There's a layer of vol directionality in my fund's strategy, even if it's mostly long equities. As I read the market maker's DM and your own perspective on the mind share trading takes, I realized that the vol part of our strategy can sometimes take upwards of 80% of mind share when I should really be spending 80% of my time on analyzing businesses for the equities side. And our vol part is far from advanced to people like you, it's pretty basic actually.
It's refreshing to read your take on trading. Anytime I feel like I should go in much more depth on options strategies, I read you and realize it takes a hefty amount of knowledge, but also experience and luck. Then, I realize equities investing works in similar ways, although the signals aren't as quantitatively sound imo so there's undoubtedly more space for "intuition". But there's still knowledge, experience and luck.
I'd be interested to know how many people you've worked with are actively aware of this, or it they're prone to taking all the credit for their gains and blaming the market for their losses. This is a common problem with equity investors. They operate under the impression that luck is a distant second to raw analytical ability. It can make the whole thing feel a bit nasty.
Option traders esp those who have come from mm backgrounds have very good understanding of things like luck and risk expectancy. The job requires a lot of ruthlessness to oneself because the feedback loops aren't long enough for you lie to yourself :-)
The flipside of this ruthlessness is the mindset can also be paralyzing outside of trading. Traders make great critics but investing might require some different skills as well.
That said, investors who lack a trader's disciplined thinking will be rate-limited by that when it comes to alpha.
But beta bails most investors out while it doesn't bail out traders so you end up with one population that's more calibrated than the other. it's like an evolutionary selection effect.
The money angle for masochists rings especially true.
I think part of the physical toll (2) is your mind being forced to wrangle with the outcomes of luck and distributions (5)
Re: Parenting you may enjoy Yeager’s book 10 to 25.
looking it up
There's a layer of vol directionality in my fund's strategy, even if it's mostly long equities. As I read the market maker's DM and your own perspective on the mind share trading takes, I realized that the vol part of our strategy can sometimes take upwards of 80% of mind share when I should really be spending 80% of my time on analyzing businesses for the equities side. And our vol part is far from advanced to people like you, it's pretty basic actually.
It's refreshing to read your take on trading. Anytime I feel like I should go in much more depth on options strategies, I read you and realize it takes a hefty amount of knowledge, but also experience and luck. Then, I realize equities investing works in similar ways, although the signals aren't as quantitatively sound imo so there's undoubtedly more space for "intuition". But there's still knowledge, experience and luck.
I'd be interested to know how many people you've worked with are actively aware of this, or it they're prone to taking all the credit for their gains and blaming the market for their losses. This is a common problem with equity investors. They operate under the impression that luck is a distant second to raw analytical ability. It can make the whole thing feel a bit nasty.
Option traders esp those who have come from mm backgrounds have very good understanding of things like luck and risk expectancy. The job requires a lot of ruthlessness to oneself because the feedback loops aren't long enough for you lie to yourself :-)
The flipside of this ruthlessness is the mindset can also be paralyzing outside of trading. Traders make great critics but investing might require some different skills as well.
That said, investors who lack a trader's disciplined thinking will be rate-limited by that when it comes to alpha.
But beta bails most investors out while it doesn't bail out traders so you end up with one population that's more calibrated than the other. it's like an evolutionary selection effect.