value. This works great, as long as you have plenty of bankroll and can ride out any losses. As you say, this advice doesn't apply to people who might need the money.

If you might need the money, how is donating it to Wall Street through day trading on -EV plays somehow better?

If you might need the money, it needs to be somewhere safe like a savings account or a CD. Once you have an emergency fund, you can start saving in higer-risk/higher-reward +EV investments like index funds.

Re: How to increase your luck surface area (2010)

#200

Post by stouset »

throwaway2245 wrote: post #181
devlopr wrote: post #133

Earlier quoted context omitted.

That's why you move from a risky stock portfolio to a safer bold driven portfolio as your age increases.

This helps, but not that much. (Assuming your risk assessment is correct) Suppose a shock happened right before I planned to shift into a safer portfolio. What do I do then? The only really correct answer is: "well, I didn't need that money anyway."

There shouldn't be an exact moment you switch to a conservative portfolio. As you get nearer to retirement, you gradually rebalance. Often this is as easy as simply placing new contributions in safer investments. Less often it just involves exchanging one set of funds for another, say once per year.

Again, Target Retirement funds handle this completely transparently for you and require literally zero hands-on involvement.

This is quite simply nowhere near as hard as you're making it out to be.

Post reply on HN