Beeminder Forum

Beeminder diary, take 2

according to some sources that i’ve learned, more than 1.5 hours of learning would be worthless taking in consideration that our brain is too tired after this time, unless some exceptions when you have extraordinary powers. so yes, i assume that’s enough. there are different methods and recipes allowing you to learn more, but it requires knowledge, time and dedication.

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I spread it out, and regarding the methods and recipes you speak of - I’ve implemented my own language learning platform integrating a reader for immersion connected to a SRS system for vocabulary. All custom (except for mecab and the dictionary file).

It’s incredible how effective beeminder is for me. I’m not lazy, I’m just extremely akratic. The threat of losing a single dollar gets me from nearly 0 work per day to hours, consistently, everyday. That’s to me a (much needed) confirmation that it’s not laziness driving my work output. If I can keep this up, I’ll probably ask to write a guest post about it in a year or something, @dreev.

Drastic change in priorities. This is an extremely important moment in the markets, especially because I’m long/short (market neutral-ish to be more specific). Today, for the first time in my investor life, a market-wide circuit breaker halted everything for 15 minutes.

I’ve had like 10 days of straight profit because of pure luck and a slightly negative beta and slightly positive alpha. Also, being more or less neutral means that my daily moves are in the magnitude of 0.1-0.5% even if the market is down 10%.

But luck doesn’t cut it. Because of this, I’ve had beeminder’s support instantly bump up my daily financial study to 3 hours a day, from 30 minutes.

I’ve asked to also take some time off some other goals, but this is a big net increase, and I now have over 5 hours of beeminder work to do every day. It’s getting interesting now.

I need to learn as much about finance as possible. In the next days, or weeks, or months, we will finally start to see good businesses at a good price, and my understanding of accounting and finance needs to allow me to take those positions with conviction.

As the market keeps going down, I might want to increase my long exposure so that i am net long. But with being net long comes being influenced by market moves. It’s not going to be trivial.

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I spent an annoyingly long time on financial twitter today, to try to understand what was going on. Even with a filter that only shows tweets with >20 retweets, it’s still way too cluttered. I need to find a way to cut down on it.

I still have to count it towards my studying finance goal. What is a REPO agreement? I have no idea, but twitter just threw the word at me, so now it’s in my queue of stuff to learn. Arguably, most of my alpha currently comes from stocks pointed out to me on twitter.

I’ll “default” on my finance goal today. Got up too late, then evernote went down for hours, and then I dillydallied too much. Tomorrow it reaches my $5 cap, so things get serious for my tiny bank account :slight_smile:

I’ll use this opportunity to go to sleep at 22:00, and try to get up before 8 tomorrow, with the goal of being done with every goal in the first hours of the afternoon.

I’ll also migrate all my evernote stuff to a github repo because Just No. 3 hours of scheduled downtime WITHOUT WARNING for a service like this is downright irresponsible.

Melt! :heart: Thanks for saying so!

Super skeptical face! I can never decide just how strong a version the efficient markets hypothesis I believe in but definitely a version that precludes making money based on what stocks are buzziest on Twitter. I mean, there may be some signal there but surely it’s already priced in. I was debating these kinds of questions with my dad and brother recently and wrote some things down at http://doc.dreev.es/emh

Btw, I’m kind of in love with Matt Levine’s Money Stuff newsletter. (It’s paywalled on the web but you can subscribe to it free by email.) That guy really knows his stuff and makes incredibly boring finance topics hilarious / riveting / edifying. Reminds me of Slate Star Codex – such a good writer that I tend to read his posts even when I have no inherent interest in the topic he’s writing about.

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I’d love to debate this with you, if you’ll indulge me. :slight_smile:

I hate to say something in such a sure way, as if I had some kind of authority in the matter while I’m still studying the basics, and I also hate being sure while I’m wrong… but the efficient market hypotesis, whether strong, semi strong, super duper weak, is simply wrong, period. The only way in which markets are almost 100% efficient is arbitrage, eg 100 shares are worth the same as position consisting of a short ATM put and a long ATM call.

Anyway, but Warren Buffett seems to make insane amounts of money by disagreeing with the market.

You cannot evaluate the EMH by looking at the results of people who are long only. Their performance is just going to be dominated by beta, and if their performance is dominated by beta you can say “look, their equity curve looks just like the market’s!” but of course it does.

Look instead at the performance of Jim Chanos’ short only fund. 20 years, CAGR of +2%, but the market had a CAGR of 13% in the same time.

What gives? This shouldn’t be possible, right? If the EMH is even close to being true, the market should be pricing these stocks such that if you buy a bunch of them, you should make more or less money depending just on the amount of systematic risk you take, having diversified away idiosincratic risk. So, by definition, a portfolio who just shorts stuff for 20 years has to have negative returns, and big ones at that, right?

Nope.

And at this point you might be saying “hold on a minute, 2% is pretty bad! You’re just proving my point!” Just the contrary. In fact, I’m going to be a bit masochist, transcribe and plot it.

Chanos offres a short only fund if you want to hedge your own risk, a market neutral fund, or a 190/90 fund. They are plotted together with going long SPY either 1x or 2x.

Exercise for the reader: normalize performance by standard deviation, or calculate sharpe, or calculate sortino, and drawdowns for each of the strategies. Because another thing is, return% is not a measure of your results. I can make exactly 50% a year every year by selling extremely OTM SPY weekly puts, until I get margin called so hard they take my house last week. I can make more money as a long only (during the good times) if I invest in leveraged companies with lots of debt. (feel free to point out where the code is wrong if it is! it’s super simplified but should be reasonably close)

His track record is enough to disprove the EMH, but I’ll give you another example that disproves it :stuck_out_tongue:

People were paying 200x future sales for cannabis growers. People who grow crops are in the commodity business. They have tiny margins, the field is hyper competitive, there was no way to justify any price in the space at all. But there was hype, retail money, small floats and high borrow costs inducing short squeezes, and so prices were astronomical.

TLRY was worthless at $30 in 2018. It was also worthless at $100, or at $300, or when it went down again to $30. Today, TLRY is priced at $4. But here’s the thing: it’s not that the business of Tilray significantly changed, or that you couldn’t have predicted that its intrinsic value couldn’t be $300 any given day or in the future. It’s that the market was extremely irrational.

But even if you shorted $TLRY from day one (it’s “good practice” to start shorting when the cracks in the price action start showing, but let’s ignore good practice), with discipline and a small starting position you would have been able to add small bits all the way up, and you’d have made a good profit on it. After all, if you know the company is worthless based on financial statements and plain old common sense, you don’t need to adjust your thesis based on market price.

Third exhibit: my last month performance. I understand that it’s waaaaaaaay too small of a time frame to draw any conclusions, but if the EMH is true, with a beta of nearly 0, I shouldn’t have made any money. (I had a beta of -0.03 until friday, but that +10% market day just had to “ruin it” for me :P)

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