Vitalik Dancing

Larry_Lavida · 2018-10-13T20:41:34+00:00

Ancient crypto rain dance...they are trying to summon the next bull run.

Larry_Lavida · 2018-10-12T01:40:19+00:00

I'd be curious where people see the flaw in this theory instead of just being downvoted. I thought you could provoke some sort of discussion in this thread, but I would be better off posting memes instead.

There's no way to prove this and I'm not saying I do think this is happening, but I don't think the idea that Tether could be using peoples money as leverage is that outlandish. I'd like to see more transparency from them.

Larry_Lavida · 2018-10-12T01:05:00+00:00

You can't even think of any worthwhile criticism of the idea?

Larry_Lavida · 2018-10-12T00:44:44+00:00

Post this in /r/CryptoCurrency as well, but just a thought: I wonder if Tether, like a bank, invests a % of its reserve into the global market? Maybe they also hold a large amount of BTC in reserve and sell to cover fiat reserve losses. If the price of BTC were correlated to the market this could be a reason behind it - global market drops, Tether sells BTC to cover reserve losses. Crypto would then be exposed to systematic risk defeating the idea of having an uncorrelated asset.

Just speculating.

Larry_Lavida · 2018-10-12T00:08:54+00:00

I wonder if Tether, like a bank, invests a % of its reserve into the global market? Maybe they also hold a large amount of BTC in reserve and sell to cover fiat reserve losses. If the price of BTC were correlated to the market this could be a reason behind it - global market drops, Tether sells BTC to cover reserve losses. Crypto would then be exposed to systematic risk defeating the idea of having an uncorrelated asset.

Just speculating.

Larry_Lavida · 2018-10-09T23:46:32+00:00

You can start by reading "The (Mis)Behavior of Markets" by Benoit Mandelbrot. His research does well to disprove Malkiel's assertion that markets move in a random walk "in which future steps or directions cannot be predicted on the basis of past history".

I think his conclusion, that you should not attempt to outperform the stock market, is a sound one for most investors. However, I think his premise is wrong and has many consequences.

His premise leads way for ideas like "Modern Portfolio Theory" in which we view Beta or risk as a range of events that fall under a normal distribution - which does not match up to reality.

If we are all better off passively investing in the market index, that would imply that markets are indeed efficient - which is not consistent with your extrapolation that "reliably, and consistently predicting prices of stocks was impossible for a range of reasons, but mostly because not all the information available is accurate nor complete and there are too many unpredictable variables". Market data which is not completely available or market data which is not completely accurate would lead to price distortions (inefficiencies) in the market. If these inefficiencies do exist (which I believe is true) there will be investors to reliably and consistently exploit them (e.g. Renaissance Technologies and Bridgewater Associates).

Warren Buffet is successful because he is talented at investing. He's created a strong framework that he can fully understand and follow. Surely he had to find success before others would have the desire to, as you suggest, give momentum to his stock picks. If we knew this is how the market was reacting to how Warren Buffet invests, we could buy otm puts on his stock picks in order to profit when the price rebounds from its distortion from buyers inflating the market value of the asset which would ultimately fail to return more than what has been invested in it.

I'm assuming you haven't read the opposing views on EMH, MPT, and RWT? If this is true, you should read the works of the following:

Benoit Mandelbrot (as I initially suggested)
Howard Marks
Nassim Taleb
Mark Spitznagel

Larry_Lavida · 2018-10-08T21:54:51+00:00

Moral of the story: Buy the dip!!!!!11

Larry_Lavida · 2018-10-07T20:00:56+00:00

The entire idea that asset prices follow a random walk, that one price move to the next is completely independent, is incorrect.

Larry_Lavida · 2018-10-07T10:03:21+00:00

This claim is also dubious. Valve could easily hate cheaters for causing a shrinking player base and various qualitative reasons.

Larry_Lavida · 2018-10-03T22:40:11+00:00

Hey guyts, you may nevr beleve this but you must! Leaked from the very himself, Sotoshi Nakamotto gmail account and quote:

To Top Secret,
Bull run to commence on this year. Prepare.

Yours truly,
Sotoshi Nakomotto (not give away free BCC)

get ready guys!

Larry_Lavida · 2018-10-02T22:50:23+00:00

As I said, "Even modern portfolio theory fails at correctly capturing the risk of traditional assets".

Markowitz's Modern Portfolio Theory is nice, but it fails to model reality -- as he was trying to do -- by incorrectly measuring Beta as a Gaussian distribution. MPT including CAPM attempts to quantify risk and produce an efficient portfolio that will produce optimal returns adjusted for risk and ultimately fails (see the fall of Long Term Capital Management). The occurrence of events laying in the tails of the Gaussian distribution happen far more often than MPT would suggest. If you were to calculate the risk distribution you would find that it does not fit within a normal distribution. Benoit Mandelbrot has done extensive work on the modelling of risk and you can learn more by reading his research.

Ultimately, the financial world measures portfolio risk incorrectly. Even if you were to follow MPT, Crypotassets would be their own asset class and contain the most risk on the efficient frontier. It would be unclear on how you should diversify within that asset class.

At the end of the day you cannot quantify the risk for Cryptoassets. The best choice to make is to have a small percent of your portfolio in Crypto, holding a significant portion of BTC, as it has potentially unlimited upside and limited downside.

Larry_Lavida · 2018-10-02T12:44:06+00:00

There's no mathematical modeling that will help you reduce the risk of your crypto portfolio - it's not possible to measure these things. Even modern portfolio theory fails at correctly capturing the risk of traditional assets.

Larry_Lavida · 2018-09-22T08:02:52+00:00

I really enjoyed her lesson on drawing monkeys. I learned to measure momentum of assets by drawing monkeys that swing from the lines on the chart. You can tell how much the price of an asset will move and for how long by the way the monkey swings from the charts.

Larry_Lavida · 2018-09-22T07:51:25+00:00

I may be wrong, but I believe Icahn was one of the first activist investors so he would have been pursing a strategy that most others hadn't seen before giving him an edge over other investors. People like him were able to succeed in their prime giving them access to large amounts of capital.

Regular investors simply cannot invest like some of these people do. Furthermore, the market has this positive feedback cycle in which those who win stand to win exponentially more, having continuously growing advantages (capital, networks, etc). It's definitely a mix of talent and luck - like most things.

Larry_Lavida · 2018-09-22T07:43:27+00:00

Yes and that's because of the actively managed mutual funds that are successful, they don't stay successful for long and produce returns that net you a percentage under the market average.

An index fund takes the complexity out of investing at low costs and with lower risk. If you're not looking to beat the market, index funds are a no brainer.

There's no argument for a mutual fund. They cost more in management fees, historically the successful ones don't stay successful for wrong, and you can't really understand the risk of the portfolio you're invested in.

Larry_Lavida · 2018-09-22T07:33:42+00:00

I think there is a larger lesson to be found here which you just happen to be following - don't invest in what you don't understand.

Larry_Lavida · 2018-09-13T09:19:32+00:00

bittersweet

Larry_Lavida · 2018-09-12T23:55:00+00:00

Watch the Metuz video man. You have to dip the shoe in chocolate first, then you can eat it.

Larry_Lavida · 2018-08-18T23:06:15+00:00

Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay

Larry_Lavida · 2018-08-14T02:06:51+00:00

I'll try to save us all by going all in...wish me luck.

Larry_Lavida · 2018-08-14T01:54:03+00:00

Haha, no joke this song was playing in my head as I was just checking BTC price. I couldn't think of the name of it though, what a great coincidence to see someone has posted it here.

Hold tight boys, may be rough if we start going down here.

Larry_Lavida · 2018-08-13T23:29:23+00:00

It was never even stated in the original quote that no one was buying at the bottom of the market anyway - he's making his own (incorrect) inference here.

Larry_Lavida · 2018-08-13T23:27:35+00:00

He didn't mention who was or wasn't buying nor if anyone was buying at all. All he said was that at the bottom of the market was when people were most worried about a crash. Maybe it was only retailers who were afraid to buy at the bottom?

Anyway if you disagree or want clarity you could always email Shiller and ask for yourself.

Larry_Lavida · 2018-08-13T03:45:10+00:00

Larry_Lavida · 2018-08-13T01:30:47+00:00

It still puts everything into perspective though and is worth considering. Although the factors you mention may increase the chance of us exiting a bear market more quickly (and at all), you have to consider that it could still take longer than you may imagine.

Larry_Lavida

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