tennis parlays are mild randomness
Dustin Brown beating Rafa does not spill over into other matches
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risk
fragility, linear and non-linear phenomena, blind spots
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volatility drag in action
real world example of our insidious friend volatility drag
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the man of the cliffs
documentary about Purunga, a traditional cliff fisherman in Peru.
on sampling and its discontents
terrain, models, and inference... the more uncertain the terrain, the less we can rely on sampling
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wild randomness
an easy to visualize example of wild randomness
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"daily standard deviation of 1% moves 1% a day" - not so
In the financial markets, the definition of volatility is assumed to be standard deviation. However, in practice, people seem to either forget the definition or completely substitute it with the mean absolute deviation. For example...
2 min read
shorting stocks based on fragility
On principle, therefore, a small short position is in order. Small because we cannot time markets, and small because it's an expression of a philosophical view, not an attempt to make fuck you money with one trade.
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virtue over fortune in investing and other pastimes
since you can't help yourself, then let's use the word "virtue" for the disciplined application of your method, and the word "fortune" for the outcome of your "investments."
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what we talk about when we talk about correlation
in day-to-day meetings and coffee chats, no big deal, but when it comes to making investing or hedging decisions, beware.
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the misery of sovereign power
a sword is perpetually suspended over our head. We dread our very guards, we distrust our companions.