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Macropotamus

@macropotamus

11 Jun

@FT

There are a couple lessons here. The first one is risk management, and the second is the setting yourself up to adapt quickly and pivot.

US hedge funds Melvin Capital and Light Street suffer further losses via @FT
on.ft.com/3iuvVsb

When a position goes against you, especially one with the potential of unlimited loss, you need to quickly identify the driver of the adverse movement, and strategize your exit or next step. My bias is that if you can't control the risk, better to exit than torture yourself.

Adapt- you don't want to bind yourself to a certain style of investing or trading. As the world and the financial markets continue to evolve, you need to as well. The ability to quickly adapt and ride the new tide is key to long-term success.

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Macropotamus

@macropotamus

16 Oct 20

One thing I keep thinking about is that as consensus sees wider deployment of vaccines as the only path to normalcy (sometimes next year), what would happen if we return to "normal" with only better hygiene, test/trace, treatments, and the sheer desire/will for community?

What would happen to the risky assets in this case? How would different asset classes perform? How would sectors within an asset class perform relative to each other? How would you isolate and validate this thesis?

Well, OK, two things. With lower long-term expected returns but unrealistic target returns, as institutions expect continued accommodative policies and move out further on the risk curve, will they become the persistent dip buyers that prevent big drawdowns over the medium term?

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Macropotamus

@macropotamus

16 Oct 20

House hunting and home renovation shows set unrealistic expectations and insidiously alter viewers' priorities in life. Having a "perfect" home =/= happiness.

I avoid them.

Same way I throw away my Bloomberg Pursuits.

The older I get, my view is moving towards "don't let what you own owns you”.

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Macropotamus

@macropotamus

15 Oct 20

Equity investing:
As I continue to improve on my selection & shift my focus on names that have potential to surprise to their upward fundamentals, the discipline of selling & trimming winning positions (on valuation, sizing, lack of catalysts) keeps making me feel like an idiot.

It was "easier" when I covered cyclical sectors or traded turnaround names or companies going through changes (industry, company specific). More predictable, or said differently, less room for imagination about these companies.

With fast growing companies, it becomes tricky. I would often miss at least half of the upward movement (latter part) as fundamental stories change (outlook expansion), followed by increase in speculative interests.

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