Razex

[Razex @0xRazex]

@veraxlab had no idea Guinness had this much to do with modern statistics

[Razex @0xRazex]

@Mararia964735 This is actually crazy for 20 minutes
Grok keeps surprising me

[Razex @0xRazex]

@Astra1Byte crazy progress for just two weeks, still wanna see how consistent it is outside a perfect demo though

[Razex @0xRazex]

A hedge fund returned 50% a year for ten years straight. In 2005 the man who ran it sat on a desk at Columbia and taught the entire method to 30 students for free. No bank, no fund, no business school has ever promoted the recording.

His name is Joel Greenblatt. He ran Gotham Capital from 1985 to 1994. Almost nobody sustains 50% annually for a single year. He did it for ten. Then in 1995 he returned all outside capital, kept running his own money, and walked into a classroom.

The first lecture is about corners of the market where the usual buyers are structurally forced to sell regardless of price. Spinoffs, restructurings, situations where an index fund must dump a stock the day it leaves the index. He does not teach a screener or a formula. He teaches why these corners exist at all, and why they keep existing after everybody knows about them.

The uncomfortable part is what he says about diversification. He held very few positions. It runs directly against everything the business school teaches two floors down. Columbia charges $80K a year in tuition. The man upstairs gave away the method for free.

Every screener is free now. Every filing is searchable. The constraint was never information. It was knowing which information to ignore.

Filmed from the back row, audio uneven, students blocking the frame. He gave away 50% a year to a room of 30 people. Almost nobody traded on it.

One classroom. One camera. The full lecture is free. It is in the video.

[Razex @0xRazex]

A hedge fund returned 50% a year for ten years straight. In 2005 the man who ran it sat on a desk at Columbia and taught the entire method to 30 students for free. No bank, no fund, no business school has ever promoted the recording.

His name is Joel Greenblatt. He ran Gotham Capital from 1985 to 1994. Almost nobody sustains 50% annually for a single year. He did it for ten. Then in 1995 he returned all outside capital, kept running his own money, and walked into a classroom.

The first lecture is about corners of the market where the usual buyers are structurally forced to sell regardless of price. Spinoffs, restructurings, situations where an index fund must dump a stock the day it leaves the index. He does not teach a screener or a formula. He teaches why these corners exist at all, and why they keep existing after everybody knows about them.

The uncomfortable part is what he says about diversification. He held very few positions. It runs directly against everything the business school teaches two floors down. Columbia charges $80K a year in tuition. The man upstairs gave away the method for free.

Every screener is free now. Every filing is searchable. The constraint was never information. It was knowing which information to ignore.

Filmed from the back row, audio uneven, students blocking the frame. He gave away 50% a year to a room of 30 people. Almost nobody traded on it.

One classroom. One camera. The full lecture is free. It is in the video.

[Vexel @vexelxbt]

https://t.co/62wJFf5wYq

[Razex @0xRazex]

@0xFinrex never knew there was this much behind a coke price lol

[Razex @0xRazex]

@0xForem curiosity for sure, would be cool to see in person

[Razex @0xRazex]

@carbonyxxx good one, discipline really is the whole game

[Razex @0xRazex]

@choopyplug1 yeah giving agents that much access is wild

[Razex @0xRazex]

@Astra1Byte crazy how hard it is to tell now

[Razex @0xRazex]

@veraxlab good read, learned something
saved

[Verax @veraxlab]

Three couples kissed at an airport. Two turned their heads to the right.

That's 67 percent. It also means nothing, and every trader with a good month is doing the same arithmetic.

An MIT statistician uses this example in the first lecture of his statistics course, and it's free on OpenCourseWare. A study in Nature watched 124 couples kiss. 80 turned right. Is that a real bias, or noise? Pure chance would give you 62. To say anything at all you need 72. To be 99.9 percent sure, you need 80.

Nobody feels that threshold. Three wins in a row feel like proof. They aren't even a data point.

A man in Basel spent twenty years on exactly this question. Jacob Bernoulli died in 1705, and the answer came out in 1713, printed by his nephew from the manuscript he left behind. His own example: an urn with 3,000 white pebbles and 2,000 black. How many draws before you can trust the ratio you see? His number was 25,550.

Every fund that shows you a three year track record, every guru with a hot quarter, is selling you 67 percent from three couples at an airport.

The rule that tells you when results start to mean something has been free for 313 years. The only thing that costs anything is skipping it.

[Razex @0xRazex]

@sonicdr1p that claude.md idea is actually pretty smart, gonna try this

[Razex @0xRazex]

@0xNoraa this is probably where software development is heading

[Razex @0xRazex]

@Vektrix position size matters more than most traders think

[Razex @0xRazex]

@Beaver_0x Makes sense when you put it this way

[Razex @0xRazex]

@sonicdr1p This is where agents actually start getting useful

[Vexel @vexelxbt]

£4,061,000. Benjamin Franklin wrote that number into his own will in 1789, as the result of an experiment he was starting that day.

The experiment ran the full two hundred years. It came in nowhere near.

There is a silent film from 1921 where his ghost steps out of Poor Richard's Almanack to explain the idea to two children in Los Angeles. It sits in an archive with about a hundred and fifty downloads, and it was made seventy years too early to know how any of this ended.

What he left each city was £1,000, with instructions attached. Lend it at five percent, in sums between fifteen and sixty pounds, to married tradesmen under twenty-five. £131,000 after a century. £4,061,000 after two.

Check his arithmetic in a spreadsheet. It is correct to the pound.

Philadelphia's fund reached $172,350 after a hundred and seventeen years, less than a quarter of what he had projected. Boston passed its century mark at around $391,000. Both were wound up in 1990: roughly $5 million in Boston, about $2 million in Philadelphia.

Nothing dramatic did this. No war, no crash, no inflation shock.

The borrower went extinct. Franklin had built the machine around one specific person, the young apprenticed tradesman setting up his own shop, and that person stopped existing. Loans stopped being written. The money sat. Boston eventually abandoned his scheme altogether and put the funds into the stock market.

Which is the part worth keeping.

A compounding projection is not a promise about the figure at the end. It is a claim about every year in between, that the rate gets earned in all of them, with no gaps.

And the gaps cost more than anyone expects. Money that sits uninvested three months out of every twelve, over thirty years at seven percent, arrives about forty percent smaller. Nobody chooses that. It happens while you are deciding.

Count your idle months before you argue about fund fees.

[Verax @veraxlab]

Up 30 percent, then down 30 percent. Your average return for those two years is exactly zero. Your money is not.

You're holding 91 cents on the dollar, and the man who proved why never held a university job.

Johan Jensen ran the technical department at the Copenhagen telephone company for thirty-four years and did his mathematics after hours. In 1906 he published the proof in French, in a Swedish journal. On a $100,000 account over thirty years, the same gap comes to $738,674.

Every projection you've ever been handed uses the number that doesn't happen.

Here's the one that does.

Take a stock fund averaging 10 percent a year and bouncing around by 20. Nothing dramatic. Half the funds you've ever been pitched look like that.

Ten percent on $100,000 for thirty years is $1,744,940. That's the figure that goes in the deck.

What your money actually grows at is nearer 8, and 8 percent leaves you $1,006,266.

The missing $738,674 isn't a fee. It isn't tax and it isn't a crash. Nobody took it, because it was never there. The average was describing a portfolio that doesn't exist.

You can do the correction on your phone. Take the volatility, square it, halve it, subtract. Twenty percent squared is 0.04, half of that is 2 percent a year, gone before anyone has touched your account.

Fifteen percent volatility costs you about 1.1 a year. Thirty percent costs about 4.5. Whatever average return you were promised, run it through that, and what's left is the part you can actually spend.

You're not bad at math. You were shown the one figure that doesn't survive contact with compounding, and it was the flattering one, which is why it was the one you were shown.

The rule has a name. Jensen's inequality: the average of the logs can never be bigger than the log of the average. Your compounding is the log. The average is the brochure.

MIT filmed Tsitsiklis proving it in a few minutes and gave the clip away, along with the rest of the course.

And that's only the first bill volatility sends you. The second one isn't about money at all. The same number, squared again, decides how many years have to pass before your own track record means anything. For a fund manager the answer is around fifty. Careers are shorter than that.

The math is free. The lecture is free. The only thing that costs anything is not knowing which of the two bills you're paying.

[Razex @0xRazex]

@Di_Krass_ The fund return and the investor return being two different numbers is a lesson most people learn way too late.