fractionalhare

I don't specialize in derivatives so I can't speak to how compelling his industry work is versus his writing. But my understanding is Taleb's strategies were explicitly designed to lose small amounts of money often and win huge amounts of money occasionally.

The idea is basically to go long vega and gamma waiting for an apparently rare event you believe will happen somewhat more frequently than expected. In the meantime you'll eat the theta and usually lose money, but ideally within certain risk parameters.

That's when you sell a naked call. If you instead sell a covered call, you keep 100 * the number of calls sold in your account as collateral. Then you still only receive an exact credit at the time the position opens, but your risk is capped and defined as the price of the collateral at the time the position opened.

But more importantly - the gas fireplaces are intended to look nice with minimal effort. They are explicitly not intended to change the indoor climate much if at all. They're usually built in very new homes that have dedicated, reliable climate control systems or in cities that don't require much heating.

We found that notebook-based development is actually an antipattern for software engineering. It was ostensibly helpful for the narrower "data science" use case, but we have a much more robust ETL and research platform we built on our own using Pandas, Dask, Prefect and AWS.

And personally I hated writing code in notebooks. If you're attached to that, you can basically get the same thing by using PyCharm in scientific mode with cell execution.

Personally I don't think it's unfair when any fund loses money - that's the game. I do think it's unfair Melvin in particular has outsized attention. The only reason Melvin is in the spotlight now is because the WSB zeitgeist just happened upon Melvin's public short and fixated on it without looking at other funds' 13Fs showing the same position. Melvin was far from the only fund short GME. This in turn led the media outlets to hyperfocus on Melvin, which has in turn led the mainstream lay community to hyperfocus on Melvin.

It didn't short 138% of GME stock. GME short interest increased to 138% while Melvin and many other hedge funds were shorting it. Melvin didn't do that singlehandedly.

> Naked Short selling maybe technically illegal, but that is in name only and in continues unabated to this day, hell the SEC refused to look into this obvious collusion between various hedge funds (citadel/melvin/Steve Cohen)

There is no evidence these firms colluded or engaged in naked short selling. Naked short selling is when you sell short a security without first entering into a contract to borrow the security. Short interest is orthogonal to naked short selling.

Maybe this is how it was 6 million subscribers ago. Based on my (extensive) reading of WSB the past few weeks, this is no longer true.

I've read just about every WSB post (and its comments) about GME with over ~1000 upvotes. People asking when the gamma squeeze is going to happen were definitely not being told to read a book, they were being told things like "this Friday!" And people acting like they had intimate knowledge of this fact weren't exactly downvoted either...

I do not think this is usually the case on WSB, where people regularly show off trading on margin several times larger than their total account size :)

Even without margin, it's not uncommon to see people freely admitting they put everything they have into a single position (and mods happily verify it).

Given that 6 million of the current 8.5 million WSB subscribers joined after GME popped, I think most retail investors probably lost money. At this point it's a minority who got in early and made a lot of money.

"If that's the direction we are taking, then why not contemplate an artificial origin?"

This reasoning seems strange to me. We discover new things in nature all the time. Why would we consider an artificial origin, when we're constantly revising our knowledge of the natural world?

Well, no. Maybe by market cap, but that isn't the important metric here. Power consists of what is controlled and stewarded, not just what is owned.

JnJ controls billions of dollars of capital. The largest banks control trillions of dollars of capital, each.

JnJ is core infrastructure for healthcare; banks are core infrastructure for everything that exists in the capitalist fabric of society.

Banks may not be that wealthy by ownership, but this isn't really the right lens for critically examining how much power they wield compared to other industries.

EDIT: To whoever downvoted me: this comment isn't a defense of finance. It's a statement of fact refuting one of the author's points.

For illustration: assume any given fund has returns which simply approximate a normal distribution; i.e. their returns are theoretically just noise. Then the chance of the fund achieving a 2 sigma return in any given year is about 2%. We can model the odds of such a firm consistently exhibiting a 2 sigma return for 20 years in a row using a binomial distribution with n = 20 trials, k = 20 successes and success probability p = 0.02. Then we have

binom(20, 20) * 0.02^20 * 0.8^0 = 1x10^-34

There are firms which have consistently beaten the market by a significant margin for that long. Even if you relax the constraint to 10 years, you still get "only" 1x10^-17. At a certain point this becomes similar to saying that Steph Curry isn't actually good at basketball, all of his 3 point throws are just the expected outcome of lots of mediocre players existing who didn't make it to the NBA.

I do agree that retail investors should just invest in index funds though. And I agree it's extremely difficult to determine who has the genuine skill to beat the market before they've beaten it for so long that they're no longer accepting money.

For example, suppose you model this as a game with the following rules:

- you start with $1,000,000

- each turn you may bet $10,000

- if you bet, you roll a d100

- if you roll a 1, you earn 1000x your bet, if you roll anything else you lose your entire bet

- the game ends after 1000 turns or you lose all your money, whichever happens first

If you bet every turn, on average you'll end the game with approximately $60,000,000.

EDIT: Did you edit your comment to be 100x or did I misread? Oh well, leaving this here for posterity. If the win outcome is 100x, the EV is still 1.

Many banks control trillions of dollars. Hedge funds almost always have less than $50B, usually by one or two orders of magnitude. If a bank fails, it's actually a problem for the government. If a hedge fund fails, it's barely a blip. If the limited partner was smart, it will also only cause them a single digit percentage decrease in their portfolio.

Hedge funds can amplify a systemic risk, but they would not really be targets for a bailout, the banks would be.