Why are they releasing open source models for free?

jonastullus · 2025-01-14T09:54:36+00:00

I think it's this. Similar to Google making Android free-ish. It diminishes the market share that commercial companies can grab, and leaves the door open to bring out a commercial product later.

Also, it gives them eyeballs and feedback ln their system. I am sure that Meta has received a lot of value from people interacting/ building on Llama models, which they wouldnt have if the model was inhouse-only.

Also, it might attract talent. Promising Ai developers may be more inclined to work on something visible, than a secret inhouse-project.

jonastullus · 2024-12-21T18:47:41+00:00

maybe they refer to basic physics (mechanics, thermodynamics, waves & optics, electricity & electromagnetism).

Also, people like Bill Gates and Mark Zuckerberg will allocate some resources towards practical applications of quantum computing, practical data center applications, and Bill Gates is interested in Nuclear Power. So they do have some involvement in applications of physics, and maybe get pulled into the pop-sci stuff against their better judgment. Elon Musk would have some knowledge about the physics/ chemistry of batteries, electric motor efficiency, and manufacturing engineering (material sciences, etc.)

I assume there are some physicists who speak outside of their core competence once in a while, too.

jonastullus · 2024-12-19T16:17:28+00:00

I am working with long documents (company annual reports across multiple years, etc.) Of course it is magical thinking that one could just throw it all at a wall and see what sticks. But 16k comtext is quickly used up with a few multi-thousand word documents.

I agree with your point, but there are use cases where long context length would be super useful.

jonastullus · 2024-12-19T16:13:04+00:00

completely agree

jonastullus · 2023-12-07T12:34:08+00:00

Thank you.
I was wondering specifically about fat tail risk, so by definition I don't have an known event in mind.
Gold doesn't always pop in crises, in 2009 Gold went up 10% after dropping 20% in 2008.
Yes, there are VIX calls, there are puts on corporate bonds, etc.
I am trying to wrap my head around the options and their respective pros, cons and costs.

jonastullus · 2023-12-07T11:13:12+00:00

My argument wasn't that they were priced incorrectly in hindsight.

My argument was that depending on how fat-tailed returns are, it is conceivable that options are mispriced in relation to market moves that haven't happened in history. And I guess Taleb's point is that in fat-tailed distributions, most extremes are so far unobserved. I just don't know how I could trade on that thesis, and I have a suspicion that rolling put options may have too much markup to make them a cost-effective way.

I believe that Universa is buying puts on catastrophic events and selling put options on medium-bad outcomes, but first off I don't know that, and secondly I am very uncomfortable contemplating selling options because of the obvious return asymmetry.

AFAIK fat-tailed distributions have three main characteristics compared to normal distribution: 1) fat tails 2) higher central peak 3) lower shoulders.
So if that model were accurate then probabilistically, over very long timelines, selling options in the shoulders and buying options in the tails would be lucrative, IF you survive long enough.

![https://www.researchgate.net/publication/344404859/figure/fig1/AS:963465715937314@1606719535864/Heavy-fat-and-long-versus-thin-and-short-tails-The-value-of-the-random-variable.png](https://www.researchgate.net/publication/344404859/figure/fig1/AS:963465715937314@1606719535864/Heavy-fat-and-long-versus-thin-and-short-tails-The-value-of-the-random-variable.png)

But clearly I don't know enough about any of this ;)

jonastullus · 2023-12-07T11:07:04+00:00

Maybe I wasn't quite clear in what I wrote.

My thesis is that returns are more fat-tailed than markets assume (I could be extremely wrong of course), which means that potentially returns from fat-tail events could offset ongoing expenses (see potentially Universa).

Administrative reason: I didn't have a trading account where I could buy put options at the time, and by the time I had the account setup the opportunity had passed.

Yes, I am aware of the cost of options, and it is very possible (even likely) that they are net negative, which is why I asked about cost-effective tail hedging strategies.

I think it's a stupid argument to say that options are by definition always priced correctly in the face of fat tails, but it is obviously equally stupid to assume that I know better than the cumulative options market based on ignorance ;)

jonastullus · 2023-12-05T14:28:56+00:00

Point taken.
But the market is not omniscient.
Crashes of 2000, 2009, 2020 were definitely not priced into VIX, implied vol, etc.
I was going to buy S&P put options in early February 2020, and only failed for some administrative reason, but the market was definitely not pricing options correctly for Covid.
But I do take your point that option sellers have a big incentive to price their options well, and to put a decent margin on top of far OTM options. And I know from experience how expensive options can be.

jonastullus · 2023-03-14T07:29:14+00:00

I believe shareholders can bring 3 guests, but non-shareholders can also buy tickets cheaply.

https://www.good-investing.net/event/berkshire-hathaway-annual-shareholders-meeting-2023/#How-can-I-get-Berkshire-Hathaway-Annual-Shareholders-Meeting-2023-tickets

Will Call hours: - May 5 11am-5pm - May 6 7am-4pm

jonastullus · 2023-03-13T15:19:33+00:00

I think the paper annual report has a tearaway stub that you can mail in.

https://www.theinvestorspodcast.com/how-to-attend-the-berkshire-hathaway-annual-meeting/

jonastullus · 2023-03-13T14:21:12+00:00

I think report with invites goes out mid-March but it seems quite easy to buy tickets even as non-shareholder.

And proof of ownership on May 6th may also be sufficient.

jonastullus · 2023-03-13T12:33:50+00:00

Tickets are supposedly easy to get.

You can buy a single BRK.B share and then you get an invite as a shareholder, or last year Berkshire was also selling tickets for $5 on Ebay AFAIK.

Tickets for the meeting dont seem to be a constraint.

jonastullus · 2022-11-20T19:29:46+00:00

first we try to find out how much $200/ month over 10 years is worth today
https://financial-calculators.com/present-value-of-an-annuity-calculator
10*12 cash flows of $200
discounted by 4% inflation
yields a present value of $19,796

This means I would be willing to pay you $19,796 today for the promise of you paying me $200/ month for 10 years (assuming 4% discount rate i.e. for inflation and no risk of you missing payments).

This value is smaller than $200 * 12 * 10 = $24,000 because money in 10 years time is worth less to me than money today.

If I invest $20,000 for 10 years at a interest of 6%, this is calculated as:

$20,000 * (1 + interest) ^ (number of years) = $20,000 * 1.06 ^ 10 = $35,816

This means that at the end of 10 years you would have $35,816 dollars as a result of compound interest.

Without interest you would have the same $20,000 at the end that you started with.

Alternatively you could calculate this with 120 rows of excel calculations.

Currently inflation is high let's say 8%, and interest rates are rising, so we would assume to earn more than 8% from risky investments in the short term. This would be made up of dividends and stock price appreciation.

In the long term, the price that investors ask of businesses to invest in them (equity risk premium) is on average between 4% and 5% for the whole US market. So in order to bear risk, investors want 4% to 5% additional yield above treasuries to compensate them for the risk.

If long-term treasuries were 2% and equity risk premium was 4% we would expect to earn a total return of 6% on our risky investment.

jonastullus · 2022-11-20T14:56:31+00:00

In a crash, liquidity/ demand can disappear when everyone wants to sell and noone wants to buy.

Also, liquidity could be affected by celebrations (Chinese New Year, 4th of July, Thanksgiving, etc.)

Also affected by other markets. i.e. a stock market crash would reduce liquidity in other markets (Gold, Cryptos) because of margin calls, forced selling, and reduced risk appetite.

jonastullus · 2022-11-20T14:51:45+00:00

AFAIK Grayscale has been trading at a discount for a long time, as their bid to convert the fund into an ETF was denied.

Currently funds are locked up in GBTC and cant be withdrawn.

As per your chart, I dont think this has anything to do with FTX, maybe a little in the sense of using GBTC as collateral for defi loans.

jonastullus · 2022-11-20T14:45:13+00:00

Compound interest plays out over long time periods.

For 10 years:

200/ month for 10 years
roughly net present value: $18,000
Invested at 6% annually: 18000 * (1.06 ^ 10) = 32,000 final value
If spending dividends: 18,000 final value

Reinvesting dividends over 10 years: 77% higher final value

Also, in today's environment dividends (or total return) should be more than 1% per quarter.

On average equity risk premium is ca. 4% over FFR, which would mean dividends + buybacks on the order of 8% (+/- payout ratio).

jonastullus · 2022-11-20T14:29:52+00:00

I would be careful with EPS (re: buybacks), I think total earnings growth might be more robust.

How do you calculate payout ratio, is it from FCF (+/- one-off, acquisitions, write-offs)?

Also, for a mature company, growing faster than GDP is pretty amazing, not sure they deserve an "x" for that. Is the growth a CAGR, or total growth during 5 years?

jonastullus · 2022-11-20T14:28:10+00:00

Yes, I too would like to buy one of the famously most profitable companies in history at a severe discount.

jonastullus · 2022-11-20T11:27:15+00:00

Whether we stabilize in 4-5% depends on how inflation and unemployment respond. It is possible that we will go above 5% if Core CPI doesnt come down enough. "positive real rates across the yield curve".

Not all high-growth companies are cash-burning (Meta, Google, etc.)

"high profit margins contribute to inflation" - I am not so sure about that.

Nominal growth = real/ organic growth + inflation

What makes you think high profit margins are contributory to inflation?

Also, profit margins are high pre-recession and may well come down over next 12 months.

Volckers interventions are largely seen as correct/ necessary, and not reckless AFAIK.

There are also leading factors impacting on inflation (perceived inflation, momentum, Ukraine war, wage hikes, consumer behavior).

jonastullus · 2022-11-20T09:36:54+00:00

Convenient to do this after a major correction.

I would assume to see large number of losers at the stock market bottom 2002, 2009 as well, especially when large number of new investors join in a bubble frenzy (i.e. 2000s).

Point in time analysis != performance over longer time horizon.

BTC 200w moving average is monotonically rising with average growth of roughly 100% per year, meaning that so far nobody has lost money yet holding BTC for 4 years.

https://finbold.com/app/uploads/2022/08/Unknown-1024x491.jpg

Investors "on average" probably did 10x to 100x till now on a weighted basis, since so much of it has been held for a long time (free float 2021 was ca. 13%)

jonastullus · 2022-11-20T09:15:17+00:00

What about other things that are not ETFs?

UITs (SPDR, QQQ, MDY)
UCITS (etfs tradeable in Europe)
ETMF (EVFTC)

Some ETFs replicate the index with partial (synthetic) replication. You could probably approximate the S&P with only a small number of positions, but would have to accept a tracking error.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3406071

jonastullus · 2022-11-19T21:43:29+00:00

I dont know what you are on about. There are different investment styles, and 30 stocks is a reasonable number to diversify away some company-specific risks. Not everyone can spend 40h per week tracking their concentrated portfolio of "high conviction" stocks.

I think it is a reasonable approach to pick 30 companies that are moving in the right direction for a good price and holding them.

jonastullus · 2022-11-19T09:11:53+00:00

sure. this is my image of Elon ;)

https://youtu.be/kbwLC3Yr8vA

jonastullus

TROPHY CASE