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How to increase your luck surface area (2010)

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

#181

Post by throwaway2245 »

devlopr wrote: post #133
throwaway2245 wrote: post #129

Earlier quoted context omitted.

> the financial education to buy-and-hold through thick and thin I find this somewhat dubious. If you buy-and-hold for a lifetime, you'll face at least a once-in-a-lifetime level of shock at some point. The possibility that this shock will happen just when you need the funds occurs fairly regularly to generations of retirees: but always seems to be forgotten by gold-standard financial advice.

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."

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

#182

Post by vagrantJin »

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…

Yeah, I think I've read too much N. Taleb and his take on assymetrical outcomes.

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

#183

Post by kharak »

jlevers wrote: post #106
etrautmann wrote: post #29

Earlier quoted context omitted.

I disagree - passion can emerge after you’re much deeper into something. I liked building things but wasn’t passionate about engineering until my last year in undergrad. It took 3-4 years of grinding away uncertainly until I had enough skill to make it really fun and interesting. That knowledge snowballs. Plenty of people are passionate about work which appears arcane. Few of them started with that.

Cal Newport has a book that discusses this this called So Good They Can't Ignore You, which I found really interesting. His thesis is basically that the people who are most satisfied with their work are those who stuck with something until they got really good at it, regardless of whether it was the topic they were "most passionate" about (passion can be fickle, IMO).

I have been doing coding for some years now. Went from terrible to average and sometimes even good. Still no passion. And I'll never be one of the really good devs, my learning speed during work isn't high enough. I know what to do to get better, how to practice. But that would require huge time investments during my after work hours.

And for what? Doing more of the same I don't really like, so that my employers profit even more of my work? I can't convince myself to spend time that way and don't believe I could do it for more than a couple of weeks before burning out. So, maybe you start liking what you do if you become really good at it. But there is an assumption, that anyone can become really good at what they are doing. Or if I remember that book correctly, that case was covered by noticing that everyone else is going to drop out of the profession. In any case, not everyone drops out of the profession who isn't good at it and not everyone who stays inside the profession will become good eventually. But sure, whose who are really good will properly enjoy it.

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

#184

Post by graeme »

pashamur wrote: post #170
graeme wrote: post #101

Earlier quoted context omitted.

Stock trading has negative expected returns compared to buy and hold though.

Not sure whether it makes sense to average all returns and call it "negative expected returns" across the board. As with any game that mixes luck & skill (like poker), trading has a variety of expected returns. My guess (based on poker) is that a large part of people are small losers or break-even (in poker because of rake, in trading because of trading fees), some are big losers (in poker called whales), some are sm…

Sure but the comment I was replying to was referring to young people with four figure net worths gambling on options.

There are some successful traders but I strongly suspect those trading options with four figured are in lottery world. A few win big, most lose all, aggregate expected returns negative.

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

#185

Post by tasuki »

Judgmentality wrote: post #131
TeMPOraL wrote: post #130

Earlier quoted context omitted.

> Hell, just watching Cramer get upset is enough for me to realize the rich aren't happy with what's happening. The "rich" are a large group. Much larger than the few names that have been on the news recently. There have been plenty of believable reports about funds that already made crapton of money on this attempted squeeze. Now, that everyone's eyes are on $GME, many more will make fortunes riding the stock down.…

And many people are happy making fortunes riding GME up. Why does nobody ever talk about those stories? If the rich get richer playing the same game as everyone else - good for them! The point is we're playing the same game.

> The point is we're playing the same game.

I'm sure someone is very happy for you to think that.

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

#186

Post by tasuki »

stouset wrote: post #96
Judgmentality wrote: post #93

Earlier quoted context omitted.

> There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20. There's also orders of magnitude more money to be lost, because there's just more money on the table. At the end of the day it's a bet based on assumptions. A month ago everybody that was investing in GME was told the same thing by people that wanted to short it. The market can remain irrational longer t…

> There's also orders of magnitude more money to be lost, because there's just more money on the table. And my point is that the losing side of this is inevitably going to be the majority of people long $GME. > The market can remain irrational longer than you can remain solvent. Billionaires can remain solvent longer than you can remain irrational. Again, Melvin is almost certain to lose their shirts on this. But the…

> Billionaires can remain solvent longer than you can remain irrational.

Hilarious because true!

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

#188

Post by stouset »

Judgmentality wrote: post #131
TeMPOraL wrote: post #130

Earlier quoted context omitted.

> Hell, just watching Cramer get upset is enough for me to realize the rich aren't happy with what's happening. The "rich" are a large group. Much larger than the few names that have been on the news recently. There have been plenty of believable reports about funds that already made crapton of money on this attempted squeeze. Now, that everyone's eyes are on $GME, many more will make fortunes riding the stock down.…

And many people are happy making fortunes riding GME up. Why does nobody ever talk about those stories? If the rich get richer playing the same game as everyone else - good for them! The point is we're playing the same game.

One redditor has made (at least if he gets out now) somewhere around $50m. It’s highly likely this redditor is one of the biggest winners from the WSB crowd.

Melvin is down $5,000m.

Who do you suppose accounts for most of the remaining $4,950m in Melvin’s losses?

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

#189

Post by stouset »

PartiallyTyped wrote: post #179
darkerside wrote: post #103

Earlier quoted context omitted.

The trouble is that, if it works, why wouldn't you try it again? You're not only a single data point, you are also a snapshot in time. Two months ago, you didn't have much. And, unless you truly decide to stop doing what you're doing, you are likely to have about the same two months from now.

Fair point. By playing with the same amount of money each time, I can repeat the conditions and my behaviour. That is, I can easily 'yolo' the same amount in a year and behave in the same or similar manner. The reason being that changes in circumstances significantly alter our behaviour and perception. By simulating the conditions I can possibly emulate the behaviour and thought process. I understand that this sounds…

> Plus it sounds like trying to time the market, as many do, but I disagree.

You can disagree all you want, but this is attempting to time the market. It’s literally the exact thing that’s repeatedly warned about. Trying to be the next-to-last out in a Ponzi scheme is a dangerous game, and one that many “smart” people have lost.

That’s not to say that some people won’t succeed at trying to time the market. It’s just essentially roulette: you can do well for yourself or you can lose money, but on the whole it’s a losing proposition and winning isn’t particularly correlated with skill. And—perhaps more like poker—even repeated bad plays can be rewarding in the short or even medium run.

Also like poker, taking big gambles can be profitable in the short term, but any time you put your bankroll on the table you’re risking going bust. Even a 10% chance is going to send you back to square one eventually.

Other than exceedingly rare cases, people who perform well in the markets don’t seem to be the same year-over-year, except at the rate you’d expect from random chance. Smart plays can turn catastrophic, bad plays can be profitable, and it takes a lot of honest introspection to assess whether or not a play was smart or simply bad but lucky.

I bought into AAPL early in my investing career. It was right around when Rails was taking off. I saw a UNIX system with great interface design and better stability than popular Linux distros, and developers flocking to the platform for tools like TextMate. I knew AAPL would take off in the end if they were grabbing such developer mindset.

I was right, but for all the wrong reasons. AAPL took off, but it was pretty much just because of the iPhone. It had nothing to do with what I thought it was, and in the end I was just lucky. That’s a lesson that stuck with me.

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

#190

Post by devlopr »

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."

The idea is you are always shifting rebalancing.

If you are 45 you might be at 50/50 (safe/risky growth) by 55 25/75 by 60 90% is safe.

If something happens at 60 where you lose 50% of the 10% in growth stocks stats show that a 5 year recovery to base levels is likely.

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