LongStraddleLarry

Quant | 2nd place national math competition | do speak English | sure of the math

[High Yield Harry @HighyieldHarry]

The 🐐

R.I.P. Charlie Munger, you will be deeply missed

[PyQuant News 🐍 @pyquantnews]

Every piece of advice I could think of after 20+ years trading, 20+ years writing code, and 15+ years as a quant:

1. Bulls make money. Bears make money. Pigs go to slaughter. (Thanks Dad.)

[LongStraddleLarry @LarryStraddle]

@wagieeacc Just your average prisoners dilemma

[Danby Choi @danbychoi]

Unge menn flykter venstresiden og går til Andrew Tate. Det kan venstresiden takke seg selv for, hevder jeg ofte. Her forklarer jeg.

Det er ingenting som tvinger venstresiden til å være woke, og det finnes mange hederlige unntak. Filosofen Susan Neiman tilhører venstresiden og har skrevet en hel bok om hvorfor woke er en trussel mot venstresidens egne idealer. Jeg kommer selv fra en venstreside jeg trodde kjempet for mangfold og toleranse. Nå bør venstresiden – for egen del – ta tydelig avstand fra det som ofte er direkte antidemokratiske holdninger i egne rekker. Slik at kunstnere, forskere, komikere og journalister kan drive med det helt samfunnskritiske som de driver med.

Fra Klassekampens debatt om hvorfor arbeiderklassen og gutta flytter seg til høyre:

[Brandon Beylo @marketplunger1]

Bruce Greenwald invited Li Lu to speak to his class on value investing.

The result is a 90 minute masterclass on how to be a value investor.

If you haven't watched the video, do it now.

If you have, it's worth re-watching.

Here is a list of my favorite quotes from Li Lu 👇

PERSONALITY OF A VALUE INVESTOR

• "Understand who you are as an investor, because you will be tested. You will have to ask yourself if you truly are a value investor."

• "Value investing goes against our evolution of following the crowds to survive."

• "You will spend most of your time as an investigative journalist. To have insatiable curiosity."

• "You almost have to be curious about everything. Because you never know where you'll get that one major insight."

INVESTOR CRITERIA

• Is it cheap?

• Is it a good business?

• Why is this opportunity available to me?

"Once you answer those questions, you really have to go for it."

INVESTMENT CASE STUDY 1: TIMBERLAND

• "The first thing I check in a company is it's valuation."

• "If you're an investor you don't care where it traded before."

• "What matters isn't the price-to-book ratio itself, but what's in the book value."

• "You want to compare the capital invested in the business to how much pre-tax cash flow the business generates using that capital."

• "So Timberland generated $100M on $200M in capital invested. So why does the opportunity exist?"

- Nike, Reebok, all the shoe brands fell off a cliff during the Asian Financial Crisis.

- Founder owns 40% of the stock

- Company was profitable and didn't need financial markets (no sell-side)

- Tons of shareholder lawsuits

• "What would be your conclusion if you were a normal mutual fund hearing this information? That management is milking the company for their own gain."

What does Li Lu do next?

• "I download every file of the shareholder court cases. That's the investigative journalist part."

• "The result was that the founder withdrew guidance and shareholders didn't like it. That was it."

How do you determine if management are decent people?

• "You've got to be an investigative journalist and find the trail of evidence. Go to their community. Introduce yourself to their friends/family/neighbors."

Total Time Commitment: "A couple of weeks of diligent/obsessive work"

• "Investing is intensive work for short bursts of time."

HOW MUCH TO BUY?

• "If you go join a fund, they'll tell you not to risk anything more than 25-50bps."

• "Think about how much effort you put in to this work. You have no downside and its trading at 5x profits."

• "So, I put a shitload of money into Timberland. Over the next 10 years it went up 7x. It was never more than 15x earnings."

�� "If you're not a good analyst, you'll NEVER be a good investor."

• "When it goes up, you don't have to do a damn thing. You just sit on it and ride with it."

INVESTMENT CASE STUDY 2: KOREAN COMPANY

• "Don't think about per-share numbers. Think of yourself as an owner."

• "$236M in book value, $60M market cap, $25M net earnings."

How do you know it's cheap?

• "You must confirm that the earnings are there, and that the book value is real, liquid, and tangible."

• "They're trading at the cash value in the bank with no debt. They have hotels and department stores that they own outright. They're making $30M+ in pre-tax earnings. And insiders own 50%."

The result: Went up 5-6x

VALUE INVESTING IS NOT NATURAL

• "There's a lot of money in value investing. But it's still unnatural to most people."

• "One thing you have to do, is you have to do the work. You have to do the reps. You can make a ton of money if you really do this stuff."

• "I benefited by listening AND THEN DOING my own work. Making my own investments and mistakes."

WHAT MAKES A GREAT ANALYST

• "You must provide accurate and complete information. If you can't succeed on that, you can't succeed in this business."

• "If you're not confident about your prediction and what you know, you can't put any money when the stock's in free fall."

WHAT PROVIDES THE BIGGEST RETURNS

• "Your biggest returns will come from no more than ten tremendous insights. That's it."

• "The only way to build those insights is intense curiosity, intense study."

INVESTING MISTAKES

• "The biggest mistakes come when you buy before you've done all the work."

• "My biggest mistakes aren't buying and losing money. It's not buying and missing out on 50-60x returns."

HOW MANY COMPANIES SHOULD YOU BUY

• "I don't have any set rules on how many stocks or companies I buy. Opportunities are sporadic and it depends on the environment."

• "I usually have 3-4 big ideas. If the market is exciting, I have more opportunities. Or if the market is boring, I have fewer."

HOW LI LU ALLOCATES TIME

• "Most of the time I spend reading and studying about everything. Learning new companies and industries."

• "If I find an idea that captivates me. I stop everything and obsess over that idea."

• "Besides that, I spend a lot of time with my kid and my wife."

TL;DR:

• Be an investigative journalist.

• Work obsessively in short bursts and spend the rest. of your time learning.

• When you've done the work and have conviction, buy a shitload to make it worth it.

• Before you invest $1, make sure you can answer the three big questions: Is it cheap, is the management team good, and why does the opportunity exist.

• Never stop learning.

• Become a curiosity machine.

[David Senra @FoundersPodcast]

My notes from Poor Charlie's Almanack: The Wit and Wisdom of Charlie Munger turned into maxims:

1. Find a simple idea and take it seriously. 

2. Good ideas are rare. When you find one bet heavily. 

3. Humans have been writing down their best ideas for 5,000 years. Read them.

4. Avoiding stupid mistakes is more important than being smart.

5. Don’t work with anyone you don’t admire.

6. Don’t sell anything you wouldn’t buy.

7. Avoiding a bad habit is easier than breaking a bad habit.

8. Work on your best idea. Don't diversify

9. Incentives rule everything around you. Look for them. 

10. Great businesses are built by going ridiculously far in maximizing or minimizing one or a few things. Think Costco. 

11. Learning is changing behavior. 

12. Do the unpleasant tasks first.

13. Charlie has read hundreds of biographies. Do the same. 

14. Stop multitasking. Concentrate.

15. Many hard problems are solved best when approached backwards.

16. Think of ideas as tools. When a better tool comes along use it.

17. Clip your business and personal expenses. Small leaks sink big ships.

18. Make friends with smart dead people. Adam Smith, Darwin, Cicero, Ben Franklin —whoever interests you. Read their writing. Steal their ideas. They don’t need them anymore.

19. Don't confuse intelligence with invincibility.

20. Bad things will happen to you. It’s inevitable. When they do get up and keep going and remember the next maxim.

21. Self pity has no utility.  

22. Find out what you are best at. Then pound away at it. Forever.

23. Only plays games where you have an edge.

24. Avoid mob rule. Avoid demagogues. Avoid dogma. Avoid bureaucracy.

25. Optimize for independence.

25. Use money to buy freedom.

26. Develop durability.

27. What do you have an *intense* interest in? Do that for money.

28. Self improvement has no end.

[quant @Quantaraum]

This is such a great read that I have to quote a part of the book:

Basically, if you understand a system well and deeply, you don’t have to play by the same rules as everyone else.
You can look for flaws and omissions in the rules.
You notice where the constraints the system places on you don’t work. You naturally hack the system.
And if you’re rich and powerful, you’ll likely get away with it.

[Fermat's Library @fermatslibrary]

In 2000, Faber and Faber offered a $1,000,000 prize to anyone who proved Goldbach's conjecture: every integer greater than 5 can be written as the sum of three primes (21=11+7+3). To this day, it remains unsolved.

[Jetski Grizzly @Jetskigrizzly]

Still the greatest to ever do it. John McAfee's resume is absolutely insane 🤯

[Jack Moses ∞ @jackmoses777]

Psychologist Mihaly Csikszentmihalyi is the "Godfather of Flow."

"Flow State" is how we:

- Produce meaningful work
- Cultivate meaningful hobbies
- Create lives of joy and fulfillment

Here are his 8 ways to cultivate Flow State:

[Nik Algo @nik_algo]

How do you get started in algorithmic trading?

I presume that many of you have this question.

Thread for beginners 🧵

[NT Quant @NT_Quant]

Getting really good at probability FROM SCRATCH in about 360 hours.
Study Tip: As you go through each resource save questions that you find hard for later reference.

[Stat Arb @quant_arb]

Finished writing a full guide on pairs trading, specifically finding great portfolios. It’s a pretty comprehensive dive into the topic.

Pairs trading is an area I worked on for a while, but long enough ago that I’m happy to share my insights on it

https://t.co/86iS9JQqgA

[jeff.hl @chameleon_jeff]

1/ For quants just starting out, what specific strategies should you run?

Cast a wide net when exploring, but quickly focus in when you have a lead. The zero to one moment of live pnl should be your first goal.

A thread on some general directions to get you there 🧵

[boligbaronen @boligbaronen]

Hvis du likte denne tråden🧵 så del gjerne den første tweeten i denne tråden. #aksjer $PSKY
https://t.co/FeT9SfEqav