
Don't bet on the most likely winner - avoidboringppl
https://avoidboringpeople.substack.com/p/relatively-speaking-the-billionaire
======
jakozaur
It's contrarian article:

1\. In many tech area: networks effects and zero marginal costs creates
winner(s) take all. In that sense it make sense to follow the winners as
previously investors underestimated how big winner could be (e.g. Amazon,
Google, Facebook, Apple).

2\. Everywhere else: betting on underdogs that are mispriced is much better
strategy in long-run. See Warren Buffet got huge returns by looking at
fundamentals, but his strategy would not work well in tech.

~~~
baxtr
Exactly. Because if not, why isn't bing on par with google by now?

~~~
Retric
Bing does seem to be on a slow upward trend:
[https://www.statista.com/statistics/216573/worldwide-
market-...](https://www.statista.com/statistics/216573/worldwide-market-share-
of-search-engines/)

It’s still only 6% of global search vs 86% for google.

~~~
kohtatsu
I wonder how much of that is from dark patterns in Edge.

~~~
stormdennis
Do DDG searches count in Bing's percentage?

~~~
mrslave
I thought that DDG used Yahoo! Search under the hood exclusively (because...
why use more than one?). It turns out that it is a complex mix of resources
from multiple partners[0]:

> In July 2016, DuckDuckGo officially announced the extension of its
> partnership with Yahoo! that brought new features to all users of the search
> engine, including date filtering of results and additional site links. It
> also partners with Bing, Yandex, and Wikipedia to produce results or make
> use of features offered. The company also confirmed that it does not share
> user information with partner companies, as has always been its policy.

[0]
[https://en.wikipedia.org/wiki/DuckDuckGo](https://en.wikipedia.org/wiki/DuckDuckGo)

~~~
runarb
One way to quickly find out what underlying provider a metasearch engine uses
is to search for "my user agent". You will then normally see the user agent of
the crawler in the result snippet.

Doing this on DuckDuckGo:
[https://duckduckgo.com/?q=my+user+agent&t=hk&ia=answer](https://duckduckgo.com/?q=my+user+agent&t=hk&ia=answer)
, reviles [http://www.bing.com/bingbot.htm](http://www.bing.com/bingbot.htm)
in the snippet for whatsmyuseragent.org .

------
AznHisoka
I disagree somewhat with #1.

Long Amazon, short JCPenney is an example of an obvious trade the past 5
years. Or even the past 2 years. Same with long Apple in 2012 when iPhones
were ubiquitous. And you would have obliterated the index with those trades.

Sometimes you don’t need an edge. sometimes the most obvious idea is the most
profitable.

And my theory why is because if it’s obvious, it’s because everyone else is in
love with the idea as well and putting money into it. And in the financial
world, people don’t just put money into it once. They add on to it month after
month after month.

So you don’t necessarily need to be early to profit well. Let the big trend
appear, then invest big into it once it becomes clear as day. Because huge
trends last longer than you think.

~~~
dannyw
Specifically, there is a style of investing called “trend following” or
“momentum” where you literally just buy things that are going up, and sell
things that are going down.

This works wonders and has been a constant source of factor alpha.

~~~
eru
They have been a reasonable source of alpha some of the time. But not a
constant source all the time: trend following can badly go wrong.

And, of course, because so many people do trend following these days, trend
following itself will work less well in future.

------
zuhayeer
Looking at everything as relative to each other is a slippery slope to zero
sum mindset. Are things relative? Yes, absolutely (no pun intended haha),
great to be aware of that. But focusing too much on your relative rank eats
away from the edge that got you to wherever you are and pushes you towards
groupthink. Once you start the measuring contest, you’ve already lost.

I think one of the Intel founders said something along the lines of “every new
business sows the seeds for its own upheaval”. Yeah that’s true, but only once
you start caring about the scoreboard.

~~~
wiz21c
Had to look for it :-)

[https://en.wikipedia.org/wiki/Zero-
sum_thinking](https://en.wikipedia.org/wiki/Zero-sum_thinking)

~~~
quietbritishjim
Zero-sum game [1] is the root term. An example is playing poker or similar
(without any outside sponsorship or the like) - no matter how well we all
play, there's no way for our combined wealth to be greater (or lower) at the
end than it was at the beginning. Zero-sum thinking or mind set or whatever is
the assumption that a situation is a zero-sum game, which may or may not be
true.

[1] [https://en.wikipedia.org/wiki/Zero-
sum_game](https://en.wikipedia.org/wiki/Zero-sum_game)

------
taneq
Well yeah, you want to bet on undervalued horses, not just fast ones.

Likewise with stocks, it's hard to argue that Tesla isn't doing well, but
you'd be bonkers to buy their stock right now.

~~~
bjarneh
> but you'd be bonkers to buy their stock right now.

You're probably correct; but didn't people say that when they went above $200
as well?

~~~
huffmsa
Yeah I've been hearing that basically since the IPO.

Has yet to payoff.

~~~
OJFord
Too much FOMO and not enough 'I'd be bonkers to' \- for as long as that's the
case it pays to follow the FOMO!

(Not investment advice I'm willing to follow myself! But a comment elsewhere
in this submission, and a recent Levine column, have discussed that.. yeah,
basically following the trend works... I suppose it shouldn't be _that_
surprising, add more signals and act more quickly and you've reinvented a
successful industry/form of professional trading.)

------
hamilyon2
I don't know, this

> It's how the stock performs relative to expectations that determines whether
> you make above average returns or not.

is like, investment 101 knowledge. Anyone who ever came near managing a
portfolio understands that.

------
TMWNN
"The race is not always to the swift, nor the battle to the strong, but that
is the way to bet" —Hugh Keough

~~~
chriswarbo
I think that misses the point of this article. More appropriate might be:

"The race is often to the swift, and the battle to the strong, but the way to
bet is on those with miscalibrated odds."

If the odds are well calibrated, the expected return is zero; we might as well
not bet. The same goes for speculating on well-priced assets.

If we have reason to believe that the odds/prices are miscalibrated, we can
expect a positive return by going long/short (depending on which direction
they're off).

~~~
thaumasiotes
Well, the original quote is more about making plans. Georgia is at war with
Russia: who will win? You can -- and people very much do -- try to set up a
situation with a massive payoff for you in the unlikely event that Georgia
wins. But the maxim is there to remind you that Georgia isn't going to win.

Interacting with a bookie is a whole different context than interacting with
reality.

~~~
Robin_Message
> Interacting with a bookie is a whole different context than interacting with
> reality.

I think the point of the article was that interacting with the stock market
(and potentially other areas of many businesses) _is_ more like interacting
with a bookie than interacting with reality.

~~~
thaumasiotes
Yes; I'm just saying I don't think the article's point detracts from the
maxim.

------
rdlecler1
This may be true in public markets, but I’m not sure it extends to venture
capital where not everyone can get access to the same opportunity. A good VC
firm will not only see the best opportunities but may also pay far less in a
competitive bidding environment. That’s where edge comes from.

------
fancyfredbot
A nice post! The initial part of the article with the efficient markets
hypothesis (satellite data and app download data are table stakes for
investing) rings a bit hollow for me in a world where bankrupt Hertz is seeing
its share price go up though...

~~~
QuesnayJr
If you sincerely think that Hertz is overvalued, why don't you short it? It
seems like an easy money-making opportunity, if so.

~~~
TuringNYC
Aside from the other issues (staying solvent long enough to profit), there is
another issue - government intervention. You never know if the government will
sweep in and save a company [unfairly?] or change terms -- either with a
guarantee, bailout, or unlimited loans.

Case: Bear Sterns, AIG, GS

~~~
eru
One of the first things many European countries did to combat (?) the pandemic
was to ban short selling.

See eg [https://www.reuters.com/article/uk-health-coronavirus-
hedgef...](https://www.reuters.com/article/uk-health-coronavirus-hedgefunds-
shortse/hedge-funds-target-france-as-short-selling-bans-lifted-idUSKBN2321K7)

