Zvi’s2-part review of Nate Silver’s new book On the Edge.
Book Review: On the Edge: The Fundamentals
Book Review: On the Edge: The Gamblers
The reviews are so long, I may as well just read the book.
The river vs. village concept seems like repackaging of left vs right, or libertarian vs. left/right, or risk taking vs. playing it safe, or collectivism vs. individualism, or trustful of institutions vs. distrustful of institutions, or fringe vs. mainstream, or contrarian vs. conventional and so on. There, I saved you the money and time of buying the book.
These categories are so broad or vague that they can apply to anyone depending on the circumstance, that they are not that useful. Being pro-gay marriage in 2003 was more like the river, but now it’s squarely village. Zvi discusses how the left shifted from being pro-free speech to now supporting censorship, in another reversal.
A misconception is that people in the ‘river’ category are always big risk takers. Rather, the smarter ones risk only small amounts of their capital on endeavors which have a large potential payoff, so there there isn’t much actual risk. In other words, small downside, big upside. This is the business model of VC.
Poker seems like a poor use of one’s time. If you’re smart enough to do well at poker, there are probably better ways to get rich which have more upside and less risk or variance compared to poker. Even the best poker players have long streaks of bad luck, famously Doyle Brunson, who despite being a legend still lost a lot of money and didn’t even have much money at the time of his death at the age of 89, due to gambling losses.
Just making a couple hundred thousand dollars from a regular job/career, parking it in the Nasdaq (or using leveraged tech), and letting it compound for 10-20 years will make you richer than the vast majority of professional poker players, and much less work or risk involved (and who wants to sit in casinos all day breathing secondhand smoke).
The best way to get rich is to not take risks, but rather to take the unchartered or unbeaten path. Unless you are talented enough and can get the lucrative c-suite job, or a huge Substack newsletter, or become a professional athlete or musician, your best best to get rich are small, new niches which are either unloved, unnoticed/ignored, or unsaturated.
For example, buying and holding leveraged tech ETFs in the early 2010s yielded returns of 50-100x if held to today. Or Tesla stock in 2018-2019 when everyone assumed the company would go bankrupt. Or Meta/Facebook stock in 2012-2013 when it was assumed it was a fad or be unable to monetize its mobile users.
To use myself as an example, I invested heavily in leveraged tech ETFs around 2016-2017 and then added to those positions in 2020 at the bottom during Covid. This was before there was as much interest in leveraged tech or ‘FAMNG’ companies compared to now. I also invested in Bitcoin and Facebook in 2013 and Tesla in 2019, all documented on the blog (sold the Bitcoin part in 2018 at $10k after buying at $100).
I then in late 2022 and 2023 came up with the idea of shorting Bitcoin during market hours as a hedge against the leveraged tech portfolio. In 2024 this has worked really well, and I have magnified my returns and lessened my risk by shorting Bitcoin. I am/was the only one doing this. Same for Meta, which in late 2023 and early 2023 recommended when at $100/share when it was irrationally assumed the Metaverse losses would sink the company; now it’s at $560 and I invested at the time in the 2x leveraged version, $FBL.
I am sorta a savant when it comes to pattern recognition and ‘seeing things’, but anyone can do this to some extent. Anyone who is observant enough can pick up on trends early and then make small, safe bets and refine his or her methods accordingly. It does not have to be investing; anyone can start a Substack blog, which has a small time commitment but a potentially large upside if it takes off.
The nice thing about investing is it scales almost infinitely well, unlike, say, selling widgets on Amazon, in which there is a finite amount of demand for a specific widget. It also has the advantage of not being winner-take-all, but anyone with a brokerage account can participate by just buying and riding the trend. Poker is the opposite, being saturated, overly-optimized, scales poorly, and too competitive and winner-take-all.