Episode 971: Why Marginal $ Beats Passive $ When the Bubble Pops ｜ COMPILATION

**Martin** (0:00)
Is that the drug is a miracle drug. If you've been around the biotech hoop, which is why there are people paying 150% short interest, you know, they're not paying that because it's fun to pay 150% interest. It is not fun to pay 150% interest.
The reason they're doing that is because they know that usually when this kind of thing happens, the company's enrolled people that are really healthy. Not every patient's the same. Not every patient has the same, everybody dies at six months. That's not how the world works. There's people who live for nine, there's people who live for 12, there's people who live for 18, there's people who live for 24 And if the doctors have been enrolling really healthy people, the trial's gonna skew closer to the longer numbers than the earlier number. That's just the way it is.
To automatically assume, oh yeah, the drug's gotta work, is very naive. Just be aware of that risk.
Not saying it should invalidate your thesis, but just, you know. Yeah, it's a good question. Source for Edge is, you know, listed long short equity. It's not simple to find any alpha, but, you know, I don't think, you know, as long as you stay abreast of what the current methods are, which have evolved a bit, you should be able to find some alpha. I think if you're really stuck in the old methods, expert networks, things like that, I mean, you really have to get involved in new stuff that's going on. You know, agents, probably, if you're not using agents and scrapers and automated trading, you're probably going to fall behind. And then, you know, international was another perennial one, where like you really have to be on top of foreign stocks. If you're just doing US long short, I mean, you're asking for it. I sold all my SanDisk. It's got too much similarity to Micron to even belong it. I mean, that's the same stock. If you got both stocks in your portfolio, you're really not doing, having both of them doesn't make any sense. Yeah, I don't care about technical analysis. I do care about relative strength. I do believe, especially interpreting it versus news matters a lot. You know, if you have a stock that has good news, and it's not going up, that's pretty bearish. If you have a stock that has bad news and it doesn't go down, that's usually a sign all the sellers are out. That's pretty bullish. This is some simple stuff. It's not technical analysis, but you know, you do want to understand how the players are seated at the table. Longs, shorts, etc. That's not technical analysis, but it's sort of in the ballpark of, you know, you want to know where the supply and demand lies. I just gave you a list of my longs, so. And then on shorts, I'm short SpaceX, short Intel, and I think I was short Broadcom, but I'm out. Yeah, I'm out. And I'm for ADI analog devices. I'm short Moderna, I'm short Quantinium, short tiny bit of Pfizer. You know, I just started a couple days ago, so I'm just trying to take it easy, not do anything too crazy. I haven't been actively trading in a while. Well, crowd of trade is you have some money that is patient, that buys and holds and does nothing. Then you have marginal dollars.
Marginal dollars are folks that want to get in and out quickly. Those folks kind of decide the price of stocks more than the passive dollars. And the guys that want to get in and out quickly, they in the short run decide the marginal price. In the long run, marginal price is kind of set by an unseen hand that looks at earnings. But in the short run, if I want to sell a million shares of Micron, it's going to pressure the stock 10 bucks. Now, I might go to a real long-term buyer who's sitting there gobbling up these shares. That's great. He's there buying, but I'm really driving what price he's buying at. Our 51% guy's almost broke. He's at $3. Rough drawdown, bro. He really has a 51% edge too. Sad. This guy's struggling. Luck certainly plays a role too. Did he crash out? He crashed out. That sucks. With 51% edge?
Well, how about with 53% edge? I don't know. That was Kelly Optimal too. That was really bad.
Sucks for him.

**SPEAKER_2** (4:02)
And that class was really fun because it talked to real professionals. And I think that class would teach you something like DJN 101 I mean, not hyperliquid.

**Martin** (4:11)
I think MBA class for sure. I think undergrads kind of.