1/ So much of VIC, b school, allocator dd, the press, chatter among aspiring and existing HF players alike, fintwit and elsewhere centers on differentiated opinions and to some extent the differentiated expression of ideas coming from those opinions.
2/Alpha comes from portfolio and risk management of ideas, not the ideas themselves. The difference between being clever and making $ is what you do not what you think. Opinions are worthless.
3/ Investing involves digging, thinking and acting. Thinking and acting without digging is reckless. Digging and thinking without acting is useless. Acting without thinking or digging is just plain stupid.

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More from @pmje73

2 Feb
Another thread on shorting. 1/ I get that short selling is not popular. Winning because someone fails is a tough sell, especially when the prize is solely $. It adds nothing to society. Or does it?
2./ first though, is shorting really different than gambling which everyone loves and is increasingly legal? Praying for a missed field goal or free throw is ok but not for missed EPS? The point is, shorting, like gambling, is zero sum. Zero sum games have different rules.
3/But again, I get it. If you have an abundance mindset vs a scarcity one, you don’t want to actively bet on failure. Long only or venture investing is consistent with abundance theory. You like to bet on winners and growth and optimism.
Read 9 tweets
28 Jan
@ROIChristie Hedge fund math for dummies - 1/tiger lineage = $1.20 to $1.40 of long exposure for every $1 of capital and $80c of short exposure for $2 of total “gross exposure” and 40c of net exposure.
@ROIChristie 2/ market neutral - $2-3 of longs and $2-3 of shorts for every $ of capital for $4-6 of gross and $0 net but net is considered beta/factor risk 0.
@ROIChristie 3/ high octane new wave managers - $2 of long and $1.20 of short for every $ of capital for $3.20 gross and $0.80 net. Spicy risk taking.
Read 4 tweets
26 Jan
a thread 1/It is not inconsistent to say “I love shorting stocks” but “hate managing a short book”. Let me explain.
2/Shorting means going to a PB like GS and borrowing stock in a co. you don’t own for the purpose of selling that stock. GS makes a lot of $ lending stock. Big liquid companies “cost to borrow” are a few bps but illiquid hard to borrow shorts can cost 50-90pct per year to borrow
3/All "hard to borrow" shorts IMO need to have a liquidity event in the thesis to make it worth the risk. Sometimes borrow can be recalled causing a squeeze and sometimes the cost of borrow can rise dramatically. And sometimes you can get a massive short squeeze.
Read 12 tweets

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