Nonlinearity Tag Archive

Connect through your superfriends

(Extracted from Barking Up the Wrong Tree by Eric Barker) … there’s an 80/20 rule of sorts in networking. You probably met the vast majority of your friends through a handful of “superfriends”—the...

September 20, 2019| Life, Nonlinearity Read More

Ed Thorp on Kelly Criterion

(Excerpt from A Man for All Markets by Ed Thorp) Kelly’s criterion is not limited to two-value payoffs but applies generally to any gambling or investing situation in which the probabilities are known or can be...

September 19, 2019| Investing, Kelly Criterion, Nonlinearity Read More

Stock market is not Gaussian

(Extracted from A Man for All Markets by Ed Thorp) The defect of VaR alone is that it doesn’t fully account for the worst 5 percent of expected cases. But these extreme events are where ruin is to be found. It’s...

September 19, 2019| Investing, Nonlinearity Read More

Size of wins matters, not frequency of wins

(Extracted from Fooled by Randomness by Nassim Taleb) The best description of my lifelong business in the market is “skewed bets,” that is, I try to benefit from rare events, events that do not tend to repeat...

September 19, 2019| Investing, Nonlinearity Read More

Habits have compounding effects

(Extracted from Atomic Habits by James Clear) Habits often appear to make no difference until you cross a critical threshold and unlock a new level of performance. In the early and middle stages of any quest, there is...

September 17, 2019| Life, Nonlinearity Read More

Persevere for nonlinear effects

(Extracted from Fooled by Randomness by Nassim Taleb) Our brain is not cut out for nonlinearities. People think that if, say, two variables are causally linked, then a steady input in one variable should always...

September 15, 2019| Investing, Nonlinearity Read More

Barbell Strategy

(Extracted from Antifragile by Nassim Taleb) If you put 90 percent of your funds in boring cash (assuming you are protected from inflation) or something called a “numeraire repository of value,” and 10 percent...

September 8, 2019| Investing, Nonlinearity Read More

Investing up to 40% in one stock

“We diversify substantially less than most investment operations. We might invest up to 40% of our net worth in a single security under conditions coupling an extremely high probability that our facts and reasoning...

September 8, 2019| Focus, Investing Read More

How much you win or lose, not how often you win

“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.” George Soros...

September 8, 2019| Investing, Nonlinearity Read More

Wait, wait, wait, pounce!

If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on...

September 8, 2019| Investing, Nonlinearity Read More

↑