Episode 967: Burned Myself Shorting Amazon. Meta on Sale, Reddit Stock, Nvidia, SanDisk Short

**Martin** (0:00)
I wish I had spent some time on those types of simulations long ago. You know, I first started thinking about them in 2005 or 2006
And this is after conversations with SAC Capital.
And this is something I think they thought about quite a bit. And the trades per day, the portfolio turnover is really kind of crucial because, you know, in these cases, all these were like really great bets. But imagine you can only get one good bet a day, and it's a 60-40. But you're smart, you bet sort of a conservative amount each time. How long does it take for you to win big? Doesn't take very long. So you find one good bet a day. Look how rich you'll be. And this includes losses, this includes plenty of mistakes, 60-40. I mean, just in under, just in about under two years, you'll be multi-millionaire.
From $10,000, anybody can make $10,000, right? Two years will be worth about $5 million. You could start today. The problem is, how do you find one good bet a day? It's not so easy. Maybe you watch me. The overconfidence is the problem. So within three years, you're worth almost a bill. That's it. One 60-40 trade a day. That's it. I don't know much about Albania. So adding to winners is kind of like a, it's almost a mini Kelly game in and of itself. Yeah, so one 60-40 bet a day. One trade a day that you're that sure of, you become, this is how unlikely it is to some extent, but you know, you become a trillionaire. Just one a day. In fact, if you made one a week, one a week, you'd become extremely wealthy.

**SPEAKER_2** (1:35)
Let's see, this is, let's see.

**Martin** (1:38)
This would happen over six years. So instead of, hey, good morning. So 1529 trades, so that's over 52 weeks. Yeah, if you did one a week, it would be awfully slow. Well, let me check, let me check, hold on. Get the wrong number, 909
This took, no, that's right, that took 1529 trades.
So if you did one of those a week, it'd be a little, you know, that'd be too hard. It's the number here, times 52 So that's, no, that's not the right way to do it. That's 1529 once a week. Why am I so, my brain is so scattered here. There we go. Yeah, so that would take 29 years. And you'd be one of the richest people in the world. All you'd have to do is find one good trade a week.
And I don't mean perfect, just 60-40.
Doesn't sound that hard, right? The discipline is the hard part. Our egos, our greed, our fear, that's what controls us. If you can find a way to control that, you do great. This is why quant funds work out so well. Quant funds just print money. If you think about renaissance and things like that, I mean, again, you know, having a 50.1 or 50.3% edge, what do you do with a 50.3% edge? Well, you go to Kelly and you can do full Kelly, half Kelly, quarter Kelly, and let's say do, I don't know, 200 trades a day. Quants do thousands of trades a day. And you can see the P&L there slowly rising. You let that run and you'll see that this is an incredibly successful strategy. It doesn't take long for it to take over the world. That's why the quantitative investing world is so beautiful. There's no emotions. You can program it to make the bets that you want. And I think some of the software we're going to do here is to... So yeah, I think it's something we can do where you can, to some extent... Maybe our software can warn you if you're making too big of a trade or something like that. He's calling me at 9.15 in the morning. It better be important. TurboTax?

**SPEAKER_2** (3:36)
Man, you stupid.

**Martin** (3:38)
Oh, this fund isn't renaissance quite yet. It's been a little bad luck, but it should keep going. I'll leave that open. We can't minimize this, I guess.

**SPEAKER_2** (3:45)
It's all right. Put it over there. Volume easy.

**Martin** (3:48)
What's 89.49? I don't even know what that is. Form 89.49. Yeah, I wonder if Bloom starts rallying. Bloom is one of these companies that when I, Bloom is one of these companies that when I was drawing that earnings distribution or earnings over time, it's not really a distribution.
Earnings forecast over time, talking about area under the curve. It's kind of one of these companies that's like, yeah, it's really useful for like data center build out, but then what happens when the build out's over? Build out's not going to be over forever. It will always be building out new things, but I don't know what it still feels like. That seems like a temporary cash flow to take advantage of. How's our little renaissance doing? It's been two or three months, and it's up three or four percent. That's pretty good so far. We'll see after a rough spill. Nine minutes from the open here, markets are covering nicely. The leverage will kill you every time. I mean, you don't want to be big and levered.