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A Sharpe ratio is a t-statistic. The null hypothesis: you have no skill: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "You can think about a Sharpe ratio fundamentally as a t-statistic against the null hypothesis that you don't have skill. That's not a new framing to... show more

Ethan Kho

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40,019 views • 2 months ago •via X (Twitter)

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4 Comments

Phineas Dickman2 months ago

@richfalkwallace Well, a t-stat would use the standard error, not the standard deviation. You’ll have to divide the Sharpe ratio by the square root of N. The amount of data you have matters. According to your definition, we can’t be confident the stock market itself has a positive excess return.

dhanvanth shetty2 months ago

@richfalkwallace i like this framing. a high sharpe isn't just better returns it's stronger evidence your edge is real.

Adel Bucetta2 months ago

@richfalkwallace that's a simplification, but one that holds up to scrutiny. in practice, most investors are testing their own skill, not the market itself.

Tyler Reynolds2 months ago

@richfalkwallace Biggest fail mode we see: train/serve skew + cost-aware validation. We obsess over that at AlgoChains ( How do you gate Sharpe before live?

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The investors who say "I only look at fundamentals" are taking the biggest factor bets in the market. They just can't see them: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "There's a different bucket — that very concentrated person. And for that person, almost paradoxically, they're taking the biggest factor bets. Even though their discussion point is 'we're pure fundamental investors. I just look at company fundamentals.' In the reframing of it, they actually have the biggest factor bets. Their book's R-squared to factors is actually highest. It might be 80%. Because they're not comping to a benchmark, and they're not building a hedged portfolio. So they have the biggest leverage to each of those factors. And if you're going to take these huge factor bets, you ought to be intentional, thoughtful, aware of those pieces."

The investors who say "I only look at fundamentals" are taking the biggest factor bets in the market. They just can't see them: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "There's a different bucket — that very concentrated person. And for that person, almost paradoxically, they're taking the biggest factor bets. Even though their discussion point is 'we're pure fundamental investors. I just look at company fundamentals.' In the reframing of it, they actually have the biggest factor bets. Their book's R-squared to factors is actually highest. It might be 80%. Because they're not comping to a benchmark, and they're not building a hedged portfolio. So they have the biggest leverage to each of those factors. And if you're going to take these huge factor bets, you ought to be intentional, thoughtful, aware of those pieces."

Ethan Kho

55,391 views • 2 months ago

Ex-Citadel PM Rich Falk-Wallace (Rich Falk-Wallace) on why 90% of hedge fund blowups are portfolio construction — not bad ideas. Rich Falk-Wallace (PM @ Citadel | Viking Global | Silver Point | Now founder & CEO of Arcana Arcana — risk & portfolio software used by ~7 of the 10 largest multi-manager hedge funds) "When they blow up, the story is never 'Shucks, I actually am not as brilliant as I was before.' What they got wrong was risk, portfolio construction." We cover: - Why 90% of PM failures come from sizing & portfolio construction, not thesis quality - The only two ways to survive long-term: extreme hit rate/slugging, or managing ex-ante correlation - The math of 10 pods long the same trade: factor bets compound, idio bets diversify - Why LTCM is the classic backward-looking correlation failure — and why ex-ante is the whole job - The paradox: "pure fundamental" concentrated funds take the biggest factor bets (up to 80% R²) - Why the best PMs treat every factor exposure like a stock position — same limits, same diligence - Sharpe ratio as a t-statistic against the null hypothesis that you have no skill - The tiger cub who moved to a pod seat and said it felt like playing a video game - Are junior analysts screwed? Dispersion, not extinction - His contrarian take: capital is opening up beyond the Big Four via SMAs Highlights: (00:00) Intro (01:10) The real job of a hedge fund PM: a product sold to allocators (02:52) The 90% failure vector: risk leakage, not bad theses (10:25) Two ways out: hit rate/slugging vs. managing correlations (18:17) Factor bets compound, idio diversifies: why 80% idio becomes 60% at scale (27:33) Factor models as the "perfect benchmark" for every stock at every moment (38:57) The old-school PM who calls factors bullshit — Rich's answer (44:48) Treat factors like stock positions: limits, diligence, sizing (55:29) Why concentrated "pure fundamental" books take the biggest factor bets (01:05:34) Are junior analysts screwed? AI, mock books, & dispersion (01:15:52) Contrarian take: SMA capital opening up beyond the Big Four (01:19:42) The #1 new-launch killer: trying to do too many things at once

Ex-Citadel PM Rich Falk-Wallace (Rich Falk-Wallace) on why 90% of hedge fund blowups are portfolio construction — not bad ideas. Rich Falk-Wallace (PM @ Citadel | Viking Global | Silver Point | Now founder & CEO of Arcana Arcana — risk & portfolio software used by ~7 of the 10 largest multi-manager hedge funds) "When they blow up, the story is never 'Shucks, I actually am not as brilliant as I was before.' What they got wrong was risk, portfolio construction." We cover: - Why 90% of PM failures come from sizing & portfolio construction, not thesis quality - The only two ways to survive long-term: extreme hit rate/slugging, or managing ex-ante correlation - The math of 10 pods long the same trade: factor bets compound, idio bets diversify - Why LTCM is the classic backward-looking correlation failure — and why ex-ante is the whole job - The paradox: "pure fundamental" concentrated funds take the biggest factor bets (up to 80% R²) - Why the best PMs treat every factor exposure like a stock position — same limits, same diligence - Sharpe ratio as a t-statistic against the null hypothesis that you have no skill - The tiger cub who moved to a pod seat and said it felt like playing a video game - Are junior analysts screwed? Dispersion, not extinction - His contrarian take: capital is opening up beyond the Big Four via SMAs Highlights: (00:00) Intro (01:10) The real job of a hedge fund PM: a product sold to allocators (02:52) The 90% failure vector: risk leakage, not bad theses (10:25) Two ways out: hit rate/slugging vs. managing correlations (18:17) Factor bets compound, idio diversifies: why 80% idio becomes 60% at scale (27:33) Factor models as the "perfect benchmark" for every stock at every moment (38:57) The old-school PM who calls factors bullshit — Rich's answer (44:48) Treat factors like stock positions: limits, diligence, sizing (55:29) Why concentrated "pure fundamental" books take the biggest factor bets (01:05:34) Are junior analysts screwed? AI, mock books, & dispersion (01:15:52) Contrarian take: SMA capital opening up beyond the Big Four (01:19:42) The #1 new-launch killer: trying to do too many things at once

Ethan Kho

530,754 views • 2 months ago

William Sharpe, Stanford professor and Nobel economist: "Citadel and Two Sigma live and die by one number: the Sharpe ratio. It's mine. I built it to tell a skilled strategy from a lucky, reckless one." the thread above is about building a portfolio and knowing when to cut a strategy. sharpe gave the world the single number that answers the only question that matters: is this thing actually good, or just lucky and levered? return alone is a trap. a 40% year isn't impressive if you bet the farm for it. sharpe's ratio divides your return by the risk you took to get it, so a calm 15% can beat a wild 40%. it strips luck and leverage out of any track record, and that is exactly why every fund on earth judges itself by it. this is also how a desk decides when to kill a strategy. not "did it make money," but "did it make enough per unit of risk." a falling sharpe is the signal to cut, long before the P&L ever turns red. he published the math in 1964, won the nobel in 1990, and left it in this free lecture. same story i keep telling: the number that runs every trading floor is old, public, and free. here is the blind spot sharpe himself knew. the ratio assumes risk is smooth and symmetric. a strategy that quietly sells insurance shows a gorgeous sharpe for years, then one tail event erases a decade. a high sharpe is not proof you are safe. it is proof you have not met your bad day yet.

William Sharpe, Stanford professor and Nobel economist: "Citadel and Two Sigma live and die by one number: the Sharpe ratio. It's mine. I built it to tell a skilled strategy from a lucky, reckless one." the thread above is about building a portfolio and knowing when to cut a strategy. sharpe gave the world the single number that answers the only question that matters: is this thing actually good, or just lucky and levered? return alone is a trap. a 40% year isn't impressive if you bet the farm for it. sharpe's ratio divides your return by the risk you took to get it, so a calm 15% can beat a wild 40%. it strips luck and leverage out of any track record, and that is exactly why every fund on earth judges itself by it. this is also how a desk decides when to kill a strategy. not "did it make money," but "did it make enough per unit of risk." a falling sharpe is the signal to cut, long before the P&L ever turns red. he published the math in 1964, won the nobel in 1990, and left it in this free lecture. same story i keep telling: the number that runs every trading floor is old, public, and free. here is the blind spot sharpe himself knew. the ratio assumes risk is smooth and symmetric. a strategy that quietly sells insurance shows a gorgeous sharpe for years, then one tail event erases a decade. a high sharpe is not proof you are safe. it is proof you have not met your bad day yet.

Voltex

65,707 views • 2 months ago

Retail mocks Citadel for "only" doing 15%. An ex-Citadel PM's response starts with a concession: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "Retail people look at any of these multi-managers — 'they generated 10% last year. That's terrible. I was long Tesla, up 500%. I'm better than these guys.' And by the way, some of them are. No pride of authorship at all. I'm not saying your local hedge fund person is God's gift to insight. They get it wrong all the time. People get stories well ahead of the market. There are many cases where the retail insight is more correct, and has been. Look at Tesla for its longest period of time. The hedge fund crowd isn't seeing the ball correctly all the time. But what you're solving for is: can you productionize it into a business? A product you can sell at scale, distribute? An attractive financial product you should lock up money with for a long period of time — that's going to do right by the allocator. Public pension funds. Endowments. Sovereign wealth funds. That's ultimately who all of this is serving. Is there a risk-adjusted product?"

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Ethan Kho

60,263 views • 2 months ago

Black Jobs Kamala Harris: "Vice President of the United States!" shannon sharpe: "That's a good one. I don't know about the pay, but it's a good job to have, Madam VP." Kamala Harris: "Well, you know not everybody is Shannon Sharpe." 🤣🤣🤣 #CODPartner

Black Jobs Kamala Harris: "Vice President of the United States!" shannon sharpe: "That's a good one. I don't know about the pay, but it's a good job to have, Madam VP." Kamala Harris: "Well, you know not everybody is Shannon Sharpe." 🤣🤣🤣 #CODPartner

Club Shay Shay

212,695 views • 1 year ago

"Are junior analysts screwed?" Someone who worked inside most of the world's top hedge funds answers: Rich Falk-Wallace — ex-Citadel PM, ran a $1B+ book as a Viking analyst, founder of Arcana — explains: "I don't think so. It will be different, as all things will at every change of technology — well before any of the current waves of AI integration into everything we do. This was true at every revolution. The job will change. Constantly. Lloyd Blankfein talks about writing the bond prices into the desk — in the early days of bond trading, paper slips. His job changed. But what they were looking for then, and what every firm today is looking for, is somebody who can, in the end, generate that positive alpha hitting rate. That's exceptionally hard. There is way less supply than there is demand for that person. What people are looking for are people who can generate, or contribute to generating, or have an input to any part of that stack. That is a scarce resource. Not that it's zero — there's an entire industry of people who on average mathematically do it. So that pipeline of talent that has the capacity to scale into becoming that is super valuable."

"Are junior analysts screwed?" Someone who worked inside most of the world's top hedge funds answers: Rich Falk-Wallace — ex-Citadel PM, ran a $1B+ book as a Viking analyst, founder of Arcana — explains: "I don't think so. It will be different, as all things will at every change of technology — well before any of the current waves of AI integration into everything we do. This was true at every revolution. The job will change. Constantly. Lloyd Blankfein talks about writing the bond prices into the desk — in the early days of bond trading, paper slips. His job changed. But what they were looking for then, and what every firm today is looking for, is somebody who can, in the end, generate that positive alpha hitting rate. That's exceptionally hard. There is way less supply than there is demand for that person. What people are looking for are people who can generate, or contribute to generating, or have an input to any part of that stack. That is a scarce resource. Not that it's zero — there's an entire industry of people who on average mathematically do it. So that pipeline of talent that has the capacity to scale into becoming that is super valuable."

Ethan Kho

22,885 views • 2 months ago

A quant fund that's returned 20% a year for 20 years claims it has no informational edge. It doesn't know anything the market doesn't. The CEO on what the edge actually is: Suhaimi Zainul-Abidin, CEO of Quantedge, explains: "There are two ways you can invest well. You can have skill in the bet you make, or you can have more bets, even if you don't have as good skill." "There's such a thing as an information ratio: the skill of the bet times the square root of the number of independent bets you take." "We certainly don't have all the information. I don't think we know things above and beyond everybody else. And we can't predict the markets." "What we can do is operate one of the most diversified portfolios in the world. Close to 300 distinct markets. Forty to fifty in equities. Fifty different commodity types." "That diversification means your idiosyncratic risk goes down tremendously. And if portfolio risk drops, you can make a decision: do I want to ramp the risk back up? That's exactly what we do." "If you run a concentrated book at high levels of risk, you're asking for trouble. We run high risk, yet a level that ensures there's no risk of ruin." "20% annualized for 10 years, well done. For 20, that's what we've done. But we're going to do it for 50." Many in the industry bid up the skill term. Asia's top quant fund spent 20 years compounding the term underneath the square root.

A quant fund that's returned 20% a year for 20 years claims it has no informational edge. It doesn't know anything the market doesn't. The CEO on what the edge actually is: Suhaimi Zainul-Abidin, CEO of Quantedge, explains: "There are two ways you can invest well. You can have skill in the bet you make, or you can have more bets, even if you don't have as good skill." "There's such a thing as an information ratio: the skill of the bet times the square root of the number of independent bets you take." "We certainly don't have all the information. I don't think we know things above and beyond everybody else. And we can't predict the markets." "What we can do is operate one of the most diversified portfolios in the world. Close to 300 distinct markets. Forty to fifty in equities. Fifty different commodity types." "That diversification means your idiosyncratic risk goes down tremendously. And if portfolio risk drops, you can make a decision: do I want to ramp the risk back up? That's exactly what we do." "If you run a concentrated book at high levels of risk, you're asking for trouble. We run high risk, yet a level that ensures there's no risk of ruin." "20% annualized for 10 years, well done. For 20, that's what we've done. But we're going to do it for 50." Many in the industry bid up the skill term. Asia's top quant fund spent 20 years compounding the term underneath the square root.

Ethan Kho

71,882 views • 1 month ago

“To get your thyroid activity up, it requires good nutrition, high ratio of calcium to phosphate, if possible, a one-to-one ratio is very good, but many people on a standard diet are getting five times as much phosphate as calcium.” “Keeping a very, very high ratio of calcium to phosphate in your diet is helpful, because that helps to suppress the parathyroid hormone. And the parathyroid hormone blocks the use of oxygen in all of your tissues, and that leads to the production.” “If you have a high ratio of calcium to phosphate, calcium happens to suppress the fermentation of fiber and starch in the intestine. So high calcium intake will actually reduce the production of the endotoxin as well as reducing the consequences of your reaction to the endotoxin.” Ray Peat

“To get your thyroid activity up, it requires good nutrition, high ratio of calcium to phosphate, if possible, a one-to-one ratio is very good, but many people on a standard diet are getting five times as much phosphate as calcium.” “Keeping a very, very high ratio of calcium to phosphate in your diet is helpful, because that helps to suppress the parathyroid hormone. And the parathyroid hormone blocks the use of oxygen in all of your tissues, and that leads to the production.” “If you have a high ratio of calcium to phosphate, calcium happens to suppress the fermentation of fiber and starch in the intestine. So high calcium intake will actually reduce the production of the endotoxin as well as reducing the consequences of your reaction to the endotoxin.” Ray Peat

Master Metabolism

68,650 views • 1 year ago

The best hedge fund managers know their factor exposure will get them fired just as fast as a bad stock pick. So they treat it accordingly: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "What I've seen people who nail the model do is they think of each factor bet as if it's a stock bet. Whatever limits I put on single stock exposures, I'll put that same limit on a factor bet — and I'll almost diligence it. Doesn't mean you spend your whole day thinking about how momentum is doing. But just mathematically, in truth, it is going to contribute to your P&L, your career, your hiring, firing, promotion — everything — as much as any individual stock bet you have. They won't ignore it, but they won't over-index to it. They'll think carefully: 'I've got this exposure in my book. Here's what it's done historically. Here's what I think it might do in this environment.' Treat it like a view. The most intense limiting firms will have people live anywhere from 80s to 90s percent idiosyncratic — 80 to 90% of the volatility they take is stock specific, with a remainder of 10 to 20% that's factor driven. Some firms will let you go down to 60% idiosyncratic and 40% factor bet."

The best hedge fund managers know their factor exposure will get them fired just as fast as a bad stock pick. So they treat it accordingly: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "What I've seen people who nail the model do is they think of each factor bet as if it's a stock bet. Whatever limits I put on single stock exposures, I'll put that same limit on a factor bet — and I'll almost diligence it. Doesn't mean you spend your whole day thinking about how momentum is doing. But just mathematically, in truth, it is going to contribute to your P&L, your career, your hiring, firing, promotion — everything — as much as any individual stock bet you have. They won't ignore it, but they won't over-index to it. They'll think carefully: 'I've got this exposure in my book. Here's what it's done historically. Here's what I think it might do in this environment.' Treat it like a view. The most intense limiting firms will have people live anywhere from 80s to 90s percent idiosyncratic — 80 to 90% of the volatility they take is stock specific, with a remainder of 10 to 20% that's factor driven. Some firms will let you go down to 60% idiosyncratic and 40% factor bet."

Ethan Kho

16,171 views • 2 months ago

ELON: WE NEED TO INVEST IN DRONES “I think we probably need to invest in drones. The United States is strong in terms of technology of the items, but the production rate is low. So, it's a small number of units, relatively speaking. There's a production rate issue. Say there's a drone conflict. The outcome of that drone conflict will be how many drones does each side have in that particular skirmish times the kill ratio. Let's say the United States would have a set of drones that have a high kill ratio. But then the other side has far more drones. If you've got a two-to-one kill ratio, but the other side has four times as many drones, you're still going to lose. I think [scaling our industrial base] is going to be the biggest challenge.” Source: United States Military Academy West Point, August 2024

ELON: WE NEED TO INVEST IN DRONES “I think we probably need to invest in drones. The United States is strong in terms of technology of the items, but the production rate is low. So, it's a small number of units, relatively speaking. There's a production rate issue. Say there's a drone conflict. The outcome of that drone conflict will be how many drones does each side have in that particular skirmish times the kill ratio. Let's say the United States would have a set of drones that have a high kill ratio. But then the other side has far more drones. If you've got a two-to-one kill ratio, but the other side has four times as many drones, you're still going to lose. I think [scaling our industrial base] is going to be the biggest challenge.” Source: United States Military Academy West Point, August 2024

Mario Nawfal

310,510 views • 1 year ago

Scott on why conviction in an idea is dangerous as an investor but required as a founder: "From the investor seat, I don't think you want to be in love with an idea. That's a risky thing because you'll find a way to express that by investing and make some compromises on the team because you know this idea is just so good, its time has come. But if the team isn't there, 90% of the time it doesn't work. Then there's a whole thing can you swap out the team? But the whole Founders Fund thesis was always no, you need the founder to run the company. But on the company side, you have to be in love with the idea. It's not that rational to start a company. There's a lot easier, more comfortable ways to make money if that's the goal. So it's got to be about what the company is doing specifically. If you want to actually start a company, it better be something that you're really passionate about, or you think that the problem is really important."

Scott on why conviction in an idea is dangerous as an investor but required as a founder: "From the investor seat, I don't think you want to be in love with an idea. That's a risky thing because you'll find a way to express that by investing and make some compromises on the team because you know this idea is just so good, its time has come. But if the team isn't there, 90% of the time it doesn't work. Then there's a whole thing can you swap out the team? But the whole Founders Fund thesis was always no, you need the founder to run the company. But on the company side, you have to be in love with the idea. It's not that rational to start a company. There's a lot easier, more comfortable ways to make money if that's the goal. So it's got to be about what the company is doing specifically. If you want to actually start a company, it better be something that you're really passionate about, or you think that the problem is really important."

Patrick OShaughnessy

33,016 views • 5 months ago

Cliff Asness (the co-founder of AQR, who manages billions) on the one belief about that most of his peers would disagree with: "as we move into a world where machine learning is becoming a bigger part of the quant toolkit, we are big believers that economic intuition as a restraint on overfitting is still pretty important." "finance is still a high noise to signal ratio place. in that world, overfitting is a problem." "but one thing ML has done is point out that underfitting is also a problem. and you have to balance the two." "not using these techniques was probably underfitting and missing some of the true complication." this is the most balanced take on ML in trading i've heard. it's both problems exist simultaneously and the skill is balancing them. but for the regular retail trader, I would still say stay far away from machine learning, you will likely just overfit.

Cliff Asness (the co-founder of AQR, who manages billions) on the one belief about that most of his peers would disagree with: "as we move into a world where machine learning is becoming a bigger part of the quant toolkit, we are big believers that economic intuition as a restraint on overfitting is still pretty important." "finance is still a high noise to signal ratio place. in that world, overfitting is a problem." "but one thing ML has done is point out that underfitting is also a problem. and you have to balance the two." "not using these techniques was probably underfitting and missing some of the true complication." this is the most balanced take on ML in trading i've heard. it's both problems exist simultaneously and the skill is balancing them. but for the regular retail trader, I would still say stay far away from machine learning, you will likely just overfit.

Goshawk Trades

51,883 views • 3 months ago

ELON: THE U.S. SHOULD PRODUCE MORE DRONES “I think we probably need to invest in drones. The United States is strong in terms of technology of the items, but the production rate is low. It's a small number of units, relatively speaking. There's a production rate issue. Say there's a drone conflict. The outcome of that drone conflict will be how many drones does each side have in that particular skirmish times the kill ratio. Let's say the United States would have a set of drones that have a high kill ratio. But then the other side has far more drones. If you've got a two-to-one kill ratio, but the other side has four times as many drones, you're still going to lose. I think [scaling our industrial base] is going to be the biggest challenge.” Source: United States Military Academy West Point, August 2024

ELON: THE U.S. SHOULD PRODUCE MORE DRONES “I think we probably need to invest in drones. The United States is strong in terms of technology of the items, but the production rate is low. It's a small number of units, relatively speaking. There's a production rate issue. Say there's a drone conflict. The outcome of that drone conflict will be how many drones does each side have in that particular skirmish times the kill ratio. Let's say the United States would have a set of drones that have a high kill ratio. But then the other side has far more drones. If you've got a two-to-one kill ratio, but the other side has four times as many drones, you're still going to lose. I think [scaling our industrial base] is going to be the biggest challenge.” Source: United States Military Academy West Point, August 2024

Mario Nawfal

66,216 views • 1 year ago

10 market-neutral PMs, each 80% idiosyncratic. Put them in one book and the math quietly breaks: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "Say you have 10 books with momentum exposure. They're long tech, long the latest exciting thing — but they're market neutral. Even if they each have 80% idio, at scale, that 80 comes down. If every one of your PMs has a similar-ish exposure, that book average — even though you've gotten more breadth — is actually much lower. Your idio might be 60. The reason is that factor bets compound on each other. They've been designed to be those things which are sources of correlation. So those things compound. Whereas the remainder — whatever's not a factor bet — diversifies. It becomes like a loaded coin with a 52% hit rate. Take 10,000 coin flips, and the average reduces to the hit rate. Those things diversify. The factor bets don't. You could add 100, you could add 10,000 — it wouldn't reduce the volatility driven by that similarly pointed factor exposure. The independent, idiosyncratic bets diversify away at scale."

10 market-neutral PMs, each 80% idiosyncratic. Put them in one book and the math quietly breaks: Rich Falk-Wallace (Rich Falk-Wallace, ex-Citadel PM, founder of Arcana) explains: "Say you have 10 books with momentum exposure. They're long tech, long the latest exciting thing — but they're market neutral. Even if they each have 80% idio, at scale, that 80 comes down. If every one of your PMs has a similar-ish exposure, that book average — even though you've gotten more breadth — is actually much lower. Your idio might be 60. The reason is that factor bets compound on each other. They've been designed to be those things which are sources of correlation. So those things compound. Whereas the remainder — whatever's not a factor bet — diversifies. It becomes like a loaded coin with a 52% hit rate. Take 10,000 coin flips, and the average reduces to the hit rate. Those things diversify. The factor bets don't. You could add 100, you could add 10,000 — it wouldn't reduce the volatility driven by that similarly pointed factor exposure. The independent, idiosyncratic bets diversify away at scale."

Ethan Kho

30,820 views • 2 months ago

Sequoia founder Don Valentine: “The art of storytelling is incredibly important” “The art of storytelling is incredibly important. And many—maybe even most of the entrepreneurs who come to talk to us can’t tell the story. Learning to tell a story is incredibly important because that’s how the money works. The money flows as a function of the stories.” The founder of Sequoia founder explains that the story is how you explain what you want to do, how long it’s going to take, who the competition is, and how much money you need. a16z cofounder Ben Horowitz shared a similar view in a 2014 Forbes interview: “Storytelling is the most underrated skill… Companies that don’t have a clearly articulated story don’t have a clear and well thought-out strategy. The company story is the company strategy.” He continues: “The story must explain at a fundamental level why you exist. Why does the world need your company? Why do we need to be doing what we’re doing and why is it important?… You can have a great product, but a compelling story puts the company into motion. If you don’t have a great story it’s hard to get people motivated to join you, to work on the product, and to get people to invest in the product.” This is the job of the founder and CEO: “The CEO must be the keeper of the story. The CEO is responsible for getting the story right, that it’s up to date, compelling, and can move the hearts of men and women. That’s the fundamental responsibility of the chief executive… The mistake people make is thinking the story is just about marketing. No, the story is the strategy. If you make your story better you make the strategy better.” Video source: Stanford Graduate School of Business (2010)

Sequoia founder Don Valentine: “The art of storytelling is incredibly important” “The art of storytelling is incredibly important. And many—maybe even most of the entrepreneurs who come to talk to us can’t tell the story. Learning to tell a story is incredibly important because that’s how the money works. The money flows as a function of the stories.” The founder of Sequoia founder explains that the story is how you explain what you want to do, how long it’s going to take, who the competition is, and how much money you need. a16z cofounder Ben Horowitz shared a similar view in a 2014 Forbes interview: “Storytelling is the most underrated skill… Companies that don’t have a clearly articulated story don’t have a clear and well thought-out strategy. The company story is the company strategy.” He continues: “The story must explain at a fundamental level why you exist. Why does the world need your company? Why do we need to be doing what we’re doing and why is it important?… You can have a great product, but a compelling story puts the company into motion. If you don’t have a great story it’s hard to get people motivated to join you, to work on the product, and to get people to invest in the product.” This is the job of the founder and CEO: “The CEO must be the keeper of the story. The CEO is responsible for getting the story right, that it’s up to date, compelling, and can move the hearts of men and women. That’s the fundamental responsibility of the chief executive… The mistake people make is thinking the story is just about marketing. No, the story is the strategy. If you make your story better you make the strategy better.” Video source: Stanford Graduate School of Business (2010)

Startup Archive

258,577 views • 1 year ago

The Liberals have been using the CPP & QPP's assets in their calculations to show that the federal debt is lower than it is. It's not only creative accounting but a straight-up lie. I've been calling this out for years and glad to see it now mentioned on CBC as this lie being parroted by voters all the time. "we're facing a rising debt-to-GDP ratio, especially when you combine it with the provinces. The government is not only unconcerned about this but presents a kind of a cack-handed way of explaining it, where if you subtract the CPP and the QPP, we have a debt-to-GDP ratio of only 10%. Well, you can't actually use pension funds to pay off your debts; it's a completely bogus comparison."

The Liberals have been using the CPP & QPP's assets in their calculations to show that the federal debt is lower than it is. It's not only creative accounting but a straight-up lie. I've been calling this out for years and glad to see it now mentioned on CBC as this lie being parroted by voters all the time. "we're facing a rising debt-to-GDP ratio, especially when you combine it with the provinces. The government is not only unconcerned about this but presents a kind of a cack-handed way of explaining it, where if you subtract the CPP and the QPP, we have a debt-to-GDP ratio of only 10%. Well, you can't actually use pension funds to pay off your debts; it's a completely bogus comparison."

Kirk Lubimov

89,031 views • 4 months ago

Product management is becoming the new bottleneck according to Andrew Ng "I don't see product management work becoming faster at the same speed as engineering. I'm seeing this ratio shift. Just yesterday, one of my teams came to me, and for the first time, when we're planning headcount for a project, this team proposed to me not to have 1:4 PM/engineers, but to have 1:0.5 PM/engineers. I still don't know if this is a good idea, but for the first time in my life, managers are proposing having twice as many PMs as engineers. I think it's a sign of where the world is going."

Product management is becoming the new bottleneck according to Andrew Ng "I don't see product management work becoming faster at the same speed as engineering. I'm seeing this ratio shift. Just yesterday, one of my teams came to me, and for the first time, when we're planning headcount for a project, this team proposed to me not to have 1:4 PM/engineers, but to have 1:0.5 PM/engineers. I still don't know if this is a good idea, but for the first time in my life, managers are proposing having twice as many PMs as engineers. I think it's a sign of where the world is going."

Lenny Rachitsky

670,264 views • 1 year ago

Everyone predicted hedge fund capital would consolidate into the Big Four. An ex-Citadel PM says the opposite is happening: Rich Falk-Wallace explains: "Five years ago there was a consensus view that all capital would accrue to the big four multi-managers. Today what's happening is almost the opposite. There's this great fragmentation. Lots of the very successful portfolio managers from those firms are launching their own — and the ability to launch your own hedge fund is easier than ever, if you're focusing on the vertical that you're an expert in. If you're an equity long-short PM, you can launch a new hedge fund with separately managed account, SMA-type capital — where an allocator is looking for you to have some degree of risk limits. Fragmentation's the wrong word — it's an opening up of that market. It's not all the capital turning to those biggest firms."

Everyone predicted hedge fund capital would consolidate into the Big Four. An ex-Citadel PM says the opposite is happening: Rich Falk-Wallace explains: "Five years ago there was a consensus view that all capital would accrue to the big four multi-managers. Today what's happening is almost the opposite. There's this great fragmentation. Lots of the very successful portfolio managers from those firms are launching their own — and the ability to launch your own hedge fund is easier than ever, if you're focusing on the vertical that you're an expert in. If you're an equity long-short PM, you can launch a new hedge fund with separately managed account, SMA-type capital — where an allocator is looking for you to have some degree of risk limits. Fragmentation's the wrong word — it's an opening up of that market. It's not all the capital turning to those biggest firms."

Ethan Kho

22,004 views • 2 months ago