So update as of November 23rd, 2022...
FTX is bankrupt, with at least an $8 billion hole on their balance sheet. Customer funds gone, many people lost 6 and even 7 figure balances.
So... what were those odds on "FTX.com losses a substantial amount of user funds" again?
The more info that comes out, the more it looks like the entire thing was fraudulent from the beginning. They even have a software back-door that allows them to transfer funds without alerting auditors, which it looks like they used many times with FTX customer deposits.
3 arrows capital: bankrupt.
Terra Luna: worthless.
Genesis: likely bankrupt.
Digital currency group: ???
Obviously this is hindsight, but you should STRONGLY update, because it looks like the counter-party risks were well over 10%. In fact, many were even calling SBF and FTX fraudulent well before it came to light and blew up, but people didn't really listen.
We all need to strongly update on this. I know I have.
I'd also encourage you to consider what happens if/when the SEC decides to finally label every "crypto" except Bitcoin a security, and force them to file S1 disclosures. This process will likely be greatly accelerated by the FTX debacle. I suspect MANY of these "projects" will completely fall out of favor, being out competed by better securities like Google and Apple. Their current price merely reflects their regulatory arbitrage, which will end.
It always derails me a bit, and then I realize it's a gender neutral singular and move on. "They" has been adopted for this purpose, and my brain is used to understanding "they" as gender neutral singular. Sure, it's overloaded, but it's not that big a deal, and it has the momentum on it's side.
Here's a good one:
Inflation is good because give everyone money / inflation is bad, deflation is good / small inflation may be necessary to offset human loss aversion
One that really irks me is compound noun with a pronoun usage:
Always "Me and X" / Always "X and I" / "X and I" for an subject and "X and me" for an object
The second one is being smart enough to know that "Me and X went to the store" is improper because you're using "Me" in a subject, but not smart enough to know how to fix it, and instead just replacing "Me and X" with "X and I" one for one in every sentence.
What makes my blood run hot (and gives me that "like to argue it" high, I think) is that the middle section are trying to signal they're "above the peons" by using "he and I" like a sophisticate, when in reality they are just using different improper grammar, and doing so just as often as the peons they want to be above. Even worse, the other mid-wit contrarians actually accept this signal of how sophisticated everyone is talking.
I don't think this should bother me so much, but it does.
I agree. Here are some predictions:
Note that the formula listed in the article is the Kelly formula for when you lose 100% of your stake if you lose the bet, which isn't always the case.
The Kelly formula is derived from the starting point of:
Essentially, after a sufficiently large number of n wagers, you expect to have won pn times and lost (1-p)n times. Each time, your previous bankroll is multiplied, either by (1 + b*wager) if you won, or by (1 - a*wager) if you lost.
Often, a = 1. Sports betting, poker tournament, etc - if you lose your bet, you lose your entire wager.
Sometimes, though it isn't: For something like an investment with a stop-loss, for example, the downside risk could be something like 20% instead of 100%.
If you leave it as "a" instead of assuming a=1, you end up dividing that first term by it:
I love how one of the paragraphs in here is essentially:
"Buy bitcoin, not investment advice."
In all seriousness, though, what makes you believe you have an edge over the market, when it comes to the crypto crash due to Omicron? Everyone in the market is trying to price in the risk of Omicron, why do you think you can do it better?
I certainly believe Omicron poses essentially zero risk to bitcoin, and so if the market is pricing in such a risk, I'd like to buy, but is it actually justified to believe my appropriation of the risk is more accurate than the market's as a whole?
Would you mind clearly articulating where you think your edge is?
Zvi, you're an absolute legend. Thanks for getting these out so fast. If it weren't for your write-ups, I have no idea where I would go for anything even remotely resembling a minimally biased, rational review of the current evidence.
"A witty saying proves nothing." How ironic. I love it.
As long as the reputation doctor had committed to publishing the results regardless of what he found, then, yes, the data has equal evidential weight.
However, the story seems to imply he would have continued testing indefinitely until he got it right, and if he didn't, he would have faded into obscurity.
The issue here is that we must SEE the data in the possible world where he has a 58% cure rate with N=1000 (kept trying, kept trying, kept trying, eventually published), if we are to accept his 70/100 results in this world.
If, on the other hand, we would only see the 70/100, but wouldn't have seen the 580/1000, then the 70/100 does not carry the same weight as the other doctor's 70/100.
Imagine a world where the true success rate is 58%. We have 1000 biased researchers all doing the experiment and not publishing when they get 580/1000. The few who get lucky and get a 70/100 publish, leading to the 70%+ success rate results being very over-represented in the data we see.