Taylor Pearson Profile picture
Into Complexity, Ergodicity, Investing, Ops, Biz, Crypto. Reality has a surprising amount of detail. Pirating @MutinyFunds. Writing @ https://t.co/2dNI2rNvVt.
Chiel Profile picture hgtp://Greg Kalus Profile picture Richard Winters MD Profile picture Pistol Bobcat Profile picture Cameron Priest Profile picture 43 subscribed
Nov 22, 2023 10 tweets 5 min read
Most investors today love them some stocks.

Indeed, U.S stock performance over the past century ( especially post-2008) has been stellar.

However, I don't think stocks are not as reliable of a long-term investment as many believe.

🧵🧵🧵 Looking at developed markets around the world from 1841 to 2019, we see a much higher probability of loss over a 30-year period at 12.1%.

Investors have historically had about a 1 in 8 chance of loss, only slightly better odds than playing Russian Roulette! Image
Nov 18, 2022 44 tweets 12 min read
For my next trick, I will attempt to explain how a misunderstanding from @SBF_FTX of the The St. Petersburg Paradox appears to have been a contributing factor in the (ongoing) blow up of FTX:

and the Ricky Bobby Criterion (Note: I am setting aside the fact that there are many allegations of fraud in this instance and you don’t really need to resort to the St. Petersburg Paradox to explain why fraud is bad, others have covered and will cover that issue better than I can)
May 19, 2022 4 tweets 1 min read
After AirBnB closed out their Series C raising $200 million in a round led by Peter Thiel’s Founders Fund, the AirBnB team invited Thiel to the office.

While there, AirBnB CEO Brian Chesky asked Thiel what was the single most important piece of advice he had for us? You’d think maybe it would be something about gross margins or network effects that you’d hear about in an MBA program. It wasn’t.

He replied, “Don’t fuck up the culture.”

This is perhaps not what you might expect from someone who just wrote a $150M check.
May 15, 2022 4 tweets 1 min read
Thinking a lot lately about time and path dependance as they appluy to economics and investing.

The whole ergodicity economics literature is obviously a great look at this.

What else should I read on topics like time/path dependance/sensitivity to initial conditions? I think in 20 years when we look back at what we got wrong about investing/economics, it will center on the notion of time.

Just haven't quite wrapped my head around what that implies 😅
May 6, 2022 16 tweets 3 min read
It's accurate to say "most people that got rich concentrated, most people that stay rich diversified."

But that does NOT imply that "concentrate to get rich and diversify to stay risk" is good prescriptive advice.

If you run some toy Monte Carlo simulations and compare a diversified Kelly optimal strategy to a variety of other more concentrated strategies then the diversified Kelly strategy will win in the long run.

Mar 9, 2022 14 tweets 5 min read
I hear this feedback a lot and here's some thoughts if you feel similarly...

I ran a boutique consulting business (read highly custom and not saleable) for five years and I still used SOPs extensively.

Examples of things I had SOPs for:

Sales call process, onboarding process, call note templates, biz diagnostic (300 checklist for my own reference of potential improvements)

More examples in screenshots.
Mar 9, 2022 21 tweets 4 min read
What makes a "good" culture?

Here's my best take: A good culture is one that is optimized to its business model and competitive environment. A 🧵 on what that means.

Amazon’s culture is famously “customer centric.”

This isn’t because they are particularly nice or anything. It is because Amazon’s business model has a strong, positive feedback loop for making customers happy as the image above shows.

More customers means lower fixed costs per unit sold for Amazon and more new third party sellers.
Feb 28, 2022 8 tweets 2 min read
I wish there was some concept of like a "close circle" on Twitter where you cold whitelist certain accounts for certain tweets.

(I think instagram stories has a similar concept) I would like to tweet about the Ukraine situation not because I have any idea whatsoever what I'm talking about (I don't), but because dialogue is an important part of sense making and a lot of that dialogue happens on Twitter.
Feb 25, 2022 15 tweets 8 min read
Like everyone else, I have been doing a lot of sense making around the Ukraine situation.

It prompted to think about different philosophies of history: How does history happen, what drives it?

Here's my attempt at a taxonomy of theories! 🧵 1. The @balajis tech theory: Technology is the dominant driver of history and we can best understand the future by extrapolating technological trends.

I would maybe add Vaclav Smil (at least as it relates to energy) and books like the Sovereign Individual into this camp.
Feb 21, 2022 7 tweets 2 min read
A simple but helpful framework I find myself sending around a lot: The Boston Consulting Group's Star Matrix

A short thread 🧵 A business that is the leader in a growing market is a Star business likely to offer strong returns for a long term.

Example: Paypal becoming the biggest online payment processor circa 2001. It was a market leader in a fast growing industry.

Action: Re-invest heavily
Jan 28, 2022 4 tweets 1 min read
There's a sense in which all of computing is merely a series of footnotes to the spreadsheet. On this note, I highly recommend Mitchwell Waldrop's excellent book The Dream Machine: amazon.com/Dream-Machine-…

Really changed how I thought about the role of computers in society and how to best use them.
Jan 26, 2022 12 tweets 2 min read
One major difference I notice between professional investors/traders vs. more retail focused one is that professional investors tend to talk and think a lot more about market (micro)structure as opposed to just "fundamentals." When I talk to more thoughtful retail investors (I am ignoring the YOLO crowd), their reasoning around investments tends to be (mostly) fundamental:

I like this stock/asset because I think the growth isn't priced in or because there's a supply squeeze, etc.
Oct 22, 2021 4 tweets 1 min read
Has anyone written about the idea of applying the Kanban philosophy more broadly than just a production line?

On a Toyota Production System kick right now and the general idea of Kanban (a tool to minimize waste) seems very generally applicable. However, trying to think about how it would apply a layer of abstraction above just a production line.

Like, say you have three priorities in a biz: design a new onboarding system, revamp a website, Hire a marketing person.
Aug 30, 2021 4 tweets 1 min read
Spent way too much time this weekend reading about couches for a new place.

My impression is that everything in the $1-3k range is manufactured in the same 1 square mile block (prob Shenzen?) and so it doesn't really matter from a quality POV. I.e. Crate and Barrel, CB2, Burrow, Article, West Elm all seem more or less interchangeable to me so just pick the cheapest one that you think is comfortable/looks good.
Aug 2, 2021 6 tweets 2 min read
@CoachCarter19 I think most people fail to accurately forecast the returns on buying a single family home in a way that factors in their time. @CoachCarter19 For people with flexible incomes (e.g. business owners or those advancing in their careers, there's a huge time component that goes into it that isn't appropriately adjusted.
Jun 17, 2021 9 tweets 2 min read
Inflation in Brazil from 1980-200 annualized at 250% and yet a Brazilian investor that converted 100% of their assets to gold in 1980 still lost 70% of their purchasing power.

Would seem to cast some doubt on how effective gold is against high inflation in a single country? Arguably, gold worked because an investor holding Brazilian fiat lost ~100% of their purchasing power so losing 70% was better than that.
Jun 8, 2021 17 tweets 4 min read
Occasionally, there is a saying that hits you in just the right way and just the right moment and you keep coming back to it over and over.

One of those for me is: Slow is Smooth. Smooth is Fast.

taylorpearson.me/interestingtim… The saying is widely attributed to the Navy Seals though many other military figures have made similar observations.

One of Augustus Caesar's favorite sayings was "Festina Lente" (Hasten slowly)
Jun 5, 2021 8 tweets 2 min read
One interesting thing with the Kelly Criterion is that it sort of necessarily shows you the importance of diversification.

Even with insanely good odds, you never bet a huge amount of your bankroll (I did a short explanation of Kelly here if you're unfamiliar)

Jun 3, 2021 9 tweets 2 min read
One of the interesting elements of crypto/digital currency that doesn't get talked about enough is the auditability of having everything being digital. Part of the 2008 GFC story that isn't as widely talked about was that a lot of the problems were not just that a lot of bad mortgages had been handed out (they had), but that it was all buried in giant paper contracts so no one know how bad (or not bad) it was.
Jun 1, 2021 14 tweets 2 min read
I think understanding basic game theory concepts like the prisoner's dilemma is really useful, but it leaves at least two important concepts out:

1. Reputation

2. Context Dependence. The gist of the prisoner's dilemma that [[Robert Axelrod]] showed was that by getting people to engage in iterated prisoner's dilemmas instead of one off, you promote cooperative
May 19, 2021 4 tweets 1 min read
I've never found a way to articulate it cleanly, but this is a really important point from Taleb's work (and others) that goes underappreciated.

If an environment is becoming more fat tailed, we would actually expect less variance in the short-term. It's got a Minsky-esque quality to it that more stability can actually suggest greater future instability.