One strange thing I noticed in myself in the beginning of my career and among other young investors is the tendency to size too small on ideas with conviction, and size too big on ideas with lower conviction.
It's counterintuitive but it seems common.
1/x
"Dammit I should have sized bigger! I had a strong thesis. I don't know why I didn't."
"Why did I bet so much on this? It's all XXX's fault for fomo'ing me into this."
Statements like this are manifestations of the above.
2/x
I suspect the root cause is having low confidence (a function of lack of track record).
You want to think you're smart, but deep down you believe luck is a better driver of your success.
When you size big and get lucky, it's a win! But if you don't, you're simply unlucky.
3/x
Conversely, if you size big on a high conviction idea and end up losing badly, you attribute this failure to your skill.
You think your talent is the only reason you are here, so you'd rather avoid the possibility of having it invalidated by sizing small.
4/x
This is *kinda* similar to how professional tennis players deliberately "tank" a match that isn't going great.
Patrick Mouratoglou (Serena William's coach) attribute this to players preferring to tell themselves they didn't try hard, rather than they weren't good enough.
5/x
I don't know if there's a term for this behavior, but a good way to counter this in a team setting is to create a culture where mistakes are not punished, but failure to learn from them is.
6/x
Another idea is to also celebrate wins to help build up confidence for those who lack it.
Caution can be taught but conviction must be cultivated through encouragement, experience (or delusion lol).
7/x
Most important imho is to document wins and losses in detail.
This helps you understand the actual drivers of each success and failure beyond subjective interpretations of skill and luck.
8/x
Or if you don't want to bother with the above, just build a good track record and the problem will resolve itself.
/fin
p.s. and if you get too cocky from a string of wins just re-read Fooled by Randomness lol
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Synthesizing the AMM vs. CLOB debate going on currently.
These are unrefined thoughts and there are much more informed MMs, LPs, devs out there than me.
So feel free to tell me if I miss anything!
1/ First:
I think it's important to think of what you can/cannot do with either to figure out what the USP is for both. Apples to oranges if compare AMM IL with CLOB spreads.
2/ AMM's gamechanging feature #1 is anyone can be a market maker + earn passive fees!
Most people who fit the LP profile probably don't care too much about IL unless asset prices diverge significantly over time, in which case fees need to be sufficient to cover.
Short sellers have been getting a lot of flack on Twitter lately.
While I'm bullish about crypto/ DeFi, here's a devil's advocate take on shorting 101 and why it's not as evil as crypto twitter make it seem to be.
Obviously not financial advice, just personal opinions.
1/ There are a lot of misconceptions about shorting. It's seen as "manipulative", even "evil".
In a space where most retails are long-biased and only want number to go up, shorting is seen as something conniving and devious hedge funds and traders do to "screw over" retails.
1/ First let's set the stage: August has been a phenomenal month for DeFi bulls.
Now we're in the hangover phase of the DeFi party, with the DeFi perp on @FTX_Official pretty much completely retracing the August froth back to square one.
2/ Amidst the rout, there's clear signs of flight to quality in yield farming.
Despite the modest returns of "only" 20-30% APY, Uniswap accounts for ~70% of all TVL in yield farms even as a new farm.