Thread by @AlamedaTrabucco

I went to school for math. I got trained in quant trading, and eventually shifted to quant trading in crypto. Over time, I've relied less on math and more on intuition, e.g. for analyzing Elon's tweets.

Yesterday I looked at ... cartoons? for 4 hours.

A thread about adapting.

I've talked before about how Alameda really only has one goal: make money trading. We trade crypto because we have edge doing so and believe it to be the best use of our resources, but if e.g. sports betting became big enough we'd probably focus 1/3 of our time on it or whatever.

"Crypto" is not monolithic, of course. Our edge has historically come from a few places -- having infrastructure in place to execute short-timescale arbs and spreads and having good intuition about market structure -> make good delta bets have been two of the bigger sources.

Occasionally, a big opportunity pops up which is nothing like that, though. A few examples:
- 2020 election trading (relevant because it was on some crypto exchanges)
- DeFi becoming huge

Each of those things represented an opportunity which:
- could make us a lot of $
- could leverage our skills and resources, albeit in a new way
- required us to spend time not focusing on our bread and butter

It's easy to scoff at something like that. "There's $ there, but we don't really have edge in it, shouldn't we just focus on what we're good at?"

And often that logic is right! The initial investment in getting good might be too high, maybe we're really NOT suited for it, etc.

Recognizing spots where the investment is good is critical:
- the election trading just required a few days of modeling to transform it into something v. similar to our usual trading
- DeFi was a lot of work, but the opportunity was HUGE -- and it's still going on / paying off

When NFTs started getting big, I will admit: I scoffed. "So they're just like, pictures? Why should I care? Even if there's $, how would I have any advantage?"

But man -- this opportunity has turned out to be BIG.

Am I especially good at recognizing which project will be the biggest, or which ultra-rare Ape attribute is gonna be the most valued a priori? Not really.

But it turns out, at least lately, NFT projects have just been January 2021-era DOGE again:

We didn't KNOW it was gonna go up -- but if Elon kept tweeting, the upside was SO HIGH it didn't really matter, it was still +EV.

These NFT projects are similar -- each will individually have some probability to skyrocket ...

... and some have definitely flopped. But the average one has just done CRAZY well, because a few have gone to the moon. That means if you don't know which are good? You should just buy 'em all, and each of those trades would have been good.

(You can of course do better by, like, having your nose the ground and knowing which are the most popular, or having good instinct -- I am operating from the perspective of someone who "doesn't get" all that, though I do like a lot of the art!)

Will this be true going forward? Genuinely not sure. I thought yield farming would be more faddish than it ended up being, and I've learned to update against trusting my instincts on these things.

We'll be trying very hard to predict whether this momentum will keep up and, if so, to follow it where it goes -- it's exciting to be living through what could end up being a huge paradigm shift for the media landscape, in any case.

A big lesson for us (especially for me) is not to trust my instincts about things I've learned I'm sort of naturally biased against. I ignored a lot of signs that NFTs would blow up, and lost out on a lot of initial upside.

(I'll never ignore @ParisHilton again)

Taking a flyer on new trends is probably just right a lot more than I give it credit for being true. After all, that's exactly what my decision to pivot to crypto was.

I'll be on the lookout for more spots like this moving forward -- nothing like a cheap lottery ticket.

Please note this is not an invitation to DM me with NFT suggestions!!!!!!!

Also the episode of @UpOnlyTV contributed a decent amount to my desire to look into this, thanks guys!