“A well-rounded man is an artist, warrior, and philosopher.”- Benvenuto Cellini (1500–1571)
The story is about the time when trading wrestling cards was a thing. It was the trend and every kid on the block had a stash of their trading cards. The game was about who has the biggest and the best stash of these wrestling cards.
The kid: What?!!! He’s betting the undertaker?!!!! How could anyone bet the undertaker?!!!!!
The friend: Yeah, if you can beat his stash, you can get the undertaker.
The kid: That kid has 3 decks of 200. Let’s see, I have 50 with me. How much do you have?
The friend: 30. How many star players do you have?
The kid: With Booker T. I have 6. How many do you have?
The friend: 3.
The kid: …. How the heck do we get that undertaker?
The friend: Do you really think you could even try to get the undertaker?
The kid: Yeah.
Of course, the kid lost all his 50 cards. But what can we learn from this?
My macro study is about risk. Especially about catastrophic risks that can wipe an individual's savings. The big tail events that can potentially vanish the assets in a poof. It is about the underfunded liabilities every citizen is expecting to get a return on.
But this is not about being risk-averse. Rather it is about taking more risks that you can understand. It is about taking many iterations of bets one can afford. How do we do that? By understanding the symmetry and the convexity of a system? More on that by Author Nassim Nicholas Taleb.
Bet on it, is my skin in the game that allows me to take more risk. It is my safe haven asset that benefits from market swings. It is the allocation of the portfolio that will lose a small amount every day but has a big pay-off once in a while.
Small retail will lose money following the strategy of Universa’s Mark Spitznagel’s safe haven. But that’s precisely the point he is making. He can make these iterations of bets because he can afford to lose it.
That’s the difference between a speculator and a professional.
So what would the boy do if he was in the game again? He would stash the prepayments. He knows the market is monopolized by the kid with the Undertaker. He would get into a new emerging trend of that time, Pokemon Cards, and stash early to get the best position.
Don’t pick pennies in front of a railway track.