Nostr Web Client

I posted this on twitter at the time (~november) but I’m coming around to the idea that twitter is just for shitposting and if you want to have serious, nuanced discussions, you have to do them here.

it’s not a long read but TLDR is that there is a highly counterintuitive logic to embracing conditional probability in investing. and I really mean counterintuitive - Sacha and I have explained this directly to highly intelligent financial professionals who seem to follow all the individual steps but still can’t accept the conclusion.

we cheekily distil this down to the Meyers-Farrington Law: “it’s better to be right when you think you’re right than it is to think you’re right when you’re right,” but the fun thing is that this is really just a rigorous mathematisation of a Buffetism.

Warren do be smarts tho (other than on bitcoin):

comments and commentary very welcome, especially since nobody cared on twitter 😂

https://sachameyers.medium.com/inversion-59344427e12c

Gunson 2y ago

Bitcoin fixes this? 😅

When it becomes much more expensive to make these mistakes in terms of opportunity cost, then less failures will be invested in. The amount of cheap money available determines the marginal value of investment research. Cheap money means you can afford to hide failures for longer.

I'm surprised professional investors you met didn't get it? Were they like "but ycombinator tho"?

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Discussion

allen 2y ago

maybe in a kind of inception/subconscious sense - but there is a very strongly engrained idea that “you can’t miss winners.” like that’s the worst thing that can possibly ever happen because “upside is asymmetric.” the 2010s everything bubble undoubtedly made this much, much worse. I’m certain many people got fired or lost clients for being underweight some or other complete joke of a company that has only destroyed massive piles of capital in real terms (not to name names, but you don’t really need to there are so many examples)

again - conditional probabilities are highly counterintuitive. I don’t think that’s a bitcoin thing or even a finance thing. it’s just a math and psychology thing.