Wednesday, June 13, 2012

Wednesday

Part of a Q&A with Ed Thorp: "It all depends on how confident you are about your edge. If you have a really strong conviction about your edge, then the best thing to do is sit there and take your lumps. If, however, you believe there is a reasonable chance that you might not have an edge, then you better have a safety mechanism that constrains your losses on drawdowns. My view on trend-following was that I could never be sure that I had an edge, so I wanted a safety mechanism. Whereas for a strategy like convertible arbitrage, I had a high degree of confidence as to the payoff probabilities, so reducing exposure on drawdowns was unnecessary."

Discrediting wine: "[T]he rank order of the wines was mostly insignificant. That is, if the wine judges repeated the tasting, the results would most likely be different. From a statistica[l] viewpoint, most wines were undistinguishable."

The distressed pipeline: "In summary, we are encouraged both by the current portfolio and our pipeline of opportunities. As of December 31, 2011, there were over 100 companies with approximately $400 billion debt outstanding with average gross leverage of greater than 9.0x in our pipeline."

5 comments:

C. Fischer said...

The part about the wine is absolutely true. When I was in high school, I worked at a very high end North Jersey wine store. The owner explained to me back them that many people can tell the difference between bad wine and good wine, but almost no one can tell the difference between good wine and "great" wine - including most of the experts.

C. Fischer said...

The part about the wine is absolutely true. When I was in high school, I worked at a very high end North Jersey wine store. The owner explained to me back them that many people can tell the difference between bad wine and good wine, but almost no one can tell the difference between good wine and "great" wine - including most of the experts.

CP said...

So, what's the right answer to the wine question then?

C. Fischer said...

The advice I would give is to figure out what kind of wine you like, and purchase a reasonably priced bottle of it. There are lots of good wines in the $30-40/bottle range. Buying multi-hundred dollar bottles is just showing off.

The guy I used to work for has a very extensive collection of on line videos on wine selection - http://en.wikipedia.org/wiki/Gary_Vaynerchuk

CP said...

Seems like <$10/bl is fine too. It's all grape juice...