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I have been operating at the intersection of engineering and entrepreneurship for my whole career. Two key traits I notice in entrepreneurs is overwhelming opti

I have been operating at the intersection of engineering and entrepreneurship for my whole career. Two key traits I notice in entrepreneurs is overwhelming optimism and the ability to take huge risks without batting an eyelash. Conversely, on the engineering side, my fellow nerds are almost paralyzed by over-thinking things and wondering about what the "experts" say, if a decision is "safe", agonizing over career moves, etc. The result is a safe, careful life with above-average to upper-class income, but avoiding the risks that would lead to super-charged results. This essay reads to me like the ultimate nerd analysis of why you should never take any risks. Why start a company when every good idea is taken, and MicroApple AmaGooFace can destroy you the moment you get traction? Why buy any stock when the smartest people on the planet already priced it accurately (surely you don't know more than them)? Why do anything outside of mainstream thought at all? I assume future chapters of his book will address why the rational market hypothesis is incorrect, or why it can be rational to buy AMZN when the market (obviously) knows more than you, but I wanted to comment on this specific post. The truth is that infinite opportunities exist to make money, make an impact, start something worthwhile. However there is a limited supply of people with the balls (or ovaries) to seize these opportunities and take the necessary risks. So many people settle for the cushy life, handcuffed to the big company. The risk takers earn the rewards, and even if they fail, the journey to failure almost always leads to meeting tons of people, tons of opportunities, and a future path that leads back to the cushy high-paying job they tried to avoid. So buy the stock, start the company, assume you know more than the experts, take the risks. You can always go back to the safe life.

JoshTriplett 9y ago
> This essay reads to me like the ultimate nerd analysis of why you should never take any risks. On the contrary, it analyzes in great detail how you can better calibrate your sense for when you should or shouldn't believe you can do better. Which seems like an improvement both over the "you never can" mindset (which you're arguing against and seem to think the article espouses) and the "you always can" mindset.
tempestn 9y ago
The author is not saying that you shouldn't take any risks or disagree with the masses - nearly the opposite. Essentially the article states that while there are some circumstances where it is true that you almost certainly can't 'beat the market' (the stock market being one), one shouldn't believe that if something was a good idea it would have already been done. Apparently in the next chapter he will lay out a framework for identifying the specific areas that are most likely to present these opportunities.
- MrLeap 9y ago
  What's beating the market mean to you? The meme that the s&p's performance +/- is as good as you should expect to do is so bizarre to me. I know where it comes from -- I've read the same stuff about warren buffet's bet and everything else. After having traded a while myself it's just so hard to believe. I don't think it's axiomatic for people who don't have enough capital to overcome liquidity. I wonder if someone has ever paid a PR firm to perpetuate that idea. If the PR firm were successful, it would drive more people away from active investing towards index funds, lowering volatility. That would help explain why shorting the VIX has c-c-c-c-clobbered the S&P's performance for a few years. If I start to see news stories about rags to riches stories I'll probably start going long volatility. Haha. My most successful trades this year have been betting against the consensus. The consensus is hilarious and terrible about a lot of things. I bought shares of a good property/casualty insurance company the friday ahead of irma. It was down like 35% in a month as the news convinced traders florida was going to sink. My theory was that if the storm was as bad as advertised, the stock would move about sideways. If it was anything less than there was money to be made. I was up 20% on the trade by Monday. In August when North Korea news hype was peaked and missiles were being tested, I shorted the vix hard. I didn't think the panic was sustainable. Because of how much I put on it that was probably my riskiest trade. Made the S&P's YTD twice over in 2 weeks. In June I saw silver flash crash to 14$ an ounce and that just felt stupidly cheap for such a useful precious metal. Sold it for the S&Ps YTD about a week after. There was no research in this, I was just into hobby jewelry making and thought "hmph that isn't right." I watch the news pretty regularly and I'm mostly happy to stay uninvested unless I see an opportunity to bet against hype. Then I put about 10-20% of my savings on the hypothesis and I beat the market pretty handily doing that, with less of my cash on the line and everything. I guess one of these days I'll have so much money my block trades will get me sniped or I'll lose 5x in a row and start investing in the S&P again or something. Haha.
solatic 9y ago
It's not just about taking risks, it's also about understanding that the big-company oracles which turn over billions of dollars a year do so from ivory towers. Though they may have the numbers on what is happening far from New York or San Francisco, they don't have the eyes, the boots on the ground, or the personal contacts to know everybody locally and their problems which need payment-worthy solutions. To argue that there are no market opportunities for new businesses is to argue that the world is a problem-free happy place to be in. This is clearly and inherently false. Some problems may require more capital than you currently have access to - which is why investors take meetings with the hopes of being persuaded, and many times, you just have to reduce the scope in order to reduce the amount of capital needed. The only real limits are legal and ethical in nature.
taway_1212 9y ago
> The risk takers earn the rewards, and even if they fail, the journey to failure almost always leads to meeting tons of people, tons of opportunities, and a future path that leads back to the cushy high-paying job they tried to avoid. At which point, the "safe path" guys are already nearing their early retirement.

JoshTriplett 9y ago

> This essay reads to me like the ultimate nerd analysis of why you should never take any risks. On the contrary, it analyzes in great detail how you can better calibrate your sense for when you should or shouldn't believe you can do better. Which seems like an improvement both over the "you never can" mindset (which you're arguing against and seem to think the article espouses) and the "you always can" mindset.

tempestn 9y ago

The author is not saying that you shouldn't take any risks or disagree with the masses - nearly the opposite. Essentially the article states that while there are some circumstances where it is true that you almost certainly can't 'beat the market' (the stock market being one), one shouldn't believe that if something was a good idea it would have already been done. Apparently in the next chapter he will lay out a framework for identifying the specific areas that are most likely to present these opportunities.

MrLeap 9y ago
What's beating the market mean to you? The meme that the s&p's performance +/- is as good as you should expect to do is so bizarre to me. I know where it comes from -- I've read the same stuff about warren buffet's bet and everything else. After having traded a while myself it's just so hard to believe. I don't think it's axiomatic for people who don't have enough capital to overcome liquidity. I wonder if someone has ever paid a PR firm to perpetuate that idea. If the PR firm were successful, it would drive more people away from active investing towards index funds, lowering volatility. That would help explain why shorting the VIX has c-c-c-c-clobbered the S&P's performance for a few years. If I start to see news stories about rags to riches stories I'll probably start going long volatility. Haha. My most successful trades this year have been betting against the consensus. The consensus is hilarious and terrible about a lot of things. I bought shares of a good property/casualty insurance company the friday ahead of irma. It was down like 35% in a month as the news convinced traders florida was going to sink. My theory was that if the storm was as bad as advertised, the stock would move about sideways. If it was anything less than there was money to be made. I was up 20% on the trade by Monday. In August when North Korea news hype was peaked and missiles were being tested, I shorted the vix hard. I didn't think the panic was sustainable. Because of how much I put on it that was probably my riskiest trade. Made the S&P's YTD twice over in 2 weeks. In June I saw silver flash crash to 14$ an ounce and that just felt stupidly cheap for such a useful precious metal. Sold it for the S&Ps YTD about a week after. There was no research in this, I was just into hobby jewelry making and thought "hmph that isn't right." I watch the news pretty regularly and I'm mostly happy to stay uninvested unless I see an opportunity to bet against hype. Then I put about 10-20% of my savings on the hypothesis and I beat the market pretty handily doing that, with less of my cash on the line and everything. I guess one of these days I'll have so much money my block trades will get me sniped or I'll lose 5x in a row and start investing in the S&P again or something. Haha.

solatic 9y ago

It's not just about taking risks, it's also about understanding that the big-company oracles which turn over billions of dollars a year do so from ivory towers. Though they may have the numbers on what is happening far from New York or San Francisco, they don't have the eyes, the boots on the ground, or the personal contacts to know everybody locally and their problems which need payment-worthy solutions. To argue that there are no market opportunities for new businesses is to argue that the world is a problem-free happy place to be in. This is clearly and inherently false. Some problems may require more capital than you currently have access to - which is why investors take meetings with the hopes of being persuaded, and many times, you just have to reduce the scope in order to reduce the amount of capital needed. The only real limits are legal and ethical in nature.

taway_1212 9y ago

> The risk takers earn the rewards, and even if they fail, the journey to failure almost always leads to meeting tons of people, tons of opportunities, and a future path that leads back to the cushy high-paying job they tried to avoid. At which point, the "safe path" guys are already nearing their early retirement.