Eric Li

[Paul Enright @pmje73]

I increasingly believe the only real way to extract alpha from the rising volatility (not seen in mkt vol) and desire to focus on “duration” is through extreme concentration.

Duration, concentration, and leverage all lead to increased exposure to volatility.

When you play Mortal Kombat you are prompted to choose your weapon. Investing requires the same.

Duration, leverage, concentration and liquidity are all examples of weapons.

If you choose all four it’s like taking a shot and a beer every time your friends order a beer. Feels good til it feels really really bad.

Leverage is the most powerful weapon and minimizes the value of the other weapons if used. It also leaves you the most vulnerable to death.

Concentration and duration both have value and amplify one another without leverage. They also eventually come at the expense of one another when also combined with leverage.

Flexibility to reach into private markets for companies with a visible path to IPO as well as access to the privates you want, combined with an extreme concentrated public long book is the most powerful combo out there right now. But only if you adhere to strict concentration limits and always force yourself to exit something marginal when something great presents itself. If the plan is to always just accumulate fallen angels, returns will asymptote to the indices or worse.

[Eric Li @ogrowthinv42]

@SubletterNYC Anyone subletting for the fall semester (mid-aug to mid-dec)?

[Eric Li @ogrowthinv42]

@_sonith Let’s connect!

[Eric Li @ogrowthinv42]

@cory @reply yes! sign me up!

[Eric Li @ogrowthinv42]

@oprfhsdebate 😊