makitra

Finance, the way experienced people see it.

[makitra @mak1tra]

@learnodd Family ends there.

[makitra @mak1tra]

YALE GRADS GAVE A MONEY MANAGER $375,000 AND TOLD HIM HE COULD LOSE IT ALL. 25 YEARS LATER HE HANDED YALE $90 MILLION

1979. The Yale class of 1954 meets for its 25th reunion.

Someone says: let's chip in, give it to an investor, and donate whatever's left at our 50th.

$375,000. About the price of one house.

The only rule: "Go for maximum return. If you lose everything, fine."

The manager, Joe McNay, bought Walmart, Home Depot and internet stocks.

In 2004 he handed Yale $90 million.

That's 240x. About 24% a year, for 25 years straight.

Genius? Nobel economist Robert Shiller isn't so sure.

The picks fit in one sentence. And he started selling in 2000, right at the top of the market.

His take: for every risk-taker you read about, there are 1,000 who got squashed. You just never hear their names.

Luck or skill: what do you think?

[makitra @mak1tra]

SEMYON TOOK HUNDREDS OF THOUSANDS OUT OF A CASINO IN ONE WEEKEND AND ON MONDAY TOLD HIS CLASSMATES HE DID "NOT MUCH"

week after week, it's Semyon who delivers. sometimes a thousand dollars a hand, sometimes hundreds of thousands over a weekend

he's not a gambler. it's all just a numbers game to him

[the weekend]

→ fly in on Friday
→ gamble straight for 48 hours
→ enjoy all the comps, but stick to the strategy
→ take the red-eye home on Sunday night
→ Monday, back in class, someone asks what you did this weekend. the answer is always: not much

[the scale]

Kaplan and Massar are expanding fast. teams set up in New York, New Jersey, Pennsylvania, California, Illinois and Washington

at any one time, 30 players might be out at resorts from Canada to the Caribbean, all using the same playbook

there are a handful of hero performers. Mike Pony is one, Andy Blotch is another. Jeff Ma becomes the face of the scheme later, because he's the first to talk

[back at base]

this is where Strategic Investments is different. it's run like a professional hedge fund:

→ players must report back on every single hand
→ the details are fed into a central system that optimizes future play
→ players get a basic fee for their time
→ future profits are calculated based on roles and success rates

there is natural variance, but the team wins 60% of the time, and that's more than enough to keep the bankroll building

an assault by an algorithm, backed by a hefty bankroll, unlike anything the casinos have ever seen before ↓

[makitra @mak1tra]

@OxPips Over everything except going broke. Survive first.

[makitra @mak1tra]

ANNIE DUKE, POKER CHAMPION TURNED DECISION EXPERT, SAYS YOU SHOULD TAKE A BET YOU'LL ALMOST ALWAYS LOSE, AS LONG AS THE WIN IS $10 BILLION

Most startups fail. A few become $10 billion companies.

So the math says: if you can afford the risk, you take it. Even though you'll probably lose.

But your brain won't let you.

It's called loss aversion. We pick the option without a big loss, even when the other one pays far more on average.

Her conditions are honest:
→ Can you actually afford to lose? Some people can't.
→ Are you OK with 120-hour weeks, no sleep and the stress?

If yes to both, take the bet. Fear is just bad at math.

You don't need to win most of the time. You need the wins to be big enough to pay for all the losses.

Which bet are you avoiding only because you'd probably lose?

[makitra @mak1tra]

@x_cha1n True. Just automate the size too, so one bad run can’t wipe you out.

[makitra @mak1tra]

@rendeeex One clause, forty million dollars.

[makitra @mak1tra]

WARREN BUFFETT OWNS A FURNITURE STORE THAT GREW FROM $250K TO $400M ON ONE QUESTION ITS OWNER ASKED EVERY MORNING, WHILE FIGHTING SEARS

Bill Child took over his father-in-law's store when it made $250,000 a year.

He was up against Sears. Against Levitz, one of the biggest furniture chains in America. Against everybody.

He didn't have their money. He didn't have their size.

What he had was one question, from the moment he woke up:
"How do I take care of my customer?"

No secret strategy. No growth hack.

He ended up with more than half the furniture market in Utah. The business is RC Willey, and Berkshire Hathaway owns it today.

Your competitors are busy watching each other. Watch your customer.

Who's the one customer you'd go out of your way for this week?