Lol no.

I just realized this [statement, not bet] is an epic troll on your part.

I apologize. Kudos on your excellent work!

I'm not going to bet, because I don't trust people over the internet that I've never seen before to pay up. I would probably bet against Tooth though and take Brian's side. I think he has a decent chance, but I'd want more than 2:1.

People are talking about bear and bull markets making a difference. With options, you can set up your orders so that you are only betting against volatility and it being a bear or bull market would not matter. Correct? Am I missing something here? I believe it is called an iron condor. I did a search on Investopedia and that seems to be right. I'm a noob though.

This will be fun to watch. I kind of want Tooth to win, because making 500% returns in a single year is kind of badass. When are the trades going to be posted here?

I don't agree with Tooth on some of the things he says, but I'm not sure why he's getting all this hate.

I have a feeling this alone could make Tooth's trade a self fulfilling prophecy in his favor, making it easier to achieve the returns he needs.

I'll go on record as saying my Sklansky bucks are on Brian. I'm risk averse so I won't bet any real money on this, but I'm certainly interested in the results. Looking forward to seeing which positions are judged to be profitable.

Not sure if trolling. Should we set a line on Tooth $1k to $20m in 5 years?

He said "highly talented trader", not Tooth.

Pay no mind to these heathens Tooth, I have complete confidence in your ability to turn 1k into 6k inside the year and win us some money!

I could probably run $1k to $10k (without much difficulty) and I know traders that are way better than me who could run it to $30k-$50k+. No, its not bs, its simply that for active traders the normal 'rules' that you read on finance/investing books and articles (usually written by idiots who believe in efficient markets or some version of it) dont exist in the real world. I know guys who pull $20K+ almost everyday day using $100k or so in capital (on most days) even though professors and bloggers would say thats impossible, it isn't

I am very interested in this.

When is this happening and will it be posted in this thread?

Thank you. The funniest trolls are the ones where people aren't sure whether it could be true. The bet is very real though.

I regret where this thread has gone. I don't want people to think there are huge edges to be had. There aren't. There are spots where you can get a nice return for decent risk of ruin, though.

It's disappointing (though not unexpected - my detractors are all either cowards or fools) that the people who believe in efficient markets or think I'm full of **** generally haven't had the balls to bet against me. This is free money if you think I suck. How many standard deviations outside the norm is a 5x yearly return? More than two I'd guess. Should be 10:1 at least, and the odds being offered are 3:1.
It's live as of a few days ago when Brian and I agreed, and trades will be posted when +EV high return situations become available. Could be today, could be two months away.

Just look at that position soften in real time...

You want to put some money up? You don't get to call me out repeatedly in a bet thread without having some skin in the game.

Actually I can do whatever I want. Thanks though.

You're being far too modest here Tooth. With you at the helm, the true odds should probably be something like 10:1 that you don't do it. Luckily, there's a sucker born every minute!

Where does the 10:1 come from? You could be flipping coins and be doing way better than that, and that's before factoring in the roughly 5-10% expected rate of appreciation by having it in the markets. That, and I think most of us would be willing to believe you might have SOME edge, just not anything close to what you seem to think.

When you consider how much of a hassle it is to get a reliable escrow and all the potential complications, and the fact that we could be making 5-10% on that money by sticking it in some vanguard fund, you're going to have a lot of trouble getting action at 3:1 unless it's for a huge some of money or a trivially small sum from someone looking to have fun. If someone is interested doing a large sum (25k+) at 2:1 I'll think about it.

The stupidity of this, though, is that no one should ever consider taking that kind of action at 2:1 (or even 3:1) because if they felt that strongly about your chances they'd just mimic your trades. And alternatively we should basically be willing to take unlimited action at 3:1 and just hedge by doing the same.

Personally I think him claiming his edge is evidence he's at a marked disadvantage, and more than likely has no edge at all, because it shows a fundamental misunderstanding of the market.

It's like the person who randomly claims he could compete with top level ball players. It's WAY more likely he has less skill than average, because he doesn't even understand the gap that exists between him and the elites, or between what he claims and what's reliably possible. Tooth is the instantiation of Dunning-Kruger.

He's not a random person off the street though and the fact that he's willing to take action at 3:1 doesnt at all imply that he believes his expected return is anything close to 500%.

At 3:1 what would your edge even need to be? My napkin math hunch would be 25% (or 20% after accounting for an expected market appreciation of 5%).

ie: if you expect to approach the end of the period with 1.25x your initial investment, and you had some mechanism to force volatility, 1/4 times you'd end up with 5 (the other 75% you'd bust). And 1/4 is the probability you'd need to break even being paid 3:1.

Is my math wrong?

You're not analyzing this properly. Firstly, leverage isn't free - it's damn expensive, and the future out you go (50x to beat a 10% average return, ceteris paribus), the more expensive it gets. You pay 100% for that level of leverage.

Secondly, I'll be in the market for a few days at most over a year, possibly as little as 20 minutes, so the market return is irrelevant.

Pretending that this is a type of no-spread, no-leverage-fee series of coin flips, and aided rather than hindered by the market, is just hokey analysis.

The proper way to analyze this is to consider what the distribution would look like on people who attempt this. Over 90% of people with no edge would fail this attempt.

You're not a random person. People are betting on (or against) you based on what they know about you.

If you can't figure out a way to efficiently flip the money that's a pretty major leak on your part, but i'm guessing you could and probably would if it came down to that as long as it was within the rules.

What do you mean you pay 100%?

What is this an equation of?

The idea that you can just 5x your money by taking leverage or "forcing volatility" while keeping your non-leveraged market edge is absurd. Margin rates alone would destroy that, without even considering the spread.

Even if your edge is 25%/year as Abbaddabba was quoting, you'd need $20K in margin to get there (which you couldn't even get because no one is giving 20:1 margin on $1000 collateral), for which you'd pay $1400 on average, or 140%.



Typical bureaucratic thinking - quick to build models that fail horribly in the real world and beyond that don't even apply to the question at hand.

I just assumed tooths plan was to sit back with a cigar and his feet on the desk like the monopoly guy waiting for news to cross his desk. He just needs to take 2-4 stabs at beating the market in to some news based movement and has a year to find those opportunities. The wynn news would have been checkmate for example. That strategy would be very different than managing your actual roll and eliminating ruin from the equation gives him a significant edge (in the bet vs his actual roll)

Oh yeah, forgot how bad margin rates are outside of IB. But there's always futures. While futures bake in a short term rate, I don't think that's going to have an impact on a 20 minute trade.

I'm not suggesting that it's as easy as taking simple flips.

But the idea that paying huge fees for margin trades is the only way to do it is insane.

There're plenty of stocks that're hinged on the outcome of specific event at a specific point in time that will either send it soaring or drop it like a brick (ie: an election, a bill being passed, a contract being issued).

Events aren't as reliable as you think. For companies that depend on them, they mostly are smaller cap and lack options or have enormous (50%) spreads because they're thinly traded.

For larger companies, take NAFTA and KSU as an example. KSU will be gutted if NAFTA gets canned. But how to bet on it? You could buy options and it drags on for months. There's no guarantee of a binary outcome. Even if NAFTA is dropped, the transition might be favorable or long term.

Can you name a few upcoming events in advance where we can get 6:1 payouts at anywhere near 6:1, reliably? I can't think of any but I don't really go looking for them.