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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)

#91

Post by stouset »

Judgmentality wrote: post #87
stouset wrote: post #80

Earlier quoted context omitted.

Look, it's great that you managed to be one of the people who came out ahead in all of this. But while you personally have seen some success so far, it's important to recognize that overall this is a transfer of wealth from people in your financial situation to the wealthy. The fact that this one situation is so incredibly newsworthy should be strong evidence of how unlikely such successes are in practice. Further, a…

> But even if you are, it's important to realize that the eventual winners of this scenario aren't going to be the Redditors holding on to $GME shares, but the wealthy short-sellers who manage to either predict the pop or simply have enough assets to hold on long enough for it to happen. What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are goi…

> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week.

Yes, Melvin is losing their shirts.

But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that amount will utterly dwarf the gains from WSB redditors, mostly coming at their expense.

There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20.

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

#92

Post by abdullahkhalids »

kharak wrote: post #11

Being passionate about something for a long time (not just a couple of hours or weeks) seems to be a rare quality. Too bad for those who lack it, as it seems to be a requirement for success in everything. There are so many posts that try to tell you how to get the most out of your passion, I haven't seen one that explains the origin of passion or whether it is possible to become passionate.

I think you are switching the order of things. Passion often comes after doing something for a long time. The trick is that you have to mindfully analyze what parts you enjoy about the thing, and how you can enjoy or tolerate the parts you don't like.

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

#93

Post by Judgmentality »

stouset wrote: post #91
Judgmentality wrote: post #87

Earlier quoted context omitted.

> But even if you are, it's important to realize that the eventual winners of this scenario aren't going to be the Redditors holding on to $GME shares, but the wealthy short-sellers who manage to either predict the pop or simply have enough assets to hold on long enough for it to happen. What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are goi…

> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. Yes, Melvin is losing their shirts. But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that am…

> 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 than you can remain solvent.

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

#94

Post by ghaff »

throwaway2245 wrote: post #84
stouset wrote: post #54

Earlier quoted context omitted.

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…

> 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."

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

#95

Post by dataflow »

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…

> 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.

It's not—the lottery is by design guaranteed to have negative expected returns. The stock market isn't.

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

#96

Post by stouset »

Judgmentality wrote: post #93
stouset wrote: post #91

Earlier quoted context omitted.

> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. Yes, Melvin is losing their shirts. But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that am…

> 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 there’s many, many more hedge funds that are sharks circling the waters. And Melvin and WSB are both going to be their prey.

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

#97

Post by Judgmentality »

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.

Melvin Capital has a very real chance of going insolvent. Also have you heard of Lehman Brothers? Hell, just watching Cramer get upset is enough for me to realize the rich aren't happy with what's happening. It seems pretty obvious they're worried. Why else would they pay for ads claiming to have closed a position for which they supposedly no longer have an investment stake?

> And my point is that the losing side of this is inevitably going to be the majority of people long $GME.

I said the same thing about TSLA way back when. So did David Einhorn. I still believe TSLA is more than 10x overvalued, and people continue to get rich despite my "rational" obstinance.

Also you're completely missing the point. Do you not even understand most of these people aren't trying to make money? If you don't understand that, then you don't even have a basis to start the conversation.

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

#98

Post by PartiallyTyped »

stouset wrote: post #91
Judgmentality wrote: post #87

Earlier quoted context omitted.

> But even if you are, it's important to realize that the eventual winners of this scenario aren't going to be the Redditors holding on to $GME shares, but the wealthy short-sellers who manage to either predict the pop or simply have enough assets to hold on long enough for it to happen. What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are goi…

> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. Yes, Melvin is losing their shirts. But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that am…

> There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20.

I have been running scenarios of this in my head over the previous days. This play would be to short while the squeeze is near closure and force the remaining shorts to purchase your stock. The problem with this play is that eventually you need to cover, albeit at much lower price, unless, of course, the bag holders i.e. remaining retail isn't willing to sell to you at a lower price, so you can never close. If anyone else attempts to short at the rebounded prices, you can close your position, but this becomes a perpetual game of hot potato. For this play to you work, you need to assume the retail will paper hand, but if WSB is any indication, WSB can, as they put it, stay retarded longer than you can stay solvent and if they don't paper hand at those prices, they won't give it to you that easy.

The alternative play, is to make a deal with other firms where you rotate who owes the shares and you share the profits from shorting the top, but I suppose that constitutes market manipulation. If we were to assume that the market moves up and the profits can be reinvested and profit more than the interest, this play makes the most sense.

These two plays assume that all the floating shares are held by WSB, and if that is true; the bag holders will be people willing to let the prices literally moon. Then the only solution would be to wait for GME to issue more shares. The most plausible case is that WSB will be the ones holding the shares when it eventually squeezes and the shorts need to cover since all others in retail would have already sold.

This isn't a particularly good position for anyone to be in because no institution will be selling and nobody will be buying, so you will end up with a staring contest between you and WSB, and if the past few days are any indication, your only bet is your profits outweigh the interest.

If you can imagine the actual play executing in a scenario where WSB doesn't hold you by the ..., please share, I am interested.

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

#100

Post by ghaff »

rexreed wrote: post #49
carrozo wrote: post #40

I’ve had this old post from Marc Andreessen pinned in my mental browser for a long time now. There are four types of luck and you can influence three of them: Chance I is completely impersonal; you can't influence it. Chance II favors those who have a persistent curiosity about many things coupled with an energetic willingness to experiment and explore. Chance III favors those who have a sufficient background of soun…

Of all those kinds of chance, the kind that you can really prepare for is really only Chance-type III. Chance I is truly deus-ex-machina stuff you can't foresee nor plan for. Chance II encourages randomness and serendipity, but those who lack the ability of discernment and proper focus risk being ADHD never focusing enough on anything to capture any opportunity, should it even emerge. Chance III rewards those who hav…

And he really owes much of his fortune to Chance I. Right capabilities/decisions but right place/time.
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