0x_Ito

Reading markets in the language of Itô

[0x_Ito @0x_Ito]

Ed Thorp got banned from Vegas for counting cards.
He took the same math to Wall Street and ran 76 straight quarters without a loss

He didn't start on Wall Street He started in casinos, counting cards, until Vegas banned him and he had to trade in disguise just to keep playing
He took the same idea to the market in 1969 - not a gut feeling about which stocks would rise, a mathematical edge, sized by rule, repeated without exception

Princeton Newport Partners ran for 19 years, 1969 to 1988 Never a losing quarter. Not one, across 76 straight quarters 19.1% annualized before fees

The discipline wasn't about being right more often It was about never letting a good streak or a bad one change how much he bet. The same rule, every time, regardless of how he felt about the position

Which is the same conclusion Simons landed on decades later with a computer instead of a card count Different tools, same refusal - don't let the person in the room override the system that's actually working

[0x_Ito @0x_Ito]

Jim Simons, 300 employees, 90 PhDs, 66% annual returns for 30 years. The one rule behind all of it started with a trade he made by hand

He left academia at 40, built Renaissance Technologies to roughly 300 people, 90 with PhDs, processing terabytes of data a day. The fund stopped taking outside money in 1993

He doesn't teach a strategy in the talk. He walks through his own years as a gut trader and calls it what it was - stomach wrenching. One day you're a genius, the next a dope, no rhyme or reason to it

Then the rule that replaced all of it
Nobody at the firm ever overrides the computer. Not when the position looks insane, not when the boss disagrees, not once

The reason isn't that the model is always right
It's that you can't simulate a human changing his mind. Allow one override, and every backtest you own becomes a story about a market that never existed

Which makes his own gold trade the most expensive thing in the talk
It worked. It made money. And it's the exact behavior he engineered out of his own company for good

[0x_Ito @0x_Ito]

@quant_fold Legend, from blackjack tables to Wall Street, 20 years with zero losing quarters

[0x_Ito @0x_Ito]

@voyzlab It’s cool that, with all these new technologies, we’ll soon be making our own films

[0x_Ito @0x_Ito]

@tOMMY_m1LLER yeah

[0x_Ito @0x_Ito]

Jim Simons, 300 employees, 90 PhDs, 66% annual returns for 30 years. The one rule behind all of it started with a trade he made by hand

He left academia at 40, built Renaissance Technologies to roughly 300 people, 90 with PhDs, processing terabytes of data a day. The fund stopped taking outside money in 1993

He doesn't teach a strategy in the talk. He walks through his own years as a gut trader and calls it what it was - stomach wrenching. One day you're a genius, the next a dope, no rhyme or reason to it

Then the rule that replaced all of it
Nobody at the firm ever overrides the computer. Not when the position looks insane, not when the boss disagrees, not once

The reason isn't that the model is always right
It's that you can't simulate a human changing his mind. Allow one override, and every backtest you own becomes a story about a market that never existed

Which makes his own gold trade the most expensive thing in the talk
It worked. It made money. And it's the exact behavior he engineered out of his own company for good

[Сarm1ne @carm1nee]

https://t.co/AEvpm1M5Sd

[0x_Ito @0x_Ito]

@quant_fold You’re welcome

[0x_Ito @0x_Ito]

@carbonyxxx this guy is genius

[0x_Ito @0x_Ito]

@quant_fold He was absolutely right

[0x_Ito @0x_Ito]

Stanley Druckenmiller: 30 years, 30% annual returns, zero losing years. Bought Palantir in 2008 - before almost anyone. Now he says the market goes flat for the next ten years

Told Alex Karp it could be flat the same way it was from 1966 to 1982 it's like driving a Porsche 200 miles an hour, not only taking the foot off the gas, but just slamming the brakes on

The companies that get built in a decade like that there were companies that did very, very well in that environment back then. that's when Apple Computer was founded, Home Depot was founded coal and energy companies, chemicals made a lot of money in the 70s

The rule that made him buy before almost anyone one of the cardinal rules I learned early on in venture capital is look where the kids are going. I bought your stock in 08, and I checked - you guys were a magnet for talent

What Karp says his war products actually do I did quite well financially, but to tell you the truth, I've never been more proud to own a company

[0x_Ito @0x_Ito]

@enzoxbt Milton Friedman explained inflation perfectly

[0x_Ito @0x_Ito]

@stat1x_x yep

[0x_Ito @0x_Ito]

Stanley Druckenmiller: 30 years, 30% annual returns, zero losing years. Bought Palantir in 2008 - before almost anyone. Now he says the market goes flat for the next ten years

Told Alex Karp it could be flat the same way it was from 1966 to 1982 it's like driving a Porsche 200 miles an hour, not only taking the foot off the gas, but just slamming the brakes on

The companies that get built in a decade like that there were companies that did very, very well in that environment back then. that's when Apple Computer was founded, Home Depot was founded coal and energy companies, chemicals made a lot of money in the 70s

The rule that made him buy before almost anyone one of the cardinal rules I learned early on in venture capital is look where the kids are going. I bought your stock in 08, and I checked - you guys were a magnet for talent

What Karp says his war products actually do I did quite well financially, but to tell you the truth, I've never been more proud to own a company

[Сarm1ne @carm1nee]

https://t.co/AEvpm1M5Sd

[0x_Ito @0x_Ito]

@quant_fold That bloke’s really clever, thanks for the post I’ll watch the documentary about him today

[0x_Ito @0x_Ito]

@A1xen_ ofcourse

[0x_Ito @0x_Ito]

@quant_fold yeah

[0x_Ito @0x_Ito]

@maximumxspace Musk really genius 20s century

[0x_Ito @0x_Ito]

Ben Franklin - one clause in his 1790 will
$2,000 turned into millions. Still one of the cleanest proofs compound interest is real

He didn't leave his cities money
Two clauses in his will one for Boston, one for Philadelphia. £1,000 each
Roughly $100K today
Not a gift. A loan machine. 5% interest
Lent to young tradesmen starting businesses
Every dollar repaid, relent, compounding
No withdrawals for 100 years, He was already dead
He didn't need to check the math
The equation did the work on its own

By 1990 - two centuries later - Boston's share had grown to roughly $4.5 million, Philadelphia's to roughly $2 million. From $2,000, combined

Franklin never saw a cent of it
He wasn't betting on the businesses
He was betting on one equation, left alone for 200 years

[0x_Ito @0x_Ito]

@NEXORAResearch new step technology

[0x_Ito @0x_Ito]

@quant_fold That’s what they should be teaching at university

[0x_Ito @0x_Ito]

@0xMavian He was right