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> Investing in call options on AMD in 2014 or Tesla in 2019 also had huge asymmetric upside. It was clear that these stocks had massive risks, but while the ups

> Investing in call options on AMD in 2014 or Tesla in 2019 also had huge asymmetric upside. It was clear that these stocks had massive risks, but while the upside wa potentially s huge, the downside was capped at -100%. This is a terrible example. No one knew that the stocks would skyrocket. So at the time it was asymmetric on the downside because the cost of options were ridiculously expensive.

valdagger 4y ago
The point isn't whether you "knew" the stocks would skyrocket. It's whether they could with some reasonable/acceptable probability. I remember these stocks being in the doldrums in each of those years and thinking that they could explode with a little execution. I was thinking of buying the stock (but didn't). If I was thinking along the lines of the call option (adding more asymmetry), I might have pulled the trigger. This isn't a "hindsight is 20-20" example.
redox99 4y ago
I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor. So basically invest in things where there is a big information asymmetry. [1] https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry
- celim307 4y ago
  Biggest regret was taking a hedge fund job and liquidating my 5k$ of amd because I didn’t want to deal with the paperwork
- thunky 4y ago
  It's really that easy? Care to share another stock pick today with asymmetric upside?
  - redox99 4y ago
    Not financial advise It's not really that easy because 1) There aren't at least to my eyes that many opportunities, maybe people with domain specific knowledge in other domains, will find their own opportunities. I've only made in the last 10 years maybe 3 or 4 investments in which I was extremely confident that they would succeed. 2) These investments are medium-long term, at least 2 or 3 years. > Care to share another stock pick today with asymmetric upside? This will not be liked by the typical HN audience, but the investment where I currently see massive information asymmetry is Ethereum. Most people who were into crypto were oblivious that the merge was actually coming. A couple of months ago you would see in crypto forums/reddit everybody memeing that it would be delayed again and again for years. But if you were actually knowledgeable of it's development, you would know that it was coming for real (information asymmetry #1). Now that it became widely known that it's coming, ETH/BTC ratio went from 0.06 to 0.08. Easiest 33% ever. The same way, most people are unaware of the triple halvening. Ethereum miners currently get paid ~20M USD worth of ETH per day. A big chunk of that must be sold to pay for their mining bills. After the merge, that's almost 20M USD of DAILY sell pressure that will be gone (information asymmetry #2). After some months that massive reduction in sell pressure will have an impact on price. In addition, staking rewards cannot be withdrawn until a future update (shangai). Then it will be a limited withdraw queue. Ethereum at 1000 USD just a month ago was free money in my opinion. Now at 2000 USD I still believe it's a good deal. To be fair, there is a lot of information asymmetry in the negatives too. There are many things that are quite bad about Eth that most people into it aren't knowledgeable of either.
    - muzani 4y ago
      "This will not be liked by the typical HN audience..." Not to be rude, but this hits the nail on the head. Most of the asymmetric investments are unpopular. Buying something unpopular seems to be a requirement for doing well -- the whole buy when people are fearful, sell when people are hopeful. It's not just HN, crypto bros generally won't recommend ETH either. Maybe having a good risk/reward ratio just isn't interesting. It's why people don't sing praises of PHP or Excel.
    - thunky 4y ago
accountofme 4y ago
No, this is the perfect her care for an option. This gives the buyer and option to buy or sell at an agreed upon price. The buyer of the option pays a premium, and only loses that if they choose to not exercise the option. If they exercise the option they also have to pay the agreed upon price. As such, there is an asymmetric upside in this case.

valdagger 4y ago

The point isn't whether you "knew" the stocks would skyrocket. It's whether they could with some reasonable/acceptable probability. I remember these stocks being in the doldrums in each of those years and thinking that they could explode with a little execution. I was thinking of buying the stock (but didn't). If I was thinking along the lines of the call option (adding more asymmetry), I might have pulled the trigger. This isn't a "hindsight is 20-20" example.

redox99 4y ago

I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor. So basically invest in things where there is a big information asymmetry. [1] https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry

celim307 4y ago
Biggest regret was taking a hedge fund job and liquidating my 5k$ of amd because I didn’t want to deal with the paperwork
thunky 4y ago
It's really that easy? Care to share another stock pick today with asymmetric upside?
- redox99 4y ago
  Not financial advise It's not really that easy because 1) There aren't at least to my eyes that many opportunities, maybe people with domain specific knowledge in other domains, will find their own opportunities. I've only made in the last 10 years maybe 3 or 4 investments in which I was extremely confident that they would succeed. 2) These investments are medium-long term, at least 2 or 3 years. > Care to share another stock pick today with asymmetric upside? This will not be liked by the typical HN audience, but the investment where I currently see massive information asymmetry is Ethereum. Most people who were into crypto were oblivious that the merge was actually coming. A couple of months ago you would see in crypto forums/reddit everybody memeing that it would be delayed again and again for years. But if you were actually knowledgeable of it's development, you would know that it was coming for real (information asymmetry #1). Now that it became widely known that it's coming, ETH/BTC ratio went from 0.06 to 0.08. Easiest 33% ever. The same way, most people are unaware of the triple halvening. Ethereum miners currently get paid ~20M USD worth of ETH per day. A big chunk of that must be sold to pay for their mining bills. After the merge, that's almost 20M USD of DAILY sell pressure that will be gone (information asymmetry #2). After some months that massive reduction in sell pressure will have an impact on price. In addition, staking rewards cannot be withdrawn until a future update (shangai). Then it will be a limited withdraw queue. Ethereum at 1000 USD just a month ago was free money in my opinion. Now at 2000 USD I still believe it's a good deal. To be fair, there is a lot of information asymmetry in the negatives too. There are many things that are quite bad about Eth that most people into it aren't knowledgeable of either.
  - muzani 4y ago
    "This will not be liked by the typical HN audience..." Not to be rude, but this hits the nail on the head. Most of the asymmetric investments are unpopular. Buying something unpopular seems to be a requirement for doing well -- the whole buy when people are fearful, sell when people are hopeful. It's not just HN, crypto bros generally won't recommend ETH either. Maybe having a good risk/reward ratio just isn't interesting. It's why people don't sing praises of PHP or Excel.
  - thunky 4y ago

accountofme 4y ago

No, this is the perfect her care for an option. This gives the buyer and option to buy or sell at an agreed upon price. The buyer of the option pays a premium, and only loses that if they choose to not exercise the option. If they exercise the option they also have to pay the agreed upon price. As such, there is an asymmetric upside in this case.