Kris Profile picture
26 Oct, 15 tweets, 4 min read
I sometimes explain how I use boardgames as a tool to teach my kids. The unsaid assumption is that "transference" works.

Paraphrasing from Yale:

Transfer” is a cognitive practice whereby a learner’s mastery of skills in one context enables them to apply it in another.

🤔

👇
I see examples of this all the time. Consider @Alex_Danco letter this week (I'm a big fan of his writing btw).

He writes about using poker as practice for decision-making practice. In the past, he's written about bridge as the cooperative, strategic analog to SV culture.
Kasparov has tacitly taken advantage of the fact that transference is a thing, parlaying his chess acumen into authoritative political strategy writing.

SIG hires world-class poker, backgammon, Magic, and chess players. On the Amex I met world-class bridge & chess players.
SIG's training famously includes hundreds of hours of poker (ranked by Sharpe ratio), they host an annual firm-wide tourney, and won't shy from hiring unconventional misfits who are genius game players to learn options. (at least 20 years ago this was true)
Now strategic video game "transfer" is being advocating (Tobi Lutke, most famously on Invest Like the Best).

I'm inclined to believe in "transfer". CoVid blew up the boardgaming camp I supposed to do for a week for about 15 kids in my neighborhood. Transfer is assumed.
SIG has skin in the game when they spend time and money to train hires with games. And they are a brilliant company. Their offshoots believe this as well.

But this is an idea whose start and end is very fuzzy to me for a few reasons.
Thinking aloud. Transference is probably a thing.

But what are its mechanics?
What conditions of practice must be present to enable transfer?
What are the limits?
How do we decide how efficient these approaches are?
I've expressed my own bearishness on the use of video games, mostly because of what I think is opportunity cost.
moontowermeta.com/video-game-vet…
I tend to think the game skills are more symptomatic of an underlying aptitude towards computational thinking, abstraction, high attention span, memory, & being technical about rules/logic.

Tobi is really smart. I don't feel on solid ground to think he has causality backwards
But being good at some jobs can be correlated to being good at games because of genes not transfer.

I'm saying this despite wanting to believe in transfer. But the "this does not replicate" crowd is knocking.

I wish I had saved the links to other psych studies I've seen shared on Twitter (maybe @DegenRolf ) which think "transfer" is bs.

At the end of the day, industry seems to believe in it. There are opportunists who will seek to sell you something on its assumed existence.
The fact prop traders believe it is a weighty data point, they have nothing to sell you. The CIA uses games to teach computational thinking.

inversegenius.com/gsl-blog/2018/…

I haven't done a lot of research so if anyone has a survey of what academia thinks.
The games industry has a vested interest in transfer.
But a lot of that could be game-based learning where you can use games as a fun way to teach concepts you might have taught in a less fun way. This isn't really about transfer so much as putting the dog's pill in peanut butter
There are lots of cool resources for using games to teach. There are podcasts, forums, and communities devoted to this. Luckily, I don't think the merit of it all needs transference to be true for it to be worthwhile. It can just be fun ways to learn. But transfer would be sweet.
I'll end with a link to the gaming section of my site (it's mostly about using games as enrichment for kids).

Any resources, thoughts are all appreciated (I'm collecting links on the topic of games in learning as well as "transference", for or against)

moontowermeta.com/category/gamin…

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Kris

Kris Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @KrisAbdelmessih

28 Oct
Let's do dispersion trading for the uninitiated.

The vets will need to bear with me, it's been 20 years since i traded index anything...but that actually shows why it's a good thing to explain. The lessons from it come to bear on thinking about all portfolios, even today.
First what is dispersion trading?

In its purest form, imagine selling an index straddle and buying the components' straddles in proportion to the index weights. In practice, liquidity makes this impossible. Instead one settles for a "dirty dispersion" position.
The trade is "short correlation". It wants the average corr between the stocks in the basket to be as low as possible.

Imagine a 2 stock index. You own the straddles on the stocks and you are short the index straddle. The 2 stocks rip in opposite directions. The index is unch
Read 20 tweets
27 Oct
A thought on premium in options.

Index options should be "overpriced". The question is how much premium do they deserve.

If stocks warrant a risk premium over the RFR it's because their systematic risk cannot be hedged.
Index options must conceptually inherit this premium otherwise there would an arb in portfolio allocation.

A index option, held delta neutral, gets paid as correlations in the marketplace increase. It literally makes money when systematic risk embodies.
A standard for deciding if puts are expensive:

Its price should have enough premium in it that by buying a put, if delta hedged, that you would actually have basis risk. In other words, it's premium should make it uncertain that you would actually make money in a sell-off.
Read 5 tweets
23 Oct
Locking up your $$ to save you from yourself is a sales pitch in some parts.

I've said before:

"Any argument that says liquidity is bad because it exposes you to behavioral bias must address the value of that option."

Let's explore this.
First, why care?

Even if you want to lock up your $$ to "save you from yourself", that doesn't mean you don't deserve a discount for investing in something illiquid.

Your needs/preferences don't set the marginal price.

Don't be so vain, not everything is about you 🎶
The price of an illiquid investment are set by those who do care about liquidity even if you don't.

You inherit that discount the same way you get power windows for free nowadays. You get that even if you think you'd be better off with the exercise of cranking your own windows.
Read 28 tweets
15 Oct
A very humble thought on math in trading. I say humble because I risk straw-manning quant (look, I have yet to meet an IYI type quant that Taleb would caricature. I've been blown away by the curiousity and brains of every quant I've worked with). So with that caveat...
I look at backtests. But their useful domain feels really narrow to me. I'm not a quant so maybe it's just fear of what's over my head. I'll give an example of the type of idea that diverts my eyes from backtesty work.
I'm more attracted to ideas that are upstream of past moves. Understanding flows is an example of that.

How does it interact with backtests?

At the meta level. When I see a backtest and long histories etc my first meta question is about is N really N?
Read 9 tweets
13 Oct
Compounded returns experience "variance drain". This will be true if your bet size or allocation is a fixed percent of your wealth, savings, bankroll etc

Was messing with some coin flip stuff and got diverted by an illustration of geometric returns I figured I'd post...
First some quick intuition.

If you bet 1% of your wealth on a coin flip and win then lose, you are net down money. This is symmetrical. If you lose, then win, still down money.

1.01 * .99 = .99 * 1.01

This is compounding land
In additive or non-compounding land we bet a fixed dollar amount regardless of wealth.

So if I start with $100 and win a flip, then bet $1 again and lose the flip I'm back to $100.

The $1 I bet when my bankroll was less than 1% of my bankroll.

Additive world is not % world
Read 17 tweets
7 Oct
In @Jesse_Livermore interview he mentions how exceedingly high valuations are increasingly dependent on liquidity or what he terms "networks of confidence".

He refers back to prior work that shows how you'd need a healthy discount to intrinsic to buy an asset you couldn't sell
The fact that you can sell your at an in line price lowers your risk threshold to buy expensive assets.

And we see assets with long durations now. I think of duration as how long it would take to recoup your initial investment. Stocks and bonds have long durations today.
If these long durations are acceptable because we trust liquidity, and the idea that the market will not wake up one day and just reset at much lower multiples, it feels like risk that should be priced in an implied distribution.
Read 17 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!