12 ms·

Taleb talked about this with his recommendation to get exposure to randomness that has asymmetric upside, and is analogous to luck is preparedness meeting oppor

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 any kind, you naturally orient to getting exposure to opportunity for diversified parts of it, but when you have a scarcity view, your decisions are necessarily all/nothing, and it even becomes a class culture thing. It's circumstances, but also learned attitude. Related, I'm sympathetic to what's happening with GME and WSB, if a young persons net worth is four digits, it seems insane not to gamble it on options, as the housing bubble has cut off the last way for working people to get leverage. GME may mark the inflection point in the markets where young people realize it's their best or even only opportunity for leverage, and meme stocks are going to be the new normal because the economy doesn't provide anything better to invest in for under $50k. (that is, unless remote work makes distant property viable to live in)

Nevermark 6y ago
I hate to say “Bitcoin” because of its high risk, short track record, volatility, faddish aura, etc, but: I believe it’s filling a gap beyond being a better gold-like asset. Better gold = digitally portable, 24 hr liquidity, digital literate friendly, fixed cap, transactions (even with its limits), decentralized control, etc. But the solidly fixed cap is more profound than I think most people recognize. Potentially, once Bitcoin finds its “true” price, it will continue to grow in value in proportion to all wealth in the economy - over the long run. So it won’t just be a hedge against downturns, but eventually a semi-stable way of sharing in overall increasing wealth in the economy. I don’t know of another instrument that anyone can easily buy that might track (over the long run) with global wealth as apposed to particular entities or particular aspects of the economy. So in that sense, anyone can participate in overall wealth growth. A very useful new tool! OF COURSE, this is SPECULATION on my part. But I think the idea of a total global wealth correlated asset is new and useful.
- dehrmann 6y ago
  > fixed cap This makes it more like a collectable (say, baseball cards) than a currency. The number is capped and some will be lost. It has value as long as people are interested in it--scarcity does not imply value. It also has a short track record and could run into issues if miners collude, there's a DDoS attack, or someone with a lot of resources reverses transactions, hurting confidence in it.
  - Nevermark 6y ago
    Baseball cards are valued for being distinct. Bitcoin for being fungible (despite a traceable blockchain history). Baseball cards are not divisible. I know of no situation in which collectibles are viable for transaction, but Bitcoin is. (Despite limitations in transaction numbers, speed of confirmation and transaction fees.) So I don’t think that’s a good comparison.
punnerud 6y ago
I love how Reddit (and HN) enable fast sharing, fact checking of information and lifting ideas. When it comes to increase luck surface I think Clubhouse maybe will become one of the most important platforms. GME case seems to exploit the possibility for “short attack” by flipping the table into a infinite price increase, because the hedge funds accidentally created more fake shares that there is shares in existence and now have to by back. Short attack = Using the possibility brokers have to artificial creating fake shares to drive down the price, in combination with shorting stocks for earning money. More detailed explanation: https://seekingalpha.com/instablog/11442671-gerald-klein/3096735-anatomy-of-a-short-attack https://seekingalpha.com/instablog/11442671-gerald-klein/309... The combination of Clubhouse and Reddit will probably be one of the most important “inventions” this decade. Where GME could wake up everyone?
- gwnwest21 6y ago
  Hedge Funds managers have infinite resources and are working with Data Firms to prevent this from getting out of control again. These firms will use AI to scout social media platforms chatter and report back in real time what stocks are gaining momentum with retail investors. https://www.marketwatch.com/story/wall-street-looks-for-ways-to-avoid-stampede-of-reddit-day-traders-as-a-force-to-be-reckoned-with-11611954417?mod=mw_latestnews https://www.marketwatch.com/story/wall-street-looks-for-ways... https://www.ft.com/content/04477ee8-0af2-4f0f-a331-2987444892c3 https://www.ft.com/content/04477ee8-0af2-4f0f-a331-298744489...
  - ClumsyPilot 6y ago
    They also have bots posting shit encouraging people to sell Also, whats 'Infinite resources?'
- sgpl 6y ago
  I'm actually not super bullish on clubhouse. I'm sure they'll find some success but to call it something that will become one of the most important platforms, I don't see it. And perhaps I'll be proven wrong in the next decade on this. I've recently started using twitter again (after initially using it in 2010/2011) and I feel that there's so much self promotion all the time disguised at knowledge sharing. It also seems like everyone (most people) have a podcast, a newsletter, a youtube channel, etc. I understand that on a surface level people are doing this to increase their 'surface area' but there's just too much and while I'm sure it does a some/a lot of good for the people putting it out there, most of it just seems like noise to me. So that's my reasoning to think that clubhouse won't really become as meaningful as you - it just adds more noise. Sure I can hangout in this room or listen to some folks talk about x/y/z topic, etc. but honestly I feel that after some time people will realize that their time could be better spent.
tomfast 6y ago
Interesting comment. Would you explain a little more about what you mean by “diversified parts of it” in “you naturally orient to getting exposure to opportunity for diversified parts of it, but when you have a scarcity view, your decisions are necessarily all/nothing”?
stouset 6y ago
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 compared to just investing in the market as a whole—over the long run. It’s just another way that the poor are trapped in poverty, even though you can of course always find individual cases where someone got lucky and made millions. This is one of the reasons I think Robinhood is a fundamentally an evil company. It’s been pretty conclusively demonstrated that the more trades you make as a retail investor, the worse your returns. To wit: Fidelity did some internal research on their customers to see which cohort had the highest returns. The winning cohort? The dead. Dead people don’t make trades, and so perform better than the living who do. I’d be willing to bet a large sum of money that Robinhood’s internal metrics conclusively prove that the net effect of their existence is a wealth transfer from the poor to the rich. The real Robin Hood-esque company in this whole thing is Vanguard, who have almost certainly done more than most any other company in this space to return profits from the market to customers of all wealth ranges.
- dehrmann 6y ago
  > The real Robin Hood-esque company in this whole thing is Vanguard This. I do worry a bit that there's something I'm missing because Vanguard is a Boomer thing that's no longer relevant, but I suspect all the research is solid and Vanguard being shareholder-owned aligns interests. Robinhood is probably just clever marketing and gamification of stock and options trading.
  - threedots 6y ago
    No you're good. I'm a career hedge-fund/market guy and all of my investable assets (outside of my company and my house) are in vanguard trackers. I'd guess most of my friends who are professional investors are the same (except they likely have some investment in their own fund). That's not to say there aren't better investment options in the world but they aren't accessible to ordinary people (even quite rich ones).
genuine_smiles 6y ago
What’s better to invest in once you have 50k?
dehrmann 6y ago
> the economy doesn't provide anything better to invest in for under $50k What's wrong with index funds? Real estate isn't everything.
- fnimick 6y ago
  I think the underlying assumption, which wasn't spelled out in the parent, is that any amount of money under $super-rich is similar amounts of worthless. If you genuinely believe that, then high-risk swings at a big payday make more logical sense than a low-risk gradual growth strategy. I've heard friends express this - if you don't have $1 million +, you're just varying degrees of poor - so there's no point at gradual growth from 20k to 50k and etc when you're just as miserable. Might as well risk it all to try to get to the big time, since they don't see a reasonable path to growing gradually to anywhere worth living.
  - Sophistifunk 6y ago
    They're wrong though. I'm not worth much at all, but slowly (and thanks mainly to YNAB) I've managed to build up 5 digits of cash (savings, not folding), rather than living paycheck to paycheck. This is a huge load of daily stress I used to have that I no longer do. My credit card is for convenience and frequent flyer points, not something I might not eat without. I bought the missus a (6-year-old, boring) car recently, and I did so with a personal loan not because I had to but because I chose to keep the money on hand, and the world is a little shaky right now. I didn't have to accept a lien on the car, and if there were a crunch on my cashflow I can make minimum payments for a while. I don't have "fuck you money", and probably never will, but even this much peace of mind has helped my mental health significantly.
    - yibg 6y ago
      Even 25k is a huge amount of stress gone compared to 3k in the bank. With 25k I can ride out some emergencies. If I lose my job I’m not at risk of being on the street. If I total my car I can still get to work. I’ve lived pay cheque to pay cheque, it wasn’t fun. Even though I was young and could theoretically move back with my parents if shit really hit the fan I was constantly worried about money. Soon as I paid off my student loans and had a bit of emergency fund, things were a lot better.
HenryBemis 6y ago
>Taleb talked Only because I happen to just starting reading this 4 books [0-3] motohagiography (word-depipction-of-saints?), and until 2-3 weeks ago I am ashamed to say I didn't even know who that was: Nassim Nicholas Taleb. [0-3]: Antifragile, The Black Swan, Fooled By Randomness, The Bed of Procrustes
- motohagiography 6y ago
  Same Taleb. I recommend reading his books back to front because he's clearly difficult to edit and starting at the end means you don't have to go through the process of listening to him sound his ideas out. Most non-fiction works that way. If you only read his "Bed of Procrustes," and a selection of his technical papers, you'd be both better off, and following most of his advice. A hagiography is a story that exalts the life of a saint. An "autohagiography," is what some writers call a shamelessly self-aggrandizing memoir. Motohagiography was a play on writing about motorcycles in a self-aggrandizing way, but could be extended to other technology. But thank you for giving it some thought!
- Jommi 6y ago
  and each book just re-iterates the same things. Gets old fast.
aaron695 6y ago
> his recommendation to get exposure to randomness that has asymmetric upside Buy low, sell high?
WalterBright 6y ago
I'm happy that the GME spectacle happened. It's made a lot of people realize they can participate in the stock market and accumulate wealth. There's no going back!
vagrantJin 6y ago
Yeah, I think I've read too much N. Taleb and his take on assymetrical outcomes.

Nevermark 6y ago

I hate to say “Bitcoin” because of its high risk, short track record, volatility, faddish aura, etc, but: I believe it’s filling a gap beyond being a better gold-like asset. Better gold = digitally portable, 24 hr liquidity, digital literate friendly, fixed cap, transactions (even with its limits), decentralized control, etc. But the solidly fixed cap is more profound than I think most people recognize. Potentially, once Bitcoin finds its “true” price, it will continue to grow in value in proportion to all wealth in the economy - over the long run. So it won’t just be a hedge against downturns, but eventually a semi-stable way of sharing in overall increasing wealth in the economy. I don’t know of another instrument that anyone can easily buy that might track (over the long run) with global wealth as apposed to particular entities or particular aspects of the economy. So in that sense, anyone can participate in overall wealth growth. A very useful new tool! OF COURSE, this is SPECULATION on my part. But I think the idea of a total global wealth correlated asset is new and useful.

dehrmann 6y ago
> fixed cap This makes it more like a collectable (say, baseball cards) than a currency. The number is capped and some will be lost. It has value as long as people are interested in it--scarcity does not imply value. It also has a short track record and could run into issues if miners collude, there's a DDoS attack, or someone with a lot of resources reverses transactions, hurting confidence in it.
- Nevermark 6y ago
  Baseball cards are valued for being distinct. Bitcoin for being fungible (despite a traceable blockchain history). Baseball cards are not divisible. I know of no situation in which collectibles are viable for transaction, but Bitcoin is. (Despite limitations in transaction numbers, speed of confirmation and transaction fees.) So I don’t think that’s a good comparison.

punnerud 6y ago

I love how Reddit (and HN) enable fast sharing, fact checking of information and lifting ideas. When it comes to increase luck surface I think Clubhouse maybe will become one of the most important platforms. GME case seems to exploit the possibility for “short attack” by flipping the table into a infinite price increase, because the hedge funds accidentally created more fake shares that there is shares in existence and now have to by back. Short attack = Using the possibility brokers have to artificial creating fake shares to drive down the price, in combination with shorting stocks for earning money. More detailed explanation: https://seekingalpha.com/instablog/11442671-gerald-klein/3096735-anatomy-of-a-short-attack https://seekingalpha.com/instablog/11442671-gerald-klein/309... The combination of Clubhouse and Reddit will probably be one of the most important “inventions” this decade. Where GME could wake up everyone?

gwnwest21 6y ago
Hedge Funds managers have infinite resources and are working with Data Firms to prevent this from getting out of control again. These firms will use AI to scout social media platforms chatter and report back in real time what stocks are gaining momentum with retail investors. https://www.marketwatch.com/story/wall-street-looks-for-ways-to-avoid-stampede-of-reddit-day-traders-as-a-force-to-be-reckoned-with-11611954417?mod=mw_latestnews https://www.marketwatch.com/story/wall-street-looks-for-ways... https://www.ft.com/content/04477ee8-0af2-4f0f-a331-2987444892c3 https://www.ft.com/content/04477ee8-0af2-4f0f-a331-298744489...
- ClumsyPilot 6y ago
  They also have bots posting shit encouraging people to sell Also, whats 'Infinite resources?'
sgpl 6y ago
I'm actually not super bullish on clubhouse. I'm sure they'll find some success but to call it something that will become one of the most important platforms, I don't see it. And perhaps I'll be proven wrong in the next decade on this. I've recently started using twitter again (after initially using it in 2010/2011) and I feel that there's so much self promotion all the time disguised at knowledge sharing. It also seems like everyone (most people) have a podcast, a newsletter, a youtube channel, etc. I understand that on a surface level people are doing this to increase their 'surface area' but there's just too much and while I'm sure it does a some/a lot of good for the people putting it out there, most of it just seems like noise to me. So that's my reasoning to think that clubhouse won't really become as meaningful as you - it just adds more noise. Sure I can hangout in this room or listen to some folks talk about x/y/z topic, etc. but honestly I feel that after some time people will realize that their time could be better spent.

tomfast 6y ago

Interesting comment. Would you explain a little more about what you mean by “diversified parts of it” in “you naturally orient to getting exposure to opportunity for diversified parts of it, but when you have a scarcity view, your decisions are necessarily all/nothing”?

stouset 6y ago

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 compared to just investing in the market as a whole—over the long run. It’s just another way that the poor are trapped in poverty, even though you can of course always find individual cases where someone got lucky and made millions. This is one of the reasons I think Robinhood is a fundamentally an evil company. It’s been pretty conclusively demonstrated that the more trades you make as a retail investor, the worse your returns. To wit: Fidelity did some internal research on their customers to see which cohort had the highest returns. The winning cohort? The dead. Dead people don’t make trades, and so perform better than the living who do. I’d be willing to bet a large sum of money that Robinhood’s internal metrics conclusively prove that the net effect of their existence is a wealth transfer from the poor to the rich. The real Robin Hood-esque company in this whole thing is Vanguard, who have almost certainly done more than most any other company in this space to return profits from the market to customers of all wealth ranges.

dehrmann 6y ago
> The real Robin Hood-esque company in this whole thing is Vanguard This. I do worry a bit that there's something I'm missing because Vanguard is a Boomer thing that's no longer relevant, but I suspect all the research is solid and Vanguard being shareholder-owned aligns interests. Robinhood is probably just clever marketing and gamification of stock and options trading.
- threedots 6y ago
  No you're good. I'm a career hedge-fund/market guy and all of my investable assets (outside of my company and my house) are in vanguard trackers. I'd guess most of my friends who are professional investors are the same (except they likely have some investment in their own fund). That's not to say there aren't better investment options in the world but they aren't accessible to ordinary people (even quite rich ones).

genuine_smiles 6y ago

What’s better to invest in once you have 50k?

dehrmann 6y ago

> the economy doesn't provide anything better to invest in for under $50k What's wrong with index funds? Real estate isn't everything.

fnimick 6y ago
I think the underlying assumption, which wasn't spelled out in the parent, is that any amount of money under $super-rich is similar amounts of worthless. If you genuinely believe that, then high-risk swings at a big payday make more logical sense than a low-risk gradual growth strategy. I've heard friends express this - if you don't have $1 million +, you're just varying degrees of poor - so there's no point at gradual growth from 20k to 50k and etc when you're just as miserable. Might as well risk it all to try to get to the big time, since they don't see a reasonable path to growing gradually to anywhere worth living.
- Sophistifunk 6y ago
  They're wrong though. I'm not worth much at all, but slowly (and thanks mainly to YNAB) I've managed to build up 5 digits of cash (savings, not folding), rather than living paycheck to paycheck. This is a huge load of daily stress I used to have that I no longer do. My credit card is for convenience and frequent flyer points, not something I might not eat without. I bought the missus a (6-year-old, boring) car recently, and I did so with a personal loan not because I had to but because I chose to keep the money on hand, and the world is a little shaky right now. I didn't have to accept a lien on the car, and if there were a crunch on my cashflow I can make minimum payments for a while. I don't have "fuck you money", and probably never will, but even this much peace of mind has helped my mental health significantly.
  - yibg 6y ago
    Even 25k is a huge amount of stress gone compared to 3k in the bank. With 25k I can ride out some emergencies. If I lose my job I’m not at risk of being on the street. If I total my car I can still get to work. I’ve lived pay cheque to pay cheque, it wasn’t fun. Even though I was young and could theoretically move back with my parents if shit really hit the fan I was constantly worried about money. Soon as I paid off my student loans and had a bit of emergency fund, things were a lot better.

HenryBemis 6y ago

>Taleb talked Only because I happen to just starting reading this 4 books [0-3] motohagiography (word-depipction-of-saints?), and until 2-3 weeks ago I am ashamed to say I didn't even know who that was: Nassim Nicholas Taleb. [0-3]: Antifragile, The Black Swan, Fooled By Randomness, The Bed of Procrustes

motohagiography 6y ago
Same Taleb. I recommend reading his books back to front because he's clearly difficult to edit and starting at the end means you don't have to go through the process of listening to him sound his ideas out. Most non-fiction works that way. If you only read his "Bed of Procrustes," and a selection of his technical papers, you'd be both better off, and following most of his advice. A hagiography is a story that exalts the life of a saint. An "autohagiography," is what some writers call a shamelessly self-aggrandizing memoir. Motohagiography was a play on writing about motorcycles in a self-aggrandizing way, but could be extended to other technology. But thank you for giving it some thought!
Jommi 6y ago
and each book just re-iterates the same things. Gets old fast.

aaron695 6y ago

> his recommendation to get exposure to randomness that has asymmetric upside Buy low, sell high?

WalterBright 6y ago

I'm happy that the GME spectacle happened. It's made a lot of people realize they can participate in the stock market and accumulate wealth. There's no going back!

vagrantJin 6y ago

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