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thewalkingtemple

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Hello everyone,

I've had a weird journey where I've actually managed to work out an effective money system before I've established a money engine (process) to feed the money system.
Regardless, I thought that I would document this journey as a post for anyone to benefit from my knowledge so far. As a new member here, I've been reading and benefiting from a wealth of knowledge. So this is my way of giving back to the community that is currently helping me.

Disclaimer: Before you get super-hyped or completely turned-off (the two possible extremes), I'd like to clearly state that this involves actual mental effort, and a certain level of mathematics to understand and appreciate.

TLDR Takeaways:

*
Whenever you wish to get into a market (trade), look at the top and bottom most quartil performance. You basically look for the top most performer and the bottom most performer and calculate how much market percentage each holds. This will enable you to see which markets are monopolised (a negative), which ones are too tight and over-competitive, where there is room for arbitrage, etc.

* Find ways of gaining regardless of what the market is doing. For instance, my system works like this (idealistic definition): When the market is booming, I gain linearly at around 70-80% with the market. When the market is moving sideways, I gain pennies from the market. When the market is tanking, I lose pennies until a certain point, beyond which I gain geometrically (very big numbers).

* Start thinking second and third order consequences. The price of an equity for instance can go to infinity or zero without stopping (theoretically), but the volatility has mean reverting tendencies (known as regression to the mean in statistics). This can be used to your advantage.

* Learn to define risk. This means you pre-define how much you wish lose in the worst case, and by doing this you pre-define how much you are willing to win if things go best case. Think in extremes.

* Always think about your portfolio as a whole unit (thank you Khaneman and Tversky). Never look at a trade as a single entitiy. Think about it as one element of the whole portfolio (like literally your entire existence). This is a game changer.

* Achieve uncorrelated movement between the different components of your portfolio.

The System (narrated via 7 checkpoints):

Checkpoint 1:
I started out as any other naive guy would: buying into mutual funds. Within a couple of months, I smelled something wrong and bailed.

Checkpoint 2: Then I ended up with the next best thing I could find, which was investigating and researching ETFs (yikes). But hey, at least there was one middle man out of the window by now. I actually never trust anything very easily, and try and rework the mathematics myself. I picked up PhD theses in the field of investing, and started studying papers published by Nobel Prize winners in the field of economics. In the end, I figured out what a basket instrument is capable of (potentially), and realised this is probably not the immediate solution I am looking for. But I parked part of my savings into such a vehicle anyway because it was at that point of time (given my lack of better knowledge) better than my local bank account. A couple of images illustrating my journey and thought process during this period (apologies for the mixed English-German; I'm a bit weird like that):


20200302_212733.jpg

20200302_213159.jpg

Checkpoint 3: I worked out a TER equation that was low enough whilst injecting a factor (small cap) premium into the mix. After I spread the money, and parked it into the vehciles as planned, the thought that I could do better than this didn't let me go. A simplified version of the equation below (example calculation; not actual sum ivested; I'm skipping gold and bonds because I'm still young and have a relatively low net worth, where bank balances are covered by state insurances):

1604867533695.png

Checkpoint 4: By this time, COVID happened, and my portfolio got a nice boost. However, I was still not convinced if this was the way to go. I was getting more and more dissatisfied with my job by the day. Therefore, I decided to take action, and started learning active methods. In this space, there is a lot of bullshit to evade (B schools can go to hell; all those wasted lecture hours :/ ). Eventually, I worked my way to the beautiful work done by Nassim Taleb. The math was/is hard, but the potential of the thought process started to blow my mind. I got into understanding random variables.
20200417_111900.jpg

Checkpoint 5: I continued studying Taleb, and in parallel, incorporated psychology from Khaneman and Tversky (two of the most awesome minds I've come across). By this time, I started to understand the math of risk taking, and figured out ways of pre-defining how much I was willing to lose to define probabilities of how much I could gain. Later, I would learn that this concept is known as static hedging. Below, you can see a very simplistic, yet very powerful model that I came up with, after it came to me as a dream when I was half asleep during the night (yes, I was that deep into the subjects back then). I scribbled it in such a hurried manner with goosebumps, and didn't sleep for the rest of that night due to sheer excitement (M.K.V. = Max. Cumulative Loss / P.S. = Position Size):

Lat.jpg

Checkpoint 6: As the journed continued, I started learning dynamic hedging. This is literally one of the hardest things I decided to do; very difficult mathematics, at least for me. I convinced myself to jump into an active model without perfecting my knowledge in this area. I knew very well back then that this is gonna take years. I didn't want to stay theoretical for years without any practical experience. Besides, I realised that I didn't enjoy working with my boss anymore. As a stop-gap solition, I started learning the work done by Tom Sosnoff. A few images illustrating my struggles with derivatives, and the mathematics behind them:
20200429_163503.jpg
20200516_162728.jpg

20200523_172439.jpg

Checkpoint 7: As of the date of this post, my passive strategy (codenamed Virgin Beta) was up 15%, and my active strategy (codenamed Dirty Alpha) was up 48.89%
A few caveats here: These numbers are before taxes and before inflation. Plus these numbers are from relatively low cap investments (less than 50k USD). As the capital increases, the mathematics does not scale linearly, meaning, the numbers will most likely come down with larger capital inputs. However, I am proud of the knowledge I have been able to accumulate over such a short period of time. Even in its incomplete form, my knowledge is giving me such a significant advantage (especially in its Apha form). I have now quit my job, and am working on my unscripted money engine to feed my money system. While I will be turning to you guys for advise and suggestions for my money generation engine process, feel free to benefit from the money system knowledge I've been able to build until now.

P.S.
I am still continuing to learn Dynamic Hedging. This takes years to perfect. However, by now I have realised the importance of a money generating engine, and am focusing on solving this problem first before I dive full length into dynamic hedging back again.
 
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traction2

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Feb 2, 2020
61
38
Hello everyone,

I've had a weird journey where I've actually managed to work out an effective money system before I've established a money engine (process) to feed the money system.
Regardless, I thought that I would document this journey as a post for anyone to benefit from my knowledge so far. As a new member here, I've been reading and benefiting from a wealth of knowledge. So this is my way of giving back to the community that is currently helping me.

Disclaimer: Before you get super-hyped or completely turned-off (the two possible extremes), I'd like to clearly state that this involves actual mental effort, and a certain level of mathematics to understand and appreciate.

TLDR Takeaways:

*
Whenever you wish to get into a market (trade), look at the top and bottom most quartil performance. You basically look for the top most performer and the bottom most performer and calculate how much market percentage each holds. This will enable you to see which markets are monopolised (a negative), which ones are too tight and over-competitive, where there is room for arbitrage, etc.

* Find ways of gaining regardless of what the market is doing. For instance, my system works like this (idealistic definition): When the market is booming, I gain linearly at around 70-80% with the market. When the market is moving sideways, I gain pennies from the market. When the market is tanking, I lose pennies until a certain point, beyond which I gain geometrically (very big numbers).

* Start thinking second and third order consequences. The price of an equity for instance can go to infinity or zero without stopping (theoretically), but the volatility has mean reverting tendencies (known as regression to the mean in statistics). This can be used to your advantage.

* Learn to define risk. This means you pre-define how much you wish lose in the worst case, and by doing this you pre-define how much you are willing to win if things go best case. Think in extremes.

* Always think about your portfolio as a whole unit (thank you Khaneman and Tversky). Never look at a trade as a single entitiy. Think about it as one element of the whole portfolio (like literally your entire existence). This is a game changer.

* Achieve uncorrelated movement between the different components of your portfolio.

The System (narrated via 7 checkpoints):

Checkpoint 1:
I started out as any other naive guy would: buying into mutual funds. Within a couple of months, I smelled something wrong and bailed.

Checkpoint 2: Then I ended up with the next best thing I could find, which was investigating and researching ETFs (yikes). But hey, at least there was one middle man out of the window by now. I actually never trust anything very easily, and try and rework the mathematics myself. I picked up PhD theses in the field of investing, and started studying papers published by Nobel Prize winners in the field of economics. In the end, I figured out what a basket instrument is capable of (potentially), and realised this is probably not the immediate solution I am looking for. But I parked part of my savings into such a vehicle anyway because it was at that point of time (given my lack of better knowledge) better than my local bank account. A couple of images illustrating my journey and thought process during this period (apologies for the mixed English-German; I'm a bit weird like that):


View attachment 35593

View attachment 35594

Checkpoint 3: I worked out a TER equation that was low enough whilst injecting a factor (small cap) premium into the mix. After I spread the money, and parked it into the vehciles as planned, the thought that I could do better than this didn't let me go. A simplified version of the equation below (example calculation; not actual sum ivested; I'm skipping gold and bonds because I'm still young and have a relatively low net worth, where bank balances are covered by state insurances):


Checkpoint 4: By this time, COVID happened, and my portfolio got a nice boost. However, I was still not convinced if this was the way to go. I was getting more and more dissatisfied with my job by the day. Therefore, I decided to take action, and started learning active methods. In this space, there is a lot of bullshit to evade (B schools can go to hell; all those wasted lecture hours :/ ). Eventually, I worked my way to the beautiful work done by Nassim Taleb. The math was/is hard, but the potential of the thought process started to blow my mind. I got into understanding random variables.
View attachment 35596

Checkpoint 5: I continued studying Taleb, and in parallel, incorporated psychology from Khaneman and Tversky (two of the most awesome minds I've come across). By this time, I started to understand the math of risk taking, and figured out ways of pre-defining how much I was willing to lose to define probabilities of how much I could gain. Later, I would learn that this concept is known as static hedging. Below, you can see a very simplistic, yet very powerful model that I came up with, after it came to me as a dream when I was half asleep during the night (yes, I was that deep into the subjects back then). I scribbled it in such a hurried manner with goosebumps, and didn't sleep for the rest of that night due to sheer excitement (M.K.V. = Max. Cumulative Loss / P.S. = Position Size):

View attachment 35597

Checkpoint 6: As the journed continued, I started learning dynamic hedging. This is literally one of the hardest things I decided to do; very difficult mathematics, at least for me. I convinced myself to jump into an active model without perfecting my knowledge in this area. I knew very well back then that this is gonna take years. I didn't want to stay theoretical for years without any practical experience. Besides, I realised that I didn't enjoy working with my boss anymore. As a stop-gap solition, I started learning the work done by Tom Sosnoff. A few images illustrating my struggles with derivatives, and the mathematics behind them:
View attachment 35598
View attachment 35599

View attachment 35600

Checkpoint 7: As of the date of this post, my passive strategy (codenamed Virgin Beta) was up 15%, and my active strategy (codenamed Dirty Alpha) was up 48.89%
A few caveats here: These numbers are before taxes and before inflation. Plus these numbers are from relatively low cap investments (less than 50k USD). As the capital increases, the mathematics does not scale linearly, meaning, the numbers will most likely come down with larger capital inputs. However, I am proud of the knowledge I have been able to accumulate over such a short period of time. Even in its incomplete form, my knowledge is giving me such a significant advantage (especially in its Apha form). I have now quit my job, and am working on my unscripted money engine to feed my money system. While I will be turning to you guys for advise and suggestions for my money generation engine process, feel free to benefit from the money system knowledge I've been able to build until now.

P.S.
I am still continuing to learn Dynamic Hedging. This takes years to perfect. However, by now I have realised the importance of a money generating engine, and am focusing on solving this problem first before I dive full length into dynamic hedging back again.
Is there a Cliffs notes version?
 

thewalkingtemple

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Is there a Cliffs notes version?
I had to google what Cliffs notes are. So, the short answer is no.
However, if there are enough people demanding, I'd happy to invest the time to look into it further. :)
 

Primeperiwinkle

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somebody on this forum has got to understand what you’re talking about.. I’m gonna randomly tag some smart money ppl and see if they comment.

@JScott @biophase @Tourmaline
 
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thewalkingtemple

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somebody on this forum has got to understand what you’re talking about.. I’m gonna randomly tag some smart money ppl and see if they comment.

@JScott @biophase @Tourmaline
Apologies that my post is ambiguous.

Let me give you a non-technical description of what this is about in a couple of sentences:

Let's say you have a running unscripted system that earns you regular income. You would ideally want to setup a money system to protect and grow your saved income (wealth); MJ covers this topic on the surface level in his 2nd book. The worst thing you can do is depend on some third party "expert" to manage your money. Period (there are several scientific papers that have studied this phenomenon). The second worst thing you can do is start trading as a regular market participant (my strong opinion). If you have money to invest, you do not need to be at the mercy of any market. The system I am developing (in it's childhood phase) is already showing signs of breaking market dependency. This means that I do not care if the market goes up or down. I don't care about which is the next best evaluated stock. Heck, I don't even watch the news. I use mathematics and set it up, and do something more productive with my life. No middle man. No news. No caring about who's president. More caring about actually helping people.

P.S.
In its current state, I still have to spend like 15-30 minutes on it during each weekday.


EDIT:
Also, the original post is not meant to be a step by step guide, but is just a key-point illustration (those key points are more than enough for someone new to get started on it) to show that if one is willing to put in the effort, this is very much possible. I started knowing none of this shit in January 2020 (minus the mathematics part). And now I feel this is a wonderful skillset to have. The way it has shaped my thinking alone is a major tool to kick consumerism in the nuts.
 

Primeperiwinkle

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Apologies that my post is ambiguous.

Let me give you a non-technical description of what this is about in a couple of sentences:

Let's say you have a running unscripted system that earns you regular income. You would ideally want to setup a money system to protect and grow your saved income (wealth); MJ covers this topic on the surface level in his 2nd book. The worst thing you can do is depend on some third party "expert" to manage your money. Period (there are several scientific papers that have studied this phenomenon). The second worst thing you can do is start trading as a regular market participant (my strong opinion). If you have money to invest, you do not need to be at the mercy of any market. The system I am developing (in it's childhood phase) is already showing signs of breaking market dependency. This means that I do not care if the market goes up or down. I don't care about which is the next best evaluated stock. Heck, I don't even watch the news. I use mathematics and set it up, and do something more productive with my life. No middle man. No news. No caring about who's president. More caring about actually helping people.

P.S.
In its current state, I still have to spend like 15-30 minutes on it during each weekday.
Yeaaaa I got that part. It was the how to which kinda confused me. I’m trying here dude, I really am. I’m hoping more ppl start talking to you so we can figure out your genius.
 

thewalkingtemple

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Yeaaaa I got that part. It was the how to which kinda confused me. I’m trying here dude, I really am. I’m hoping more ppl start talking to you so we can figure out your genius.
I'm no genius mate; just another guy giving life his best. You are confused because what I have posted is not a how to guide. That's my mistake; I should have made that clear in the post. I've just tried to introduce what I consider as valuable concepts. Those need to be learnt. Depending upon someone's level, it could take a few months or a year or two. But anyone can get there.

Let me give you a fictional example (which I randomly came up with as I typed :) ) of the kind of thinking I'm talking about.

Let's say you have four neighbours:

a. Luca, who is a wheat farmer.
b. Sarah, who is an insurance provider.
c. Tom, who runs a bakery.
d. Rusty, who is just a wealthy floater.

Before you arrived, Tom used to buy wheat from Luca for his bakery. Rusty didn't give a F*ck about anything or anyone, whereas Sarah was selling random insurance coverages to all three.

You now arrive into the scene with your fancy cash. You have enough to buy three seasons' produce from Luca. You go to Luca first, and negotiate with him to purchase his produce exclusively and continuously for the next 3 years at a fixed rate. Luca agrees to it as soon as you promise him that you are willing to pay one half of the capital up-front.

You then go to Sarah and tell her that in case there is a poor harvest (pre-defined using a threshold number), you would like to cover your losses using a custom insurance package. You start working on a deal and come up with Y as the price of the insurance package.

You then go to Tom, and offer wheat for a fixed price for the next three years at a standard rate (with a profit mark-up). This price is 10 cents higher than what Luca offered it for (this ensures you a 130% profit during the first year, and 150% profit during year 2 and year 3, provided the minimum harvest target is met). So Tom is skeptical. But you question whether Luca had kept the same rate over a three year period. Tom realises that it was not the case, understands the benifit of a standard rate, and signs the deal. You setup Tom also with an insurance coverage with Sarah in case of a low produce year. You get brownie points from Sarah for helping with the deal.

You then go to Rusty, and offer a unique deal. You tell him that if your yield exceeds x (which is Tom's share), Rusty can have everything beyond it for his rich family. The only thing Rusty needs to pay is a small amount of Z per year (Z = your insurance cost owed to Sarah (y) + 0.5 of insurance cost owed by Tom to Sarah). Rusty is skeptical. But then you show him that 8 out of 10 times the last 10 years, your leased farm has produced much more than x, so Rusy is essentially making a favourable bet. Rusty finally agrees to buy the contract from you.

You then go back to Tom, and offer to pay one half of his insurance costs as sign of good will and continued business relationship for the future.

After one year Luca is happy and hard at work, Tom's business is doing reasonably well, and he is extremely thankful for your deal that enables him to sustain competitive prices, and Rusty is stocked with surplus produce you delivered. He treats you like you are his new best friend. You have made a handsome 130% profit on your intial investment. You now take 20% out of that and go back to Luca, and offer to pay for one half of his and his family's life insurance coverage costs (which starts to melt Sarah's heart). Luca is pleasantly surprised, and assures you of a long lasting continued business relationship. Sarah is so impressed with you, that she starts dating you (OMFG!!).

And they lived happily ever after.

Even though this was just a randomised story I made-up, there are some very fundamental concepts, and derivative instruments used intuitively without explaining what they are or how they work (i.e., the mathematics).
 
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Last edited:

thewalkingtemple

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So in a nutshell you have a fancy algo for trading?
I'd say no. I do not actively use any set algorithm. You can for sure algorithmise any thinking pattern, but what if the thinking pattern keeps changing every second day? An algorithm that is so nimble to change requires a lot of resources to sustain, which I currently do not have.

There is zero prediction involved in my sytem. I'm merely reacting with the help of systemic knowledge (developing systemic knowledge is what the OP is about).
 

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ZF Lee

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Hello everyone,

I've had a weird journey where I've actually managed to work out an effective money system before I've established a money engine (process) to feed the money system.
Regardless, I thought that I would document this journey as a post for anyone to benefit from my knowledge so far. As a new member here, I've been reading and benefiting from a wealth of knowledge. So this is my way of giving back to the community that is currently helping me.

Disclaimer: Before you get super-hyped or completely turned-off (the two possible extremes), I'd like to clearly state that this involves actual mental effort, and a certain level of mathematics to understand and appreciate.

TLDR Takeaways:

*
Whenever you wish to get into a market (trade), look at the top and bottom most quartil performance. You basically look for the top most performer and the bottom most performer and calculate how much market percentage each holds. This will enable you to see which markets are monopolised (a negative), which ones are too tight and over-competitive, where there is room for arbitrage, etc.

* Find ways of gaining regardless of what the market is doing. For instance, my system works like this (idealistic definition): When the market is booming, I gain linearly at around 70-80% with the market. When the market is moving sideways, I gain pennies from the market. When the market is tanking, I lose pennies until a certain point, beyond which I gain geometrically (very big numbers).

* Start thinking second and third order consequences. The price of an equity for instance can go to infinity or zero without stopping (theoretically), but the volatility has mean reverting tendencies (known as regression to the mean in statistics). This can be used to your advantage.

* Learn to define risk. This means you pre-define how much you wish lose in the worst case, and by doing this you pre-define how much you are willing to win if things go best case. Think in extremes.

* Always think about your portfolio as a whole unit (thank you Khaneman and Tversky). Never look at a trade as a single entitiy. Think about it as one element of the whole portfolio (like literally your entire existence). This is a game changer.

* Achieve uncorrelated movement between the different components of your portfolio.

The System (narrated via 7 checkpoints):

Checkpoint 1:
I started out as any other naive guy would: buying into mutual funds. Within a couple of months, I smelled something wrong and bailed.

Checkpoint 2: Then I ended up with the next best thing I could find, which was investigating and researching ETFs (yikes). But hey, at least there was one middle man out of the window by now. I actually never trust anything very easily, and try and rework the mathematics myself. I picked up PhD theses in the field of investing, and started studying papers published by Nobel Prize winners in the field of economics. In the end, I figured out what a basket instrument is capable of (potentially), and realised this is probably not the immediate solution I am looking for. But I parked part of my savings into such a vehicle anyway because it was at that point of time (given my lack of better knowledge) better than my local bank account. A couple of images illustrating my journey and thought process during this period (apologies for the mixed English-German; I'm a bit weird like that):


View attachment 35593

View attachment 35594

Checkpoint 3: I worked out a TER equation that was low enough whilst injecting a factor (small cap) premium into the mix. After I spread the money, and parked it into the vehciles as planned, the thought that I could do better than this didn't let me go. A simplified version of the equation below (example calculation; not actual sum ivested; I'm skipping gold and bonds because I'm still young and have a relatively low net worth, where bank balances are covered by state insurances):


Checkpoint 4: By this time, COVID happened, and my portfolio got a nice boost. However, I was still not convinced if this was the way to go. I was getting more and more dissatisfied with my job by the day. Therefore, I decided to take action, and started learning active methods. In this space, there is a lot of bullshit to evade (B schools can go to hell; all those wasted lecture hours :/ ). Eventually, I worked my way to the beautiful work done by Nassim Taleb. The math was/is hard, but the potential of the thought process started to blow my mind. I got into understanding random variables.
View attachment 35596

Checkpoint 5: I continued studying Taleb, and in parallel, incorporated psychology from Khaneman and Tversky (two of the most awesome minds I've come across). By this time, I started to understand the math of risk taking, and figured out ways of pre-defining how much I was willing to lose to define probabilities of how much I could gain. Later, I would learn that this concept is known as static hedging. Below, you can see a very simplistic, yet very powerful model that I came up with, after it came to me as a dream when I was half asleep during the night (yes, I was that deep into the subjects back then). I scribbled it in such a hurried manner with goosebumps, and didn't sleep for the rest of that night due to sheer excitement (M.K.V. = Max. Cumulative Loss / P.S. = Position Size):

View attachment 35597

Checkpoint 6: As the journed continued, I started learning dynamic hedging. This is literally one of the hardest things I decided to do; very difficult mathematics, at least for me. I convinced myself to jump into an active model without perfecting my knowledge in this area. I knew very well back then that this is gonna take years. I didn't want to stay theoretical for years without any practical experience. Besides, I realised that I didn't enjoy working with my boss anymore. As a stop-gap solition, I started learning the work done by Tom Sosnoff. A few images illustrating my struggles with derivatives, and the mathematics behind them:
View attachment 35598
View attachment 35599

View attachment 35600

Checkpoint 7: As of the date of this post, my passive strategy (codenamed Virgin Beta) was up 15%, and my active strategy (codenamed Dirty Alpha) was up 48.89%
A few caveats here: These numbers are before taxes and before inflation. Plus these numbers are from relatively low cap investments (less than 50k USD). As the capital increases, the mathematics does not scale linearly, meaning, the numbers will most likely come down with larger capital inputs. However, I am proud of the knowledge I have been able to accumulate over such a short period of time. Even in its incomplete form, my knowledge is giving me such a significant advantage (especially in its Apha form). I have now quit my job, and am working on my unscripted money engine to feed my money system. While I will be turning to you guys for advise and suggestions for my money generation engine process, feel free to benefit from the money system knowledge I've been able to build until now.

P.S.
I am still continuing to learn Dynamic Hedging. This takes years to perfect. However, by now I have realised the importance of a money generating engine, and am focusing on solving this problem first before I dive full length into dynamic hedging back again.
I'm no genius mate; just another guy giving life his best. You are confused because what I have posted is not a how to guide. That's my mistake; I should have made that clear in the post. I've just tried to introduce what I consider as valuable concepts. Those need to be learnt. Depending upon someone's level, it could take a few months or a year or two. But anyone can get there.

Let me give you a fictional example (which I randomly came up with as I typed :) ) of the kind of thinking I'm talking about.

Let's say you have four neighbours:

a. Luca, who is a wheat farmer.
b. Sarah, who is an insurance provider.
c. Tom, who runs a bakery.
d. Rusty, who is just a wealthy floater.

Before you arrived, Tom used to buy wheat from Luca for his bakery. Rusty didn't give a f*ck about anything or anyone, whereas Sarah was selling random insurance coverages to all three.

You now arrive into the scene with your fancy cash. You have enough to buy three seasons' produce from Luca. You go to Luca first, and negotiate with him to purchase his produce exclusively and continuously for the next 3 years at a fixed rate. Luca agrees to it as soon as you promise him that you are willing to pay one half of the capital up-front.

You then go to Sarah and tell her that in case there is a poor harvest (pre-defined using a threshold number), you would like to cover your losses using a custom insurance package. You start working on a deal and come up with Y as the price of the insurance package.

You then go to Tom, and offer wheat for a fixed price for the next three years at a standard rate (with a profit mark-up). This price is 10 cents higher than what Luca offered it for (this ensures you a 130% profit during the first year, and 150% profit during year 2 and year 3, provided the minimum harvest target is met). So Tom is skeptical. But you question whether Luca had kept the same rate over a three year period. Tom realises that it was not the case, understands the benifit of a standard rate, and signs the deal. You setup Tom also with an insurance coverage with Sarah in case of a low produce year. You get brownie points from Sarah for helping with the deal.

You then go to Rusty, and offer a unique deal. You tell him that if your yield exceeds x (which is Tom's share), Rusty can have everything beyond it for his rich family. The only thing Rusty needs to pay is a small amount of Z per year (Z = your insurance cost owed to Sarah (y) + 0.5 of insurance cost owed by Tom to Sarah). Rusty is skeptical. But then you show him that 8 out of 10 times the last 10 years, your leased farm has produced much more than x, so Rusy is essentially making a favourable bet. Rusty finally agrees to buy the contract from you.

You then go back to Tom, and offer to pay one half of his insurance costs as sign of good will and continued business relationship for the future.

After one year Luca is happy and hard at work, Tom's business is doing reasonably well, and he is extremely thankful for your deal that enables him to sustain competitive prices, and Rusty is stocked with surplus produce you delivered. He treats you like you are his new best friend. You have made a handsome 130% profit on your intial investment. You now take 20% out of that and go back to Luca, and offer to pay for one half of his and his family's life insurance coverage costs (which starts to melt Sarah's heart). Luca is pleasantly surprised, and assures you of a long lasting continued business relationship. Sarah is so impressed with you, that she starts dating you (OMFG!!).

And they lived happily ever after.

Even though this was just a randomised story I made-up, there are some very fundamental concepts, and derivative instruments used intuitively without explaining what they are or how they work (i.e., the mathematics).
You might want to check out MJ's thread on options in the Fastlane INSIDERS.
You could find something there.
MJ suggests taking on the seller's role on the insurance-deal though, given advantages like theta time decay.
 

thewalkingtemple

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You might want to check out MJ's thread on options in the Fastlane INSIDERS.
You could find something there.
MJ suggests taking on the seller's role on the insurance-deal though, given advantages like theta time decay.
Thanks a lot for your reply man. I was seriously starting to doubt my communication skills, as nobody so far has been able to understand what I'm trying to convey here.

What you are saying is along the line of thought I'm trying to convey. While I'm not precisely advocating being a seller, I think I have to read the thread to precisely understand what MJ says. I understand that I have to pay to get into fastlane INSIDERS. I'll consider it, but I'm being held back by the paywall. :/
 
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Thanks a lot for your reply man. I was seriously starting to doubt my communication skills, as nobody so far has been able to understand what I'm trying to convey here.

What you are saying is along the line of thought I'm trying to convey. While I'm not precisely advocating being a seller, I think I have to read the thread to precisely understand what MJ says. I understand that I have to pay to get into fastlane INSIDERS. I'll consider it, but I'm being held back by the paywall. :/
You can also check out TastyTrade's videos.
If I remember, much of them are free.

And they espouse a similar selling position as MJ.

Here's one discussion from the TastyTrade folks:

I wouldn't be surprised few folks here truly understand derivatives.

It's like a shadow market of sorts...and the financial pundits don't promote it just as much as mutual funds, taking long position on stock, etc. It's still hard to shake off the old financial SCRIPT to take on a whole set of skills.
 

thewalkingtemple

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You can also check out TastyTrade's videos.
If I remember, much of them are free.

And they espouse a similar selling position as MJ.

Here's one discussion from the TastyTrade folks:

I wouldn't be surprised few folks here truly understand derivatives.

It's like a shadow market of sorts...and the financial pundits don't promote it just as much as mutual funds, taking long position on stock, etc. It's still hard to shake off the old financial SCRIPT to take on a whole set of skills.
If you read the OP, I've mentioned that I'm using Tom Sosnoff's work as a stop gap solution for my lack of better knowledge (which I'm predicting will take years to perfect). Tom Sosnoff is one of the original founders of TOS, and later, one of the original founders of Tasty Trade. So, yes, I indeed have exposure to Tasty Trade's methods. I am using some of the methods as part of my system for now, but I am convinced that it is not a long term solution for me. What I find truly inspirational from these folks is how they disrupted an entire industry with innovation via TOS. That's true entrepreneurship skill.

I see your point about the script being the reason why folks struggle to understand what I've been talking about. I'll be sure to checkout the TT thread you've linked. Thanks again mate! :)
 

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Hello everyone,

I've had a weird journey where I've actually managed to work out an effective money system before I've established a money engine (process) to feed the money system.
Regardless, I thought that I would document this journey as a post for anyone to benefit from my knowledge so far. As a new member here, I've been reading and benefiting from a wealth of knowledge. So this is my way of giving back to the community that is currently helping me.

Disclaimer: Before you get super-hyped or completely turned-off (the two possible extremes), I'd like to clearly state that this involves actual mental effort, and a certain level of mathematics to understand and appreciate.

TLDR Takeaways:

*
Whenever you wish to get into a market (trade), look at the top and bottom most quartil performance. You basically look for the top most performer and the bottom most performer and calculate how much market percentage each holds. This will enable you to see which markets are monopolised (a negative), which ones are too tight and over-competitive, where there is room for arbitrage, etc.

* Find ways of gaining regardless of what the market is doing. For instance, my system works like this (idealistic definition): When the market is booming, I gain linearly at around 70-80% with the market. When the market is moving sideways, I gain pennies from the market. When the market is tanking, I lose pennies until a certain point, beyond which I gain geometrically (very big numbers).

* Start thinking second and third order consequences. The price of an equity for instance can go to infinity or zero without stopping (theoretically), but the volatility has mean reverting tendencies (known as regression to the mean in statistics). This can be used to your advantage.

* Learn to define risk. This means you pre-define how much you wish lose in the worst case, and by doing this you pre-define how much you are willing to win if things go best case. Think in extremes.

* Always think about your portfolio as a whole unit (thank you Khaneman and Tversky). Never look at a trade as a single entitiy. Think about it as one element of the whole portfolio (like literally your entire existence). This is a game changer.

* Achieve uncorrelated movement between the different components of your portfolio.

The System (narrated via 7 checkpoints):

Checkpoint 1:
I started out as any other naive guy would: buying into mutual funds. Within a couple of months, I smelled something wrong and bailed.

Checkpoint 2: Then I ended up with the next best thing I could find, which was investigating and researching ETFs (yikes). But hey, at least there was one middle man out of the window by now. I actually never trust anything very easily, and try and rework the mathematics myself. I picked up PhD theses in the field of investing, and started studying papers published by Nobel Prize winners in the field of economics. In the end, I figured out what a basket instrument is capable of (potentially), and realised this is probably not the immediate solution I am looking for. But I parked part of my savings into such a vehicle anyway because it was at that point of time (given my lack of better knowledge) better than my local bank account. A couple of images illustrating my journey and thought process during this period (apologies for the mixed English-German; I'm a bit weird like that):


View attachment 35593

View attachment 35594

Checkpoint 3: I worked out a TER equation that was low enough whilst injecting a factor (small cap) premium into the mix. After I spread the money, and parked it into the vehciles as planned, the thought that I could do better than this didn't let me go. A simplified version of the equation below (example calculation; not actual sum ivested; I'm skipping gold and bonds because I'm still young and have a relatively low net worth, where bank balances are covered by state insurances):


Checkpoint 4: By this time, COVID happened, and my portfolio got a nice boost. However, I was still not convinced if this was the way to go. I was getting more and more dissatisfied with my job by the day. Therefore, I decided to take action, and started learning active methods. In this space, there is a lot of bullshit to evade (B schools can go to hell; all those wasted lecture hours :/ ). Eventually, I worked my way to the beautiful work done by Nassim Taleb. The math was/is hard, but the potential of the thought process started to blow my mind. I got into understanding random variables.
View attachment 35596

Checkpoint 5: I continued studying Taleb, and in parallel, incorporated psychology from Khaneman and Tversky (two of the most awesome minds I've come across). By this time, I started to understand the math of risk taking, and figured out ways of pre-defining how much I was willing to lose to define probabilities of how much I could gain. Later, I would learn that this concept is known as static hedging. Below, you can see a very simplistic, yet very powerful model that I came up with, after it came to me as a dream when I was half asleep during the night (yes, I was that deep into the subjects back then). I scribbled it in such a hurried manner with goosebumps, and didn't sleep for the rest of that night due to sheer excitement (M.K.V. = Max. Cumulative Loss / P.S. = Position Size):

View attachment 35597

Checkpoint 6: As the journed continued, I started learning dynamic hedging. This is literally one of the hardest things I decided to do; very difficult mathematics, at least for me. I convinced myself to jump into an active model without perfecting my knowledge in this area. I knew very well back then that this is gonna take years. I didn't want to stay theoretical for years without any practical experience. Besides, I realised that I didn't enjoy working with my boss anymore. As a stop-gap solition, I started learning the work done by Tom Sosnoff. A few images illustrating my struggles with derivatives, and the mathematics behind them:
View attachment 35598
View attachment 35599

View attachment 35600

Checkpoint 7: As of the date of this post, my passive strategy (codenamed Virgin Beta) was up 15%, and my active strategy (codenamed Dirty Alpha) was up 48.89%
A few caveats here: These numbers are before taxes and before inflation. Plus these numbers are from relatively low cap investments (less than 50k USD). As the capital increases, the mathematics does not scale linearly, meaning, the numbers will most likely come down with larger capital inputs. However, I am proud of the knowledge I have been able to accumulate over such a short period of time. Even in its incomplete form, my knowledge is giving me such a significant advantage (especially in its Apha form). I have now quit my job, and am working on my unscripted money engine to feed my money system. While I will be turning to you guys for advise and suggestions for my money generation engine process, feel free to benefit from the money system knowledge I've been able to build until now.

P.S.
I am still continuing to learn Dynamic Hedging. This takes years to perfect. However, by now I have realised the importance of a money generating engine, and am focusing on solving this problem first before I dive full length into dynamic hedging back again.
It is perhaps confusing to me because you are making a very personalized investment solution for yourself using personalized way of explanation.

It is not clear that if you are dealing it with from a portfolio asset allocation perspective (top down approach), or active trading (single strategy approach).

From a product and marketing perspective such managed fund products are serving either sophisticated hnw or bigger funds looking for fund to fund services. It is not good to tell them them “hey I am coming here to solve all the problem in one fund in having superior returns across all marker conditions”. They are already looking for for specific tailored product, mainly single strategy product because they are their own portfolio managers.

One popular product is fund that makes a lot of money during high volatility in years like 2008 and 2020, and the ability to do decently well in choppy years like 2018. It is okay that if the fund loses money (not too much) in a bull market year 2017 that has very low volatility. This is because all investors are basically having large exposure to risk assets these days and looking to buy the best “insurance” in the market.

The trend in the fund business is to focus less on portfolio allocation and its related skills financial mathematics, because these are the centralized decisions that your investor clients are not going to outsource. It is focusing on the trading and perfecting a single strategy these days. Core skills are computing and data processing related. If you google trading firms job hire advertisement these days they are asking for python skills instead of financial modeling.

I would advise you talking to the proprietary trading and fund management community then you can have a better understanding on what skills to build and what product to create.
 

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So following example with Luca and others, would it be something like this:

Luca is airline (say AA) stock
Tom is some travel agency stock
Sarah does insurance (say Prudential Financial) stock
Rusty is Rusty

Does it work only when
there are lots of plane tickets sold?
And bummer when there is covid and no one flies?
 

thewalkingtemple

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only thing you should do now is get a hundred thousand dollars from a russian loan shark
:D
Jokes aside, three reasons not to do it:
1. I lose control; same reason why I wouldn't go to a venture capital as a young business.
2. I make mistakes all the time; but I design my system such that no single mistake bites me more than xx%. Leveraging using a loan shark is likely to bite my head off if I do a mistake.
3. It is a shortcut in the form of trying to buy wealth instead of earning it. Without the skills, scaling seldom sticks. I'm much more likely to grow long term if I grow organically.


It is perhaps confusing to me because you are making a very personalized investment solution for yourself using personalized way of explanation.

It is not clear that if you are dealing it with from a portfolio asset allocation perspective (top down approach), or active trading (single strategy approach).

From a product and marketing perspective such managed fund products are serving either sophisticated hnw or bigger funds looking for fund to fund services. It is not good to tell them them “hey I am coming here to solve all the problem in one fund in having superior returns across all marker conditions”. They are already looking for for specific tailored product, mainly single strategy product because they are their own portfolio managers.

One popular product is fund that makes a lot of money during high volatility in years like 2008 and 2020, and the ability to do decently well in choppy years like 2018. It is okay that if the fund loses money (not too much) in a bull market year 2017 that has very low volatility. This is because all investors are basically having large exposure to risk assets these days and looking to buy the best “insurance” in the market.

The trend in the fund business is to focus less on portfolio allocation and its related skills financial mathematics, because these are the centralized decisions that your investor clients are not going to outsource. It is focusing on the trading and perfecting a single strategy these days. Core skills are computing and data processing related. If you google trading firms job hire advertisement these days they are asking for python skills instead of financial modeling.

I would advise you talking to the proprietary trading and fund management community then you can have a better understanding on what skills to build and what product to create.
I understand your concern. I think it stems out of a misunderstanding of the OP, which I'll try to clear.
I do indeed share a personalised account of my approach. The reason to do this to share with forum members the tools I have used to achieve monetary growth as a single person. I actually want to share with folks here that they can stop looking at it as a product to be purchased from someone else. Kick the F*cking middleman out of the window, put in the effort, and set your own personlised system up. That's pretty much my message. I do not share a how to, but rather, the tools I've used to set up mine. There are valuable key words littered all over this thread by now. I hope someday that someone who first started from this thread gets it and grows strongly.

I am not trying to build it as a product. I think if I were to do that, it would take me a few years to scale my knowledge to do it. Right now, as the system's designer, I have full control of my input variables. For a fund, client no. 225689 will want to randomly take his money out of the system on any given day. That becomes a totally different problem to solve, which requires me to scale my system as a human resource system.

I would never have another fund as my client. This is because Umbrella funds leech their investors one by one, and move onto the next ones. There are quite a few research papers that go into this. This goes against my sense of ethics. Besides, if someone is spreading their risk into 10 smaller funds, and you are one of the 10, who is the smart guy here? It's the same concept with Venture Capitals. They pressurise any given start up to go all in and not deviate at any cost. They exert immense pressure. But in parallel, the same venture capital invests in 50 different diversified startups. This means each start up carries huge risk, while the venture capital's risk is statistically diversified.

So following example with Luca and others, would it be something like this:

Luca is airline (say AA) stock
Tom is some travel agency stock
Sarah does insurance (say Prudential Financial) stock
Rusty is Rusty

Does it work only when
there are lots of plane tickets sold?
And bummer when there is covid and no one flies?
Unfortunately, no. That's not what the story implies. Instead of thinking in stocks, try to embrace the concept that you can cover all blindspots (in your financial life), even without knowing where the blindspots could be (hence zero prediction required). It is a way of thinking. It needs to be learnt. And this takes effort and time. It cannot be understood by reading a few posts. Think Entry. If it were that easy, everyone would be doing it.
 
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Unfortunately, no. That's not what the story implies. Instead of thinking in stocks, try to embrace the concept that you can cover all blindspots (in your financial life), even without knowing where the blindspots could be (hence zero prediction required).
This is quite a new perspective. I don't think you should lay everything out so let' keep it at that.

Think Entry. If it were that easy, everyone would be doing it.
Understood. Actually, when you started introducing 4 different kind of people (as a metaphor ofc) is where i started to become intrigued.

Anyway, i hope it will serve you well.
Thanks for reply!
 

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I’ll be sure to Google all this the second I have some time.


  1. ETF’s
  2. Math
  3. TER equation
  4. Small cap premiums
  5. Nassim Taleb
  6. Math
  7. Nassim Taleb some more
  8. Math
  9. Nassim Taleb so close I can smell him
  10. Khaneman
  11. Tversky
  12. Dynamic Hedging
  13. Math
  14. Tom Sosnoff
  15. Derivatives
  16. Math
 

thewalkingtemple

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This is quite a new perspective. I don't think you should lay everything out so let' keep it at that.


Understood. Actually, when you started introducing 4 different kind of people (as a metaphor ofc) is where i started to become intrigued.

Anyway, i hope it will serve you well.
Thanks for reply!
Yes, I literally wrote up a simplified system and narrated it as I typed. It represents an idealistic neighbourhood where covering blindspots is fairly easy. The story was purely to illustrate a way of thinking. I'm glad to hear that it got you intrigued.

Also, thank you for your wishes mate! :)
 
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thewalkingtemple

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I’ll be sure to Google all this the second I have some time.


  1. ETF’s
  2. Math
  3. TER equation
  4. Small cap premiums
  5. Nassim Taleb
  6. Math
  7. Nassim Taleb some more
  8. Math
  9. Nassim Taleb so close I can smell him
  10. Khaneman
  11. Tversky
  12. Dynamic Hedging
  13. Math
  14. Tom Sosnoff
  15. Derivatives
  16. Math
I couldn't have done a better job of that myself. I didn't even tell anyone on this forum how much I love mathematics. But somehow, it made it 5 times on the list. :D
 

Kevin88660

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I understand your concern. I think it stems out of a misunderstanding of the OP, which I'll try to clear.
I do indeed share a personalised account of my approach. The reason to do this to share with forum members the tools I have used to achieve monetary growth as a single person. I actually want to share with folks here that they can stop looking at it as a product to be purchased from someone else. Kick the f*cking middleman out of the window, put in the effort, and set your own personlised system up. That's pretty much my message. I do not share a how to, but rather, the tools I've used to set up mine. There are valuable key words littered all over this thread by now. I hope someday that someone who first started from this thread gets it and grows strongly.

I am not trying to build it as a product. I think if I were to do that, it would take me a few years to scale my knowledge to do it. Right now, as the system's designer, I have full control of my input variables. For a fund, client no. 225689 will want to randomly take his money out of the system on any given day. That becomes a totally different problem to solve, which requires me to scale my system as a human resource system.

I would never have another fund as my client. This is because Umbrella funds leech their investors one by one, and move onto the next ones. There are quite a few research papers that go into this. This goes against my sense of ethics. Besides, if someone is spreading their risk into 10 smaller funds, and you are one of the 10, who is the smart guy here? It's the same concept with Venture Capitals. They pressurise any given start up to go all in and not deviate at any cost. They exert immense pressure. But in parallel, the same venture capital invests in 50 different diversified startups. This means each start up carries huge risk, while the venture capital's risk is statistically diversified.
If you are doing it for fun that’s okay. But asking everyone else to adopt a complicated DIY approach for possible superior return in exchange for a large amount of gut wrenching time spent figuring out the financial market, in my opinion, is not a good advice.
 

thewalkingtemple

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If you are doing it for fun that’s okay. But asking everyone else to adopt a complicated DIY approach for possible superior return in exchange for a large amount of gut wrenching time spent figuring out the financial market, in my opinion, is not a good advice.
I respect your opinion. I am not asking everyone else to do this. Who am I to do that? Heck, I don't even consider my post advice.
I am merey sharing what I think are valuable tools for any entrepreneur who has a working unscripted business system. Such a person would ideally need to work on a money growth system anyway. Whether a person chooses this path or not is upto them. Of course, if it helps at least one person, I personally feel happy that I was able to contribute a tiny bit.
 
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Kevin88660

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I respect your opinion. I am not asking everyone else to do this. Who am I to do that? Heck, I don't even consider my post advice.
I am merey sharing what I think are valuable tools for any entrepreneur who has a working unscripted business system. Such a person would ideally need to work on a money growth system anyway. Whether a person chooses this path or not is upto them. Of course, if it helps at least one person, I personally feel happy that I was able to contribute a tiny bit.
The fastlane approach here is to generate large income from business activities so that they do not have to be a genius in investment, to have high recurring investment income (even with average investment return).

Unless someone is aspiring to be a professional money manager, in which they have the scalability of managing other people’s money, devoting a lot of time to “financial alchemy” according to my observation, is almost always a super waste of time and energy.

I know this does not sound like music to your ears, but I have seen too many men sucked into this.
 

thewalkingtemple

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The fastlane approach here is to generate large income from business activities so that they do not have to be a genius in investment, to have high recurring investment income (even with average investment return).

Unless someone is aspiring to be a professional money manager, in which they have the scalability of managing other people’s money, devoting a lot of time to “financial alchemy” according to my observation, is almost always a super waste of time and energy.

I know this does not sound like music to your ears, but I have seen too many men sucked into this.
I see your point. I also appreciate your intention to protect people who might end up being sucked in.

However, as I take a look at this keyword list from @Primeperiwinkle, I cannot imagine anyone who looks into these words (especially the people's names) ending up not gaining profitable life knowledge (not just financial knowledge). In the end, I'm not so full of myself to be blindly convinced of my ways. I've been wrong about many things in the pasth, and I could be wrong again. I'll let the folks choose for themselves.

I’ll be sure to Google all this the second I have some time.


  1. ETF’s
  2. Math
  3. TER equation
  4. Small cap premiums
  5. Nassim Taleb
  6. Math
  7. Nassim Taleb some more
  8. Math
  9. Nassim Taleb so close I can smell him
  10. Khaneman
  11. Tversky
  12. Dynamic Hedging
  13. Math
  14. Tom Sosnoff
  15. Derivatives
  16. Math
 

traction2

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I see your point. I also appreciate your intention to protect people who might end up being sucked in.

However, as I take a look at this keyword list from @Primeperiwinkle, I cannot imagine anyone who looks into these words (especially the people's names) ending up not gaining profitable life knowledge (not just financial knowledge). In the end, I'm not so full of myself to be blindly convinced of my ways. I've been wrong about many things in the pasth, and I could be wrong again. I'll let the folks choose for themselves.
Why don't you provide us with an example of one of your profitable trades, maybe people can make sense of it.
 
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I'm no genius mate; just another guy giving life his best. You are confused because what I have posted is not a how to guide. That's my mistake; I should have made that clear in the post. I've just tried to introduce what I consider as valuable concepts. Those need to be learnt. Depending upon someone's level, it could take a few months or a year or two. But anyone can get there.

Let me give you a fictional example (which I randomly came up with as I typed :) ) of the kind of thinking I'm talking about.

Let's say you have four neighbours:

a. Luca, who is a wheat farmer.
b. Sarah, who is an insurance provider.
c. Tom, who runs a bakery.
d. Rusty, who is just a wealthy floater.

Before you arrived, Tom used to buy wheat from Luca for his bakery. Rusty didn't give a f*ck about anything or anyone, whereas Sarah was selling random insurance coverages to all three.

You now arrive into the scene with your fancy cash. You have enough to buy three seasons' produce from Luca. You go to Luca first, and negotiate with him to purchase his produce exclusively and continuously for the next 3 years at a fixed rate. Luca agrees to it as soon as you promise him that you are willing to pay one half of the capital up-front.

You then go to Sarah and tell her that in case there is a poor harvest (pre-defined using a threshold number), you would like to cover your losses using a custom insurance package. You start working on a deal and come up with Y as the price of the insurance package.

You then go to Tom, and offer wheat for a fixed price for the next three years at a standard rate (with a profit mark-up). This price is 10 cents higher than what Luca offered it for (this ensures you a 130% profit during the first year, and 150% profit during year 2 and year 3, provided the minimum harvest target is met). So Tom is skeptical. But you question whether Luca had kept the same rate over a three year period. Tom realises that it was not the case, understands the benifit of a standard rate, and signs the deal. You setup Tom also with an insurance coverage with Sarah in case of a low produce year. You get brownie points from Sarah for helping with the deal.

You then go to Rusty, and offer a unique deal. You tell him that if your yield exceeds x (which is Tom's share), Rusty can have everything beyond it for his rich family. The only thing Rusty needs to pay is a small amount of Z per year (Z = your insurance cost owed to Sarah (y) + 0.5 of insurance cost owed by Tom to Sarah). Rusty is skeptical. But then you show him that 8 out of 10 times the last 10 years, your leased farm has produced much more than x, so Rusy is essentially making a favourable bet. Rusty finally agrees to buy the contract from you.

You then go back to Tom, and offer to pay one half of his insurance costs as sign of good will and continued business relationship for the future.

After one year Luca is happy and hard at work, Tom's business is doing reasonably well, and he is extremely thankful for your deal that enables him to sustain competitive prices, and Rusty is stocked with surplus produce you delivered. He treats you like you are his new best friend. You have made a handsome 130% profit on your intial investment. You now take 20% out of that and go back to Luca, and offer to pay for one half of his and his family's life insurance coverage costs (which starts to melt Sarah's heart). Luca is pleasantly surprised, and assures you of a long lasting continued business relationship. Sarah is so impressed with you, that she starts dating you (OMFG!!).

And they lived happily ever after.

Even though this was just a randomised story I made-up, there are some very fundamental concepts, and derivative instruments used intuitively without explaining what they are or how they work (i.e., the mathematics).
Great posts and so are all your other posts in this thread.

LOL at people asking for examples of profitable trades. I think that's missing the point.

I'm working on avoiding intellectual distractions that take focus away from working to make money, and finance is definitely one of those topics that can get me totally engrossed, it is a huge waste of time, except, I guess, when it isn't.

Lots of respect for the work you've done putting your system together and I hope it keeps getting better.

I've read Taleb's popular books, but none of his academic stuff. I'm jealous of the studying you've done, but I'm forcing myself to wait until AFTER I've got a solid CENTS business running and then I'll allow myself to get back into nerding out full time.

To everyone that didn't understand the OP, I'll try to explain what I got from it: instead of just trading stocks or whatever like a noob, @thewalkingtemple is acting like a professional money manager, making full use of financial instruments such as options to minimize loses and profit on both bull and bear markets. Lots of small bets that work together.

He had some other considerations, but that's the gist of it (I think, lmk what I missed).

i.e. the better you are at math the more effectively you can hedge your bets

Thanks for the thread @thewalkingtemple , very fun to read
 

Tourmaline

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How did Khaneman and Tversky come into play?
 

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