
A Goat Farmer Built a Doomsday Machine That Just Booked a 4,144% Return - rchaudhary
https://www.forbes.com/sites/antoinegara/2020/04/13/how-a-goat-farmer-built-a-doomsday-machine-that-just-booked-a-4144-return/
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lordnacho
Funnily enough the "trick" with this kind of fund is to be able to survive
good times.

A firm I ran actually had a fund that did what's described here. In fact Taleb
himself came to visit us.

Your main problem is you're selling a lottery-like return. The professional
investors that you meet would have to explain to their committees every month
why they're losing money. If a collapse happens every 10 years, there's a
while between.

So then your problem is "How do I credibly demonstrate that this strategy is
worthwhile, and that I'm the best guy to do it?". Because this isn't going to
be the only fund offering this kind of protection.

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thoughtstheseus
This is so true. What’re your 1yr, 3yr, 5yr returns and vol? In these
strategies a consistent track record makes no sense because you’re planning
for events with different magnitude of impact and frequency than the norm.

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spanktheuser
Imagine if the market incentivized intelligent people to build useful things
rather than lotteries on top of known cognitive weaknesses. As one commenter
pointed out, the trick isn’t identifying or executing this strategy. It’s
having the ability to brand and sell it in such a way that the investment
seems palatable to pension and sovereign wealth funds. No mean feat but I
struggle to find it admirable.

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pdog
Capital allocation is hugely important for a modern economy.

Without financial markets, intelligent people would barely have any idea what
to build (let alone raise capital necessary to finance their innovations).

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sjg007
It's actually not. We weren't remotely prepared for the pandemic which is
laying waste to people and the economy. That's a complete failure of the
modern economy.

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valuearb
In what way was the economy unprepared?

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cgranier
Translation: Hedge fund manager bets on financial catastrophies, wins big
because of Coronavirus pandemic.

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pdog
The challenge is surviving long enough to score a meaningful payoff.

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anotheryou
Be rich to get richer, as usual.

For certain risks you sadly need a certain financial security, same for
launching startups. I'd love to be a founder, but I need a stable income for
two.

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kombucha111
Correction Northport is not in the Upper Peninsula of Michigan, its squarely
in what is considered the Northern Lower Peninsula.

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londons_explore
How do these guys handle counterparty risk?

You might theoretically have made a bunch of cash when the markets crash, but
that's exactly the time a bunch of financial companies go bankrupt and can't
pay out.

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raincom
kelly criterion is at work.

