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“What we think, we become.” — Buddha

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“What we think, we become.” — Buddha

“The more you learn, the less you fear.” — Julian Barnes

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“The more you learn, the less you fear.” — Julian Barnes

rekodi rewards #HODL‘rs just like satoshi would have wanted (price tag: $1) || “satoshi collection” drops 03-09-2021

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rekodi rewards #HODL‘rs just like satoshi would have wanted (price tag: $1) || “satoshi collection” drops 03-09-2021

“Wealth creation is an evolutionarily recent positive-sum game. Status is an old zero-sum game. Those attacking wealth creation are often just seeking status.” – @naval

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Naval Ravikant Bot

“Wealth creation is an evolutionarily recent positive-sum game. Status is an old zero-sum game. Those attacking wealth creation are often just seeking status.” – @naval

no #NFT will be sold for more than 1$ by rekodi || we are democratizing access to scarce art || “satoshi collection” drops 03-09-2021

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no #NFT will be sold for more than 1$ by rekodi || we are democratizing access to scarce art || “satoshi collection” drops 03-09-2021

Grateful for @crypto888crypto Adding these two ladies to his Collection! Let it rain 2021 Sabet and See Beyond 2021 Sabet – See more on https://www.knownorigin.io/sabet

#nft #nfts #sabetnft #love @WhaleShark_Pro @whale_community $whale

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Grateful for @crypto888crypto Adding these two ladies to his Collection! Let it rain 2021 Sabet and See Beyond 2021 Sabet – See more on https://www.knownorigin.io/sabet

#nft #nfts #sabetnft #love @WhaleShark_Pro @whale_community $whale

Distraction vs. discipline.

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Distraction vs. discipline.

all rekodi drops will be limited works of art by an unknown artist || “satoshi collection” drops 03-09-2021

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all rekodi drops will be limited works of art by an unknown artist || “satoshi collection” drops 03-09-2021

Read Thread
1/20 Epic thread incoming: The NFT Playbook for Influencers With the recent spotlight on NFTs and the inevitable digital content revolution that it brings, here is a guide for the many influencers who are looking to lead in this new decentralized era. Let's Geddit:
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2/20 What are NFTs? NFTs are digital stuff that you truly own and manage. (@DeFi_Dad @AndrewSteinwold ) I can buy a skin on Fortnite but I don't truly own it as it is tied to the platform and I can't give it to my grandmother nor sell it at Walmart. I can with NFTs.
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3/20 How do NFTs work? By creating a NFT, you are creating a token with immutable proof on the blockchain ledger that records the origin, time and scarcity of that token. The token points to a file that could be a picture or a video, which is what your audiences see.
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4/20 How can I create a NFT? The process of creating a NFT is called "minting" and anyone can create a NFT on the widely available minting platforms today. Some of those platforms are @opensea @infinitytokens @mintable_app @mintbase @BuildWithCargo @rariblecom etc.
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5/20 What should my NFT look like? Your first NFT could be a picture, a video, a digital wearable or even an autograph. Use the opportunity to collab with your favorite artist/ designer/ musician. Check out @ParisHilton's very first NFT for charity:
Paris Hilton @ParisHiltonToday I am auctioning off my @Cryptograph of #Munchkin to benefit 3 amazing charities: @LAFoodBank @MealsOnWheels @BB4Homeless. The auction is live now for the next 72 hours at twitter.com
6/20 How many NFTs should I mint? A good balance between availability and scarcity encourages a healthy collector community. Structure your long term NFT strategy to allow everyone to be included but only the most amazing collectibles and perks only for your biggest fans.
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7/20 Use Case 1: Personal Milestones I used NFTs to document the @whale_community's journey from a $150,000 project to the $230 million valuation where it stands today. As the project continues to succeed, so does the value of those NFTs. Do the same with your career.
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8/20 Use Case 2: Collectibles The base use case of any NFT is collectibility. Your fans and community want to not only be a part of your journey, but also share in your successes. Allow them to do so by minting and sharing epic milestones in your life and career.
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9/20 Use Case 3: Lucky Draw Engage your community further by not only creating a NFT that is collectible, but also one that allows them to participate in the amazing things that you are doing IRL. Example? @LoganPaul with his first NFT drop: https://www.tubefilter.com/2021/02/22/logan-paul-sells-5-million-nfts-pokemon-box-break/
10/20 Use Case 4: Authenticity Tokens Are you also creating physical collectibles? NFTs have you covered. Mint NFTs to serve as a direct proof of authenticity that your collectors have an immutably authentic moment of your life and creative journey.
Giant Swan @A_Giant_SwanThe digital soul of my latest work is now imbued into it's physical vessel. This is how you explain an NFT to someone without saying any eye glazing buzzwords. Own this work 👇 @SuperRare #Cryptoart #NFT twitter.com
11/20 Use Case 5: Exclusive Content NFTs can also serve as a "key" to unlock exclusive content whether that be more photos, videos, writings etc. Empower your NFTs with protocols like @UnlockProtocol that allow your NFT holders to access the most exclusive of your content.
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12/20 Use Case 6: Exclusive Access NFTs can also serve as "tickets" to exclusive events and interactions that you have with your fan base. Case in point? @3LAU held a private listening party to unreleased tracks in the metaverse for collectors of his NFTs on @makersplaceco.
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13/20 Use Case 7: Reward Badges Inspire lifelong loyalty and advocacy by rewarding your most die-hard fans. You can create NFTs as a "badge of honor" for those special people that always had your back and journeyed with you through the ups and downs of your career.
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14/20 Use Case 8: Collect 'em all Enhance the community experience by using NFTs as a scavenger hunt or epic real world/ metaverse puzzle. Collect 'em all and receive a grand prize. NFT puzzle OGs such as @coin_artist and @josiebellini have shown how effecitve this can be.
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15/20 Use Case 9: Long term Collector Experiences Want to incentivize longer term holding of your NFTs? Empower your NFTs with token embedding protocols such as @DefiNft (Charged Particles) to create a Russian Doll of NFT secrets that unlock over time.
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16/20 Use Case 10: Hybrids Stack the use cases that I have mentioned above to create the ultimate experience for you and your fan base. The more fun and interactive that you make the experience, the stronger participation, engagement and advocacy you will see.
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17/20 Conclusion 1: Social Tokens NFTs are the first step in which we see blockchain technology revolutionizing the influencer space. Stay ahead of the game and read up on social tokens as I firmly believe that is the next step. Or, reach out to @tryrollhq and @terrycrews
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18/20 Conclusion 2: Play the Long Game Unlike other creators, influencers should view NFTs as a way to encourage long term fan engagement, loyalty and advocacy. It's amazing to see the $ entering the space, but I would focus on recognizing, rewarding and incentiving your fans.
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19/20 Conclusion #3: Empower Others This is a wonderful opportunity to empower creatives around you and in the general digital arts space through collaboration opportunities. Leverage your network for good and let's debunk the stereotype of the "starving artist".
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20/20 Final Thoughts NFTs have the power to not only change the digital asset ownership game, but also the world. Together, we can establish equality, tear down walled gardens and empower each other. Welcome to NFT-land my friends, we've been waiting for all of you ❤️
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WhaleShark.Pro

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Less is more.

“It is likely that unlikely things should happen.” — Aristotle

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“It is likely that unlikely things should happen.” — Aristotle

AVE⚡️
The whisper of swaying ear
________________________

Continuation of our tragic series with @melnukoff about a brave samurai.

We started our final work on our third and last art of this triptych
@ave.warriors
#samurai #ave #avewarrior

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AVE⚡️
The whisper of swaying ear
________________________

Continuation of our tragic series with @melnukoff about a brave samurai.

We started our final work on our third and last art of this triptych
@ave.warriors
#samurai #ave #avewarrior

“We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.” — Richard P. Feynman

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“We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.” — Richard P. Feynman

“Belief gets in the way of learning.” — Robert A. Heinlein

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“Belief gets in the way of learning.” — Robert A. Heinlein

new work will be ready tomorrow
continuation of our series with @melnukoff

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new work will be ready tomorrow
continuation of our series with @melnukoff

“Let There Be Light” by Utopian
#NFT #cryptoart

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“Let There Be Light” by Utopian
#NFT #cryptoart

One of the three pieces I just released on @makersplaceco! These are my first NFTs and I can’t be more excited! https://makersplace.com/davidariew/

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One of the three pieces I just released on @makersplaceco! These are my first NFTs and I can’t be more excited! https://makersplace.com/davidariew/

時をかける光線。

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時をかける光線。

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Direction > Effort

Read Thread
1/ Get a cup of coffee. In this thread, I'd like to share with you a simple way to measure and track your progress towards financial independence.
2/ Financial independence is an end goal. To define this goal properly, you need to answer 2 key questions. (i) When would you consider yourself financially independent? And, (ii) In how much time do you want to get there?
3/ Typically, financial independence means: a) You won't have to work another day in your life for money, and b) You and your family will still be able to live comfortably to the end of your days.
4/ Let's say you want to reach financial independence in the next 10 years. How much money do you need to amass by that time? Well, suppose your family's expenses are ~$60K per year now. If inflation runs at ~2% per year, 10 years from now, your annual expenses will be ~$75K.
5/ Let's say you want your expenses to be under 3% of your portfolio at that time. This is called the "3% Rule". It means your portfolio's size should be about $2.5M (as 3% of $2.5M = $75K). For more on the 3% Rule and such:
10-K Diver @10kdiver1/ Get a cup of coffee. In this thread, I'll help you work out how much money you need to retire. twitter.com
6/ So that's the goal: to amass a $2.5M portfolio in the next 10 years. Of course, this goal is personal. One size does not fit all. For example, you may feel comfortable only with a more conservative inflation assumption -- say 4% (not 2%) per year.
7/ Or in 10 years, you may become eligible for social security benefits. Of the $75K you need per year, $30K may come from social security. In this case, your portfolio needs to supply only $45K per year. By the 3% Rule, this means you only need a $1.5M portfolio.
8/ So, the exact goal you set will depend on your personal preferences and circumstances. But generally, a good way to arrive at this goal is to, a) estimate the annual expenses your portfolio needs to provide for, and (b) set a reasonable withdrawal rate (like 3%).
9/ For this thread, let's go with our original "$2.5M in the next 10 years" goal. That's "Step 1" in planning for financial independence: setting an end state (eg, a $2.5M portfolio) and a time to reach it (eg, in 10 years).
10/ Step 2 is simple. It's just figuring out your current status -- how far away are you from your financial independence goal? For example, if your current portfolio is worth $500K, you're already a fifth of your way there. You only need $2M more to reach your goal.
11/ Step 3 is the real meat: figuring out the various paths that you can take to go from your current state to your goal. Your path to financial independence will typically involve 2 activities: Saving and Investing.
12/ Let's say you save $S per year, and your portfolio grows at I% per year (S for Saving, I for Investing). If your portfolio is now worth $500K, you need to add $2M over the next 10 years to reach your $2.5M goal. Key idea: Several combinations of S and I can get you there.
13/ At one extreme, you can rely only on Saving. No Investing. If you're able to save $200K per year, that's $2M over 10 years. This $2M, plus the $500K you already have, gets you to your $2.5M goal -- with zero investing. This corresponds to: S = $200K, I = 0%.
14/ Of course, saving $200K per year is no easy task -- unless your income is super high, or you have a super profitable business or something like that. But if you can do it, you'll be able to achieve your financial independence goal in 10 years with zero need for investing.
15/ At the other extreme, you can rely only on Investing. No Saving. If you can compound your $500K portfolio at ~17.5% per year for the next 10 years, that alone takes you to your $2.5M financial independence goal. No need to save a dime more. This is: S = $0, I = 17.5%.
16/ Of course, compounding at 17.5% per year for 10 years isn't easy either, unless you're really good at investing (or really lucky!). But if you can do it, you'll be financially independent in 10 years -- even if you save nothing during this time.
17/ Most likely, you won't be at either of these extremes. You'll be somewhere in the middle -- relying on some *combination* of Saving and Investing to get to your goal. The more you save, the less you need to rely on returns from investing. And vice versa.
18/ Here's a picture showing various combinations of S and I. S is on the X axis. I is on the Y axis. The red region represents failure to achieve financial independence in the time allotted. The green region denotes success.
19/ As you can see, the higher your Savings (S), the lower the return you need from Investing (I) to cross over into the green region. This red/green chart is a super useful tool. It helps you track and measure your progress towards financial independence.
20/ Key idea: the bigger the red region, the further away you are from financial independence. Over time, as you make progress towards your goal, the red region will ideally shrink. The green region will expand.
21/ When you finally reach financial independence, the chart will turn all green. For example, if you already have a $3M portfolio, you need zero Saving and zero Investing. You've already achieved your $2.5M goal, and then some. Here's how that looks:
22/ So, you can track your progress by looking at how much the red region shrinks from year to year. For example, in Year 1, suppose you save $100K, and also get a 20% investment return. That's progress! The red region will shrink to reflect it. Like so:
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23/ But then, say Year 2 is a bad year for your investments. Your portfolio goes down 30%. But you partially offset that by saving $75K. Even so, this is a step back. The red region will expand:
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24/ Let's say your Saving and Investing results look like this for the first 9 years:
25/ This is progress in most years. But from time to time, there's an occasional setback. Still, it's enough to achieve the $2.5M goal -- a year ahead of schedule. Over the years, the red/green chart evolves like this:
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26/ So, here are the key ideas: Key idea 1: Set a financial independence goal. For example, "to amass a $2.5M portfolio in the next 10 years". You can arrive at this goal by making reasonable assumptions about expenses, inflation, withdrawal rates, etc.
27/ Key idea 2: Figure out what combinations of Saving (S) and Investing (I) will get you from your current state to your goal. You can do this by constructing a red/green chart like the ones I showed above.
28/ Key idea 3: Periodically track your progress towards the goal. Progress is measured by how much the red area shrinks from year to year. That is, over time, the chart should become more and more green.
29/ This means, over time, you bring down the Saving and Investing thresholds you need to meet your goal. As these hurdles become smaller, more and more combinations of S and I will get you to your goal. It'll become harder and harder to miss the goal.
30/ Also, from time to time, you may need to modify the goal itself. This is normal. After all, deciding on the goal is not an exact science. And a large part of it is based on personal preferences and circumstances, which can change over time.
31/ The important thing is to periodically review the goal, and change it if it no longer makes sense. Also, if the red area is not shrinking rapidly enough from year to year, you may need to find a way to earn more, save more, or invest better.
32/ Everything I've said in this thread is fairly simple. At its core, financial planning is not that complicated. If you start early, set goals, and regularly track your progress towards them, the odds are good that you'll achieve financial independence in reasonable time.
33/ For example, here's a heart warming story from @morganhousel's book, The Psychology of Money. A janitor built a net worth of over $8M -- by starting early, living below his means, saving responsibly, and investing reasonably intelligently.
34/ In my experience, when it comes to financial planning, a lot of people struggle with inertia. The first step is the hardest. It's not obvious how to get started. And once started, it's not obvious how to stay on track. I hope this thread helps with some of that.
35/ Thank you very much for reading to the end of yet another long thread! All the best on your journey towards financial independence! /End

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10-K Diver
Read Thread
1/ Get a cup of coffee. In this thread, I'll walk you through the importance of understanding *correlations* between bets. For example, a portfolio of *correlated* stocks can have very different performance characteristics compared to a portfolio of *uncorrelated* stocks.
2/ Imagine we put $100K into a stock. In the next 1 year, the stock could go down 30% (our worst case scenario). Or it could go up 50% (our best case scenario). Or it could give us a return somewhere between these extremes. Say all such returns are equally likely.
3/ A "probability density diagram" can be used to visualize such scenarios. On the X axis, we take all possible outcomes (in this case, -30% to +50%). And on the Y axis, we plot the likelihoods of these outcomes. Like so:
4/ Take any 2 outcomes on the X axis -- say, R1 and R2. Now, calculate the area under the probability density diagram between R1 and R2. Our probability of getting a return *between* R1 and R2 is exactly this area. Like so:
5/ This is called a "uniform" distribution -- *all* returns between -30% and +50% are *equally* likely. But we can also imagine other "non-uniform" scenarios, where *some* returns are more likely than others. Here too, probability density diagrams can help us. A few examples:
6/ Now imagine investing the same $100K, but splitting it across 2 stocks. Each stock gets $50K. As before, each stock can give us a return between -30% and +50%. And all such returns are equally likely.
7/ If our stocks are completely *uncorrelated*, our return from each would be *independent* of the other. This means: if Stock 1 does well, that doesn't increase (or decrease) the chances of Stock 2 doing well. And if Stock 1 does badly -- again, no effect on Stock 2.
8/ Here's a simulation of 1000 such "sample returns". Each blue dot is 1 random sample -- a return from Stock 1, and an *uncorrelated* return from Stock 2. As we may expect, our samples pretty much evenly cover an entire square region: [-30%, +50%] x [-30%, +50%].
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9/ But what if our stocks are *correlated*? For example, what if both stocks depend on the US economy? In a good economy, both tend to do well. And in a bad economy, both tend to fare poorly. This common denominator -- the US economy -- makes our stocks *correlated*.
10/ To be more precise, let's break our [-30%, +50%] return from each stock into two parts: a) The "low range": the bottom quintile [-30%, -14%), and b) The "high range": the rest [-14%, +50%].
11/ In a bad economy, we'll assume stocks will give us returns from the "low range". And in a good economy, from the "high range". Within each range, all returns are equally likely. And except for this "range setting", our stocks are otherwise uncorrelated.
12/ Suppose the economy has an 80% chance of doing well and a 20% chance of doing badly. In this scenario, each *individual* stock still has the exact same return distribution as before: uniformly drawn from [-30%, +50%]. Here's the probability density diagram to prove it:
13/ Yes, each *individual* stock is still the same. But when we take *2 or more* stocks together, correlation strikes. Because, depending on the economy, our stocks either give us *all* low range, or *all* high range returns. No mix and match.
14/ This "no mix and match" feature completely changes the portfolio's statistics. For example, here's a side-by-side simulation of 2 uncorrelated and 2 correlated stocks. The *individual* stocks on either side are the same. But the *portfolios* are starkly different.
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15/ Why stop at 2 stocks? Let's do N stocks! Let's do *uncorrelated* stocks first. It's much simpler. Suppose we split our money equally between N uncorrelated stocks. Each individual stock can have a wide range of outcomes -- in our case, [-30%, +50%].
16/ But as N (the number of stocks in our portfolio) increases, we become more and more likely to get an *average* outcome rather than an extreme one. In our case, the *average* outcome is (-30% + 50%)/2 = 10%. So, as we increase N, our return is likely to be close to 10%.
17/ Here are the probability density diagrams for N=1 through N=20. As we can see, even though each individual stock has a wide range of possible outcomes, our N-stock portfolio tends to have a much narrower spread around our average 10%.
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18/ In probability parlance, we say that as N increases, the "standard deviation" of our portfolio decreases. In fact, we know that an uncorrelated N-stock portfolio's standard deviation is proportional to 1/sqrt(N). For more:
10-K Diver @10kdiver1/ Get a cup of coffee. In this thread, I'll walk you through the basics of portfolio diversification. twitter.com
19/ To better understand the benefits provided by this kind of diversification, we can set a "bad" outcome and a "good" outcome for the portfolio as a whole. Then we explore what happens to the probabilities of these outcomes as the number of stocks in the portfolio increases.
20/ For example, suppose our "bad" outcome is a portfolio-level loss, ie, any negative return. And our "good" outcome is any return above 8%. For our uncorrelated N-stock portfolio, the probability of our bad outcome goes to 0% as N increases. Great!
21/ And the probability of our good outcome goes to 100% as N increases. Even better! Here are the probability density diagrams, plus the relevant area calculations, for N=1 through N=20: (I recently discovered @matplotlib's animated plots. And I love them! Oh, you noticed?)
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22/ Now let's do a *correlated* N-stock portfolio -- with the US economy being the common denominator as described above. With these correlations, our portfolio's statistics are *much* less pleasing.
23/ For starters, as N increases, our portfolio's return distribution becomes more and more "bi-modal". If the economy does well, we're likely to get a result close to the "high range" average (+18%). Otherwise, the "low range" average (-22%).
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24/ The overall average is still 10% -- same as the uncorrelated case. But there are big differences! In the uncorrelated case, the *average* outcome was also the *most likely* one. And with increasing N, the probability of getting a "close to average" return went to 100%.
25/ In the *correlated* case, there are 2 *most likely* outcomes: the "low range" average and the "high range" average. The overall average (10%) is NOT the most likely outcome. In fact, as N increases, the probability of getting a "close to average" return goes to 0%!
26/ Also, with correlated stocks, there's a hard cap on the benefits of diversification. As N increases, the probability of a good outcome (a return of at least 8%) does NOT go to 100%. It's capped at 80% -- no matter how much we increase N.
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27/ Similarly, the probability of a loss does NOT go to 0% as N increases. There's a hard floor at 20%. That's because, if the economy does badly (and there's a 20% chance of that), our portfolio *will* lose money -- no matter how many stocks we have in it!
28/ Key lesson 1: The presence of correlations can *dramatically* change the statistics of a portfolio -- including its probability density diagram (eg, uni-modal vs bi-modal), its most likely return, its probabilities of yielding good and bad outcomes, etc.
29/ Key lesson 2: Diversification can only reduce *some* kinds of risk -- the *uncorrelated* kind. Against other kinds of risk -- like the "common denominator" risk of the whole economy doing badly -- diversification is powerless.
30/ Usually, when there's a "common denominator" risk that makes all the bets in a portfolio correlated, it means the portfolio is under-diversified. This applies to a portfolio of stocks all exposed to the same economy, the same currency, or the same interest rate direction.
31/ It also applies to securitized loan portfolios. As we saw in 2008-09, common denominator risks and widespread correlations between loans in such mortgage pools dramatically increased the likelihood that the loans would all default together. No mix and match. Boom.
32/ Also, correlations can dramatically increase tail risks in insurance policy portfolios. For more:
10-K Diver @10kdiver1/ Get a cup of coffee. In this thread, I'll walk you through tail risks and their dangers. twitter.com
33/ It's often hard to estimate correlations within a portfolio of bets. All too often, "common denominator" risks only become visible in hindsight. Still, our best best is to search proactively for sources of correlation, and plan conservatively in case they come to pass.
34/ Also, the damage caused by a correlated set of failures can be so high that only governments have the resources to fight it. For example, a pandemic that shuts down the world economy may be a source of correlated risk. But many individuals may be powerless here.
35/ Similarly, we may be powerless against a large scale cyber attack. And even governments may be out of their depths in some situations -- for example, a meteor striking the planet or something like that. We can't eliminate all risk. Sometimes, we just gotta live with it.
36/ Thanks for taking the time to read another one of my long threads. In my experience, a lot of people don't understand the impact of correlations on a portfolio of bets. I hope this thread was able to shed some light on it. Please stay safe. Enjoy your weekend! /End

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10-K Diver

“It is difficult to find happiness within oneself, but it is impossible to find it anywhere else.” — Arthur Schopenhauer

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“It is difficult to find happiness within oneself, but it is impossible to find it anywhere else.” — Arthur Schopenhauer

Read Thread
1/ Get a cup of coffee. In this thread, I'll help you understand the concept of Half Life, and how it's relevant to investing.
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2/ Half Life was first discovered around 1900 by the physicist Ernest Rutherford. At the time, Rutherford was studying radioactivity in Thorium.
3/ Rutherford discovered that the radioactivity of a Thorium sample did not stay constant with time. Instead, it shrank exponentially. Every passing minute, the radioactivity got cut in half. And after 10 minutes, it became too weak to measure.
4/ This observation -- made by Rutherford in ~1900 -- forms the basis for how scientists model radioactivity even today. The model goes by the fancy name "first order kinetics". It's based on 2 simple facts.
5/ Fact 1. If we take a bigger quantity of a radioactive substance, we'll see more radioactivity from it. For example, if you have 200 grams of Uranium, and I have only 100 grams, you'll see twice as much radiation as I do. Seems almost obvious, no?
6/ But here's the thing. Fact 2. As a radioactive substance emits radiation, it decays into more stable (less radioactive) substances.
7/ So, there's a negative feedback loop here: We may start with a large quantity of a radioactive substance. It will emit a lot of radiation. But it will also decay fast. And as it decays, it'll emit smaller amounts of radiation. And its decay will also slow down over time.
8/ Eventually, the amount of (undecayed) radioactive substance left will approach zero. This will happen in an *exponential* way: the rate of decay will be fast in the beginning, and will continuously keep slowing down over time.
9/ Such exponentially decaying phenomena have a quantity called Half Life associated with them. Simply put, it's the amount of time taken for a radioactive substance to decay so much that only half of it is left.
10/ For example, Rutherford observed a Half Life of 1 minute for thorium oxide. So, if we start with 200g of this substance, only 100g will be left after 1 minute. The other 100g would have decayed. After 2 minutes, only 50g will remain. After 3 minutes, only 25g. And so on.
11/ Note: it doesn't matter how much thorium oxide we start with. How ever much we start with, only half of it will remain after 1 minute. If we start with 200g, 100g will remain after 1 minute. If we start with 400g, 200g will remain after 1 minute. That's Half Life.
12/ To drive this home, here's an example from my high school physics textbook: (I went to high school in India. The NCERT physics and math textbooks I studied from were the best! They're available for free here: https://ncert.nic.in/textbook.php )
13/ Half Life has become such a useful concept, with applications from archaeology to biology. For example, here's an exercise problem from the same textbook -- using Half Life to do carbon dating. See if you can solve it! I'll give out the solution in next week's thread. 😀
14/ I can hear you ask: This is all no doubt very interesting, but how does any of it relate to investing? You see, Half Life and inflation are closely connected.
15/ Inflation is like radioactivity. A dollar of cash is like a radioactive substance. As inflation hits, the purchasing power of that dollar decays exponentially with time.
17/ Over every Half Life, dollars held as cash will lose half their purchasing power. For example, suppose we have a suitcase full of cash. Let's say it contains $1M. And let's say this $1M will buy us about 100K burritos today (at ~$10 a burrito).
18/ Suppose inflation is 4% per year. Then, in 18 years time, the same suitcase (with the same $1M of cash in it), will only buy us 50K burritos. Because, between now and 18 years from now, the price of a burrito would have increased to $20.
19/ And in another 18 years (ie, 36 years from now), our purchasing power will be further halved. Burritos would have again doubled in price, and our $1M then will only buy 25K burritos. And so on. Every 18 years, our dollars will lose half their purchasing power.
20/ In a sense, the purpose of investing our cash is to preserve (and if possible, grow) its purchasing power. Our dollars, if kept as cash, are continuously radiating away their purchasing power at an exponential rate. Hopefully, if invested well, they won't do so.
21/ As Buffett put it in his 1980 letter: (He used hamburgers instead of burritos, but the principle is the same!)
22/ The same logic holds when companies reinvest their earnings instead of paying them out as dividends. The hope is that shareholders will see $2 in the future for every $1 they forego in dividends today. But what counts is the *after tax purchasing power* of this $2.
23/ If the $2 comes late in the future -- after the Half Life of a dollar -- then shareholders would have been better off with the original $1. This is why earnings growth should always be viewed relative to how much capital is required to produce it.
24/ If the *after tax* return earned by shareholders on such reinvested capital is lower than inflation, then shareholders would likely be better off if that money were never reinvested, and instead just given to them as a dividend. For more:
10-K Diver @10kdiver1/ Get a cup of coffee. In this thread, I'll help you understand the relationships between *investing* and *inflation*. twitter.com
25/ To summarize, I've found Half Life to be a useful concept when analyzing exponentially decaying things -- the purchasing power of a dollar, the share count of a company doing buybacks, etc. And the Rule of 72 has helped me mentally calculate such things pretty easily.
26/ So, I hope these ideas are useful to you as well. Thanks for reading. Stay safe. Enjoy your weekend! /End

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10-K Diver

“Don’t tell people your plans. Show them your results.” — Unknown

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“Don’t tell people your plans. Show them your results.” — Unknown

I’m so incredibly stoked and honored to collab with the legendary @bosslogic on this one. 👊

‘For My Brothers’

Artwork by @bosslogic
Animation by @retro1sheet
Music composed by http://CO.AG Music
#tmnt #thelastronin

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I’m so incredibly stoked and honored to collab with the legendary @bosslogic on this one. 👊

‘For My Brothers’

Artwork by @bosslogic
Animation by @retro1sheet
Music composed by http://CO.AG Music
#tmnt #thelastronin

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tarantino

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“Truth.”

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Futures 101 Over the last several weeks, I've hit on the basics of some common forms of derivatives, including call options and put options. But there is more work to be done. Let's go Back to the Futures. (sorry, I'll show myself out) Here's Futures 101! 👇👇👇
2/ A futures contract is an agreement to buy or sell a specific amount of an asset at a specific price on a specific future date. Whereas an option gives the holder THE RIGHT to buy or sell an asset, futures are AN OBLIGATION.
3/ A few key terms in futures: Tick Size: Minimum price fluctuation of contract Contract Size: Quantity of asset in one contract Notional Value: Contract Size * Underlying Asset Price Delivery: Either financially settled (with cash) or physically settled (goods delivered)
4/ When and why are they used? Futures have two key use cases: 1⃣- Hedging 2⃣- Speculation Let's use simple examples to look at each of them.
5/ First, hedging. Imagine you are a rice farmer. You sell your rice to Happy Fish Sushi, a chain of sushi restaurants. If rice prices rise, that is good for you, but bad for Happy Fish. If prices fall, the opposite is true.
6/ Both you and Happy Fish want to plan your business and limit your exposure to movements in the price of rice. So you make an agreement. You will sell (and they will buy) a set amount of rice at a fixed price on the 1st day of the month. This is a futures contract!
7/ Now, whether the price of rice rises or falls, you know how much you will be selling your rice for and Happy Fish knows how much they will be buying their rice for. This is a simple example of how futures may be used to allow businesses to hedge - i.e. limit - risk.
8/ Next, speculation. Another very simple example. Say I am bullish on gold prices. I think the price should be $3,000+ per ounce, but see the September futures contract is at $2,500. I buy one contract. September arrives and the price of gold is $3,500, just as I predicted.
9/ My futures contract obliges me to buy at $2,500 per ounce, but I can sell at $3,500 per ounce. I can either (a) take delivery of the gold and sell it or (b) sell the futures contract to someone who will. I used futures to speculate on a price movement (and profited from it).
10/ Highly-traded futures markets include commodities, stock indexes, currencies, interest rates, and precious metals. Trading in futures typically requires a margin account, which entails real risks. For a primer on margin trading, see the thread below.
Sahil Bloom @SahilBloom1/ Margin Trading 101 If you follow the stock market and financial news, you’ve undoubtedly heard a lot of talk about margin trading or margin calls. But what is margin trading and how does it work? Here’s Margin Trading 101! twitter.com
11/ So those are the (very) basics on futures. That's Futures 101. If interested, we will get further into the mechanics in Futures 102. For more educational threads on money, finance, and economics, check out my meta-thread below. Stay tuned for more!
Sahil Bloom @SahilBloom1/ An Allegory of Finance I have been posting a lot of educational (and humorous!) threads on finance, money, and economics. My mission is simple: to demystify these concepts and make them accessible to everyone. All of the threads can be found below. Enjoy and please share! twitter.com

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Sahil Bloom

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