Xavier Raju

sucker for intrinsic value

[Xavier Raju @xavierraju]

Anything soaked in complexity is far removed from the truth.

You do not truly understand ideas until you can explain them simply.

Everything is simple, and explainable from First Principles. Thus, everything is understandable and therefore knowable.

Learning is a function of time, like everything else in life. So it might take time, but it is all possible from First Principles.

When people make something seem complex or suggest it is beyond your comprehension, it is very likely they a.) don't know it themselves, b.) don't want you to know what they know, and are lying to you.

"The most elusive of human goals: keeping things simple and remembering what you set out to do" - Warren Buffet

"Take a simple, basic idea and take it very seriously" - Charlie Munger

[Xavier Raju @xavierraju]

@UnstructuredCap Some ppl just love the game....the meritocracy in investment research can be very satisfying if you're good at what you do, which you honestly can't do over the M-LT (3-5 yr) if you don't love it....and w/ AI there is SO much more a single analyst seat can unlock atlst for now

[Xavier Raju @xavierraju]

@FundamentEdge @khemaridh GOATs.....where is Mr. Carr?

[Xavier Raju @xavierraju]

@nutlope Thank you!

[Xavier Raju @xavierraju]

@marketplunger1 @ContrarianCurse UNBELIEVABLY good

[substrated @hardinmallow]

hi brett, big fan. here's a less glib version of my take. i agree w/ your definition of judgment, weighing unique views/insights and comparing ur view to what the market thinks. my personal view is that the next big unlock is probably not finding more creative ways to use excel with ai, it is finding a more sophisticated way to automate the judgement.

to step back quickly, to me, ai represents everyone having the same facts with zero friction, when everyone has the same facts, the near term gets priced faster and more accurately and the edge moves further from the facts at hand, and closer to what those facts will mean. the problem is that the tree branches the further out u go, competitors respond, capital comes in, discounts go up, regulators show up, mgmt manages to the stock, small changes have time to compound and rip up your base case and, oh, don't forget about timing, an excel model and its variations are usually just one path w/ have baked scenarios stapled on and the pm's gut is doing the weighing.... my view is that simulation could be the answer to how you actually map the distribution in a rigorous, auditable manner.

before ppl say 'excel can already do monte carlo sims' that is not what i am saying. the paths should interact. right now excel doesn't have a way to represent that. it was built for ppl typing assumptions into cells, and on occasion they would do a nice side build, and it was good enough for what investing was in the past that we just kind of accepted it because it got us 95% of the way there, now i think that excel has become a bottleneck for what investors can do, so we should probably start to think of ways to get rid of that bottleneck.

other industries/fields that deal with predicting complex systems moved past this a long time ago. weather guys run different models and read the spread, epidemiologists and supply chain ppl simulate agents to see how stuff plays out, i actually don't know what they do if i am being honest, but i know that there is massive toolkit out there that finance bros are not tapping into. fundamental investing really hasn't touched any of that bc building it took a team of engineers, and all of the good engineers have gone into tech for the last decade.

w/ coding agents that should change right? if i were you I would literally rebuild excel from scratch, keep what you mentioned (auditable, transparent, easy to visualize), and then find a way to let fundamental analysts leverage all of the advanced forecasting techniques that have been developed over the last 20 years. i.e. how can you build a system to start to understand the all of the interacting paths (where the scale comes in), you can see where outcomes cluster, where they split and how the whole distribution compares to what the price implies, which is exactly what you are talking about with weighing insights. great investor's heuristics work alright, but they are becoming commoditized quickly now that they can be hardcoded. like in chess, everyone can see the entire board now. the edge is reading further ahead, and past a few moves u can't calculate by hand.

simple example. today most analysts probably model a restaurant chain as some drivers for same store sales hopefully they have a thorough unit economics build and they plug in data sources to get their estimates for the next 2-4 quarters, AI can do that in 5 minutes, but the analyst doesn't have an easy way to do much more than that. they should be able to model the actual business: every store, local demographics, compare that to demographics with other ramps, what is the spread of the ramp curve, how does timing effect the PV, local wages, how traffic reacts when menu prices go up (for this demographic how much of their wallet share does it eat into, etc.), how much a new store steals from the one down the road on a product by product basis, and with all of that information all stuff that is very easy to build, but you have to build a platform that lets analysts do audit, check, etc.

but who knows, maybe jane street just builds a massive model and trains it on every source of information that a l/s investor would ever use and any extra work to codify an investor's inductive bias is useless!

and maybe i was being too harsh on the talent point, you just need to actually want to try to do stuff like this, very easy with AI.

hope this is somewhat helpful and not just jibberish, always happy to chat/dms are open

[Xavier Raju @xavierraju]

@bot Amazing 👏

[Xavier Raju @xavierraju]

@tenobrus 😂😂😂😂😂

[Xavier Raju @xavierraju]

my forecast is that 10-20 years from now, 'Stock Picker' will be in the league of MoS and SA....@iancassel is truly a legend.

[Ian Cassel @iancassel]

I really appreciate the reviews 🙏

[Xavier Raju @xavierraju]

@__paleologo Thx, pre-ordered

[prathosh A P @prathoshap]

The video above was the Pūrvapakṣa - the questions.

Here is the Siddhānta - my answers.

Does the world change? Absolutely.

Do we adapt? 100%.

And ultimately, intelligence is not what makes us human.

Our ability to care for others and solve for others does.

Prathosh.

[Xavier Raju @xavierraju]

@beffjezos 😂😂😂

[Xavier Raju @xavierraju]

@vijayshekhar You would short fixed income, when yields go up...

[Xavier Raju @xavierraju]

@chamath 👏❤️

[Xavier Raju @xavierraju]

@bubbleboi

[Xavier Raju @xavierraju]

@JohnSlagboom1 @beffjezos it's amazing

[Xavier Raju @xavierraju]

@FinanceLancelot Was arbitrarily picked as a pragmatic target by the Kiwis

[Xavier Raju @xavierraju]

@FundamentEdge Thanks for sharing, Brett

[Xavier Raju @xavierraju]

@bubbleboi 😂😂😂

[Xavier Raju @xavierraju]

@FundamentEdge AMEN

[Xavier Raju @xavierraju]

@mjmauboussin @pjmauboussin @PTetlock Thanks you, Professor! This is amazing! And thank you, @pjmauboussin!!