Can You Really Be Wrong "ALL THE TIME?"
There's a common pattern in investing and trading - across pretty much all disciplines - where if you're right, the best that anyone can do is be right 55-60% of the times.
But if you're wrong, you can be wrong most of the times if not all.
There are enough stories of people who are able to stick around because "they're wrong all the time" but I've never really questioned if they are indeed wrong "all the time" - ie. there's a story of Carson Block, founder of Muddy Waters Research, where he mentioned in one interview that his dad was that kind of guy "who's wrong all the time and that's the only reason he had a job".
I find this fascinating but have started to question its legitimacy. Like could it just be a sampling and confirmation bias making us believe that those who are wrong about markets a lot can be wrong "all the time" or "most of the time"? And is the true percentage of them being wrong is also 55%-60% of the times?
Love to hear some thoughts. If you've been around "people who are wrong all the time" perhaps you can confirm as well. I just haven't been around people like that.
Just as an example from looking at my PA's trade history, I'm wrong (just in terms of # of trades) ~90% of the time because I'll play around with lots of things purely out of curiosity that I don't have any real edge on in terms of understanding. The difference-maker comes down to only betting the farm on that 10% I have deep understanding of which (hopefully) makes up for all the fuck ups. That's probably what saves a lot of these folks who are wrong "all the time" because when they do happen to be right it's like hitting the jackpot on slots. Call it "strategy" if you want or summarize it as a crippling gambling addiction, but it's certainly not what 99% of people should be doing lol
If you’re wrong 90% of the times. Why can’t you just reverse your decision all the time?
Wait that’s actually stupid because in private markets you really can’t take a short position that easily.
Honestly I know what you mean - same goes for venture investing but really I just try to be more thoughtful and won’t invest in anything at idea stage. Need the whole experience.
Because as soon as I hit that buy button god texts "and fuck you too" to whatever I found interesting in the spur of the moment haha
What I consider my "PA" is exclusively public stocks/options/credit or crypto, I didn't co-invest when I was in PE (and won't touch VC) because I hate capital lockups praying for DPI and am not rich enough to make meaningful allocations. I don't count equity grants or operating businesses/real estate, I think of that as retirement insurance to set and forget.
Minimum check size is usually $30K for venture deals so idk what you mean not being rich enough. But yeah I get hating lockups.
But why don’t you just reverse your bets on public market bets
Dude $30k is a lot of money! The vast majority of the US (let alone the world) has MUCH less than that in actual disposable income that they can afford to lose in a given year. And with the hit rate of VC I certainly don't trust myself enough to be the one writing a check that size into a single company that's early stage. I'm talking about rich enough to actually allocate to funds/solo GPs, not to throw money at some random CEO with an idea - I'd rather leave that to the people managing other people's money.
Just reversing my bets in public markets isn't that simple - see the market knows I know it knows I'm a dumbass and will account for that and fuck me no matter what I do. Just the way of the world. Which is why I limit my purely speculative trades to a few thousand at most unless one looks like it's turning into a definite winner. I threw $500 into fartcoin at 10c because I thought it was funny and didn't put in any more until it was at like 50c then dumped 90% of it as soon as it crossed $1. That's the kind of stupid shit I have fun with.
It literally says you’re a VP (I’m guess at PE) so how do you not have $30K to invest ?
Venture portfolio realistically you should have 5-10 at any point in time and lifecycle is couple years. That’s like $150-$300K throughout like 5-10 years.
If one put aside $30K of their disposable income each year instead of blowing it on nice watches and a better rental it’d very much be affordable.
If you spend enough time understanding one aspect of technology really well (usually takes 1-2years to learn the technicalities which is not bad), you can find at least 1 good opportunity to invest in each year if you go to good events often.
The economics are very much achievable for a mid career professional who’s a bit entrepreneurial. Especially easier if you work in high-income fields.
I'm not in PE anymore (was for 5+yrs), I left to start a company with some other, much smarter folks which has been a ton of fun (and stress). It's not about not having the money. I just know I'm not "that guy" and don't believe I'm going to be the lucky bastard to uncover the next Uber/Anthropic seed round. Maybe if I come across a really exciting company/amazing founder that will change, but so far that hasn't been the case. I'm not a venture capitalist and frankly think most of the VCs I've met over the years are dumbasses who occasionally get lucky (and their returns don't offer much of a counterargument).
I don't see any rationale for why I should take that kind of risk and try to build a portfolio from a dart board of private companies hoping for 1-2 of them to hit it big in the next 10yrs when I can just fuck around with more liquid opportunities that can be immediately cut as soon as I notice I'm losing.
I like my life. Living comfortably, no wife/kids (for now), can go out with friends, play poker, and invest for funzies should the mood strike me. Sure fresh out of college I was like any other wannabe hardo on this forum thinking I'm going to grind it out and become the next Henry Kravis, but I've been humbled enough times to recognize that barring me hitting the powerball jackpot it's just not gonna happen. I'm content.
Can’t see comments for some reason
Don't worry, Zohran Mamdani is wrong 100% of the time, yet is on track to becoming Mayor of the most important city in the world.
Believe in yourself, people!
Someone threw doo doo at this comment, mean there is someone on Wall Street Oasis who's triggered by anti-communist sentiment. What a time to be alive.
Not knowing the difference between democratic socialists, socialists, and communists doesn’t make you some sort of real American, it just makes you come across as uneducated. It’s also yet another occasion of bringing up politics where they don’t need to be.
There’s plenty to criticize about Mamdani without saying he is “wrong 100% of the time” (he isn’t) or that he is a communist (he also isn’t.) That is most likely why people are throwing shit: the idiocy of online discourse around topics these days.
Hit rate is one half the equation, other is slugging %...what matters more if what you can psychologically withstand.
Yeah ofc. But if you’re systematic enough I assume you can just automatically filter out opportunities with low impact.
Everyone has their spot.
I just haven’t come across people who are actually wrong most of the times so I’m wondering if it’s actually closer to wrong 60% of the times if they are consistently wrong
I know but that’s not the topic.
Question is do ppl who are “wrong all the time” actually wrong significantly above 60%
Lots of industries have winners who are only right ~55% of the time. Roger Federer said in his whole career he only won around 55% of his points. Successful blackjack players win ~54% of the time. If you can consistently win 55% in almost everything, you're successful.
Interesting but can someone be wrong all the time? because all that people have to do is just reverse the wrong decisions that someone makes. Decisions in markets are bidirectional
Geesh only 1 person has answered the actual question…
Obviously there’s the Inverse Cramer index (or there was) but we don’t know if it’s because the person who made the index was an idiot and didn’t think carefully about how allocations was handled or that Jim Cramer isn’t actually always wrong.
I'd think that you are more likely late than wrong. If you're buying after all good information is priced in, you're not going to beat the market. If you buy thinking you have an informational edge but market isn't convinced the stock should go up, you are wrong. You just need to be right on sol many things (price, timing, fundamentals, management) vs wrong only on one, so it does track.
Natus repudiandae corrupti alias. Et debitis porro optio eligendi reiciendis. Odio maiores sit laborum tempora assumenda. Sed aut velit accusamus asperiores.
Omnis aut qui voluptates esse libero nobis in. Qui quisquam eum non occaecati consequuntur dolore.
Quos qui nesciunt iusto debitis in. Ut iure laboriosam natus quisquam. Sint culpa quidem nulla vel voluptatem excepturi autem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...