4 ms·

There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Peter Lynch famously resear

by ISL 6y ago

There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Peter Lynch famously researched companies by watching to see where his family spent pocket money. I recall reading analyses of trading performance by members of Congress -- they generally did about the same as everyone else except in companies associated with their districts. Anecdotally, it is easier to double small dollars than large dollars. Berkshire Hathaway's growth has eased for ~2 major reasons: 1) Prices have been high for the last decade+, frustrating the core algorithm of value-investing. 2) It is very difficult to put huge amounts of money to work. The alternative to a world with asymmetric information (and probably impossible to implement at that) is one with zero privacy, where all information is open to everyone always. I don't think we want to live in that world.

blocked_again 6y ago
> There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?
- kortilla 6y ago
  No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.
  - crubier 6y ago
    If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.
    - smabie 6y ago
      A hedge fund needs to post good returns on the capital it has with the man power it has. They simply do not have enough resources to spend time on netting 100% returns on 50k investments. And they can't hire the problem away either, unless they pay each new employee less than 50k.
      - crubier 6y ago
        Yeah so it’s worth it for me if I pay myself less than 50k. So it’s not worth it.
    - kortilla 6y ago
      You’re not getting the math. It’s absolutely worth it for you to spend 2 months of your time to find something worth $150k. A hedge fund, investing team, whatever you want to call it, has a limited capacity. They need to beat market returns on pool of money so large that spending 2 months to find a 300% return on something with a max investment of $75k is absolutely an incorrect use of time. Read about opportunity cost to understand why there are many things “worth it” to people without access to something better.
  - riantogo 6y ago
    But totally worth it to create a “local” team that will find 10,000 such trades by using advanced aggregation and analysis techniques.
tomdell 6y ago
On the large scale, wealth reliably collects progressively higher percentages of return the higher the base capital.
- smabie 6y ago
  The absolutely dismal performance of most hedge funds indicates otherwise. In fact, it's probably easier to generate alpha using small amounts of money. When you're managing billions and billions of dollars, you're severely constrained in the types of strategies you can actually run. This is why, for example, that RenTech's Medallion fund is capped at 10bn. Just by investing in an index fund, retail investors are getting a pretty great investment, essentially freeloading off of all the hard work the active funds are doing.
  - artsyca 6y ago
    How does that bode for the vision fund? Doomed from the start?
    - smabie 6y ago
      I would say that the vision fund was predicated on a audacious idea that was either pure genius or absolutely idiotic. The idea is as follows, instead of investing our huge pile of money into a bunch of different companies, which takes a lot of legwork, let's just fund a relatively small amount and give them a bunch of money. We will give them so much money that it's not possible for them to do anything except totally crush the competition and control the entire market. The problem with the idea, and the eventual reason it didn't work, was that though it was largest VC fund ever, 100bn isn't actually that much in the scheme of things. There's so much money sloshing around the system looking for the place where it will be treated best. So, in essence, what Softbank ended up doing was bidding up the price of the entire industry, creating massive inflation. If Softbank gives a shi-tton of money , and another VC gives a shit-ton to a competitor, they've both just wasted a shit-ton of money. I actually don't think Masa is the compete idiotic everyone makes him out to be. He has a very high tolerance for risk, but that doesn't make him irrational. The Vision Fund might not be doing that well, but Softbank's stock is looking pretty good at the moment.
yesexactly89 6y ago
I disagree with your assessment of the options Simply outlawing extreme ownership of capital, via high taxes is a way to avoid privacy issues. Unfortunately, we don’t seem keen to enable people to live their lives. We seem keen on making people ogle these giant initiatives and enterprises. I don’t believe that’s natural. Growing up “off the grid” until the 90s, I’m still aghast at how sycophantic people act towards Amazon or a Gates like rich person. Then I started seeing how forced social interaction is for upper middle class especially. I should point out my family wasn’t poor. On the contrary, my parents just wanted to raise us outside the mainstream. Don’t get me wrong I, love the gaudy culture. What I’m talking out against is demands to organize it just so. To normalize to the point of absurdity human agency to propping up of finance markets and banal old men’s gambling fetish, lavishing praise and riches on men as “owners” of the things we build collectively at scale is absurd to me. There’s too much evidence out there suggesting success like that is luck not skill, and continued success like that is due to corruption of human social goals, not a lifetime of extremely good luck. Continuing to play that social ladder game is hilariously morbid motivation to me. Why not just have these men take their genitals out and prove who can take more whacks to the sack. That’s really what all this stuff feels like to me. Lookit Bezos dashing back in to save Amazon. The idea is the place is winning!! Oops reality gets in the way and they stumbled with logistics hard. Thanks to lavishing Amazon with praise in the form of billions, they’ll power on through it no problem. Tens of thousands of employees spared! Meanwhile, thanks to the tax system literally millions of people are fucked.

by ISL 6y ago

blocked_again 6y ago

> There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?

kortilla 6y ago
No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.
- crubier 6y ago
  If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.
  - smabie 6y ago
    A hedge fund needs to post good returns on the capital it has with the man power it has. They simply do not have enough resources to spend time on netting 100% returns on 50k investments. And they can't hire the problem away either, unless they pay each new employee less than 50k.
    - crubier 6y ago
      Yeah so it’s worth it for me if I pay myself less than 50k. So it’s not worth it.
  - kortilla 6y ago
    You’re not getting the math. It’s absolutely worth it for you to spend 2 months of your time to find something worth $150k. A hedge fund, investing team, whatever you want to call it, has a limited capacity. They need to beat market returns on pool of money so large that spending 2 months to find a 300% return on something with a max investment of $75k is absolutely an incorrect use of time. Read about opportunity cost to understand why there are many things “worth it” to people without access to something better.
- riantogo 6y ago
  But totally worth it to create a “local” team that will find 10,000 such trades by using advanced aggregation and analysis techniques.

tomdell 6y ago

On the large scale, wealth reliably collects progressively higher percentages of return the higher the base capital.

smabie 6y ago
The absolutely dismal performance of most hedge funds indicates otherwise. In fact, it's probably easier to generate alpha using small amounts of money. When you're managing billions and billions of dollars, you're severely constrained in the types of strategies you can actually run. This is why, for example, that RenTech's Medallion fund is capped at 10bn. Just by investing in an index fund, retail investors are getting a pretty great investment, essentially freeloading off of all the hard work the active funds are doing.
- artsyca 6y ago
  How does that bode for the vision fund? Doomed from the start?
  - smabie 6y ago
    I would say that the vision fund was predicated on a audacious idea that was either pure genius or absolutely idiotic. The idea is as follows, instead of investing our huge pile of money into a bunch of different companies, which takes a lot of legwork, let's just fund a relatively small amount and give them a bunch of money. We will give them so much money that it's not possible for them to do anything except totally crush the competition and control the entire market. The problem with the idea, and the eventual reason it didn't work, was that though it was largest VC fund ever, 100bn isn't actually that much in the scheme of things. There's so much money sloshing around the system looking for the place where it will be treated best. So, in essence, what Softbank ended up doing was bidding up the price of the entire industry, creating massive inflation. If Softbank gives a shi-tton of money , and another VC gives a shit-ton to a competitor, they've both just wasted a shit-ton of money. I actually don't think Masa is the compete idiotic everyone makes him out to be. He has a very high tolerance for risk, but that doesn't make him irrational. The Vision Fund might not be doing that well, but Softbank's stock is looking pretty good at the moment.

yesexactly89 6y ago

I disagree with your assessment of the options Simply outlawing extreme ownership of capital, via high taxes is a way to avoid privacy issues. Unfortunately, we don’t seem keen to enable people to live their lives. We seem keen on making people ogle these giant initiatives and enterprises. I don’t believe that’s natural. Growing up “off the grid” until the 90s, I’m still aghast at how sycophantic people act towards Amazon or a Gates like rich person. Then I started seeing how forced social interaction is for upper middle class especially. I should point out my family wasn’t poor. On the contrary, my parents just wanted to raise us outside the mainstream. Don’t get me wrong I, love the gaudy culture. What I’m talking out against is demands to organize it just so. To normalize to the point of absurdity human agency to propping up of finance markets and banal old men’s gambling fetish, lavishing praise and riches on men as “owners” of the things we build collectively at scale is absurd to me. There’s too much evidence out there suggesting success like that is luck not skill, and continued success like that is due to corruption of human social goals, not a lifetime of extremely good luck. Continuing to play that social ladder game is hilariously morbid motivation to me. Why not just have these men take their genitals out and prove who can take more whacks to the sack. That’s really what all this stuff feels like to me. Lookit Bezos dashing back in to save Amazon. The idea is the place is winning!! Oops reality gets in the way and they stumbled with logistics hard. Thanks to lavishing Amazon with praise in the form of billions, they’ll power on through it no problem. Tens of thousands of employees spared! Meanwhile, thanks to the tax system literally millions of people are fucked.