I like this, and it’s not even including the asymmetry with respect to losing money in the short run — if one bad investment causes your net worth to decline 50 percent, you need 100 percent gains to get back to zero.
But the biggest objection — which you allude to — is that if the “pick winners” investor has 10 percent of his assets in bitcoin, bitcoin goes on to be worth 10M per coin, it’s not going to be okay to have passed on that investment and stuck with Coca Cola.
Of course, it will be okay for Buffett himself because he will probably be dead by then, but we could conceive of some outliers you cannot afford to miss.
Maybe the Meyers-Farrington law applies at normal energy levels like Newton’s laws, but when you get toward the speed of light (or the emergence of a new paradigm) maybe it breaks down.
on your last point, it depends heavily on the underlying distribution. the more skewed it is, the riskier Nancy’s approach becomes, but arguably only at insane extremes of a handful of investments driving the entirety of index performance and not because Peter’s approach is intrinsically better - rather because “buying the index” becomes the best approach in that case if you have no skill in weeding out losers.
tbh though, this isn’t supposed to lend itself to specific investment advice, but more to draw attention to coherent ways of thinking about investment edge. in our experience (and I think just a priori too) it is highly counterintuitive to people that “being really good at picking winners” is actually a bad strategy. it’s essentially a blindness to opportunity cost because nobody cares about the absolute number of winners you picked; what matters is portfolio construction.
you should be really good at picking losers, because that way you *just will* have a higher allocation to winners.
Yes, you would have a better ratio of winners to losers, and that’s all that matters if you’re fully invested and IF we look at winners/losers as a binary rather than considering insane assymetric upside.
It’s obvious Buffett is Nancy, but which one is Saylor? Imagine thinking everything was a loser except one thing and then putting all your money into it. Seems like he’s the ultimate Nancy.
people seem very annoyed this doesn’t have a direct application to bitcoin 😂
but it seriously doesn’t - not just because the presence of bitcoin in an investable universe is clearly a freakish anomaly, but also because the only way to take advantage of it requires you be perfect at identifying *both winners and losers*, which defeats the purpose of the thought experiment. the point is to assume your time/energy/skill/whatever is limited and “focusing” has an opportunity cost. if you just happen to know that one asset will destroy everything else over an unbounded interval of time then there is nothing to think about.
Your law is like, “here’s a helpful insight into playing the game” and bitcoin is like, “why are you even playing this game anymore? It’s over!”
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