Essays
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Edge Without Discipline Is Gambling
In the previous essays, I argued that good decisions can produce bad outcomes and that variance is the price of edge. Randomness is unavoidable in probabilistic systems. But there is another truth that matters just as much. Even a real edge can fail. Not because the probabilities are wrong, but because the strategy is not
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Variance Is the Price of Edge
In the previous essay I argued that good decisions can still produce bad results. In probabilistic systems, outcomes contain noise, and even disciplined decisions can lead to losses. That reality stems from a deeper truth. The same uncertainty that produces losses is also what creates opportunity. Howard Marks often reminds investors that greater risk should
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Why Good Decisions Still Lose
Good decisions still lose in probabilistic systems. Most people judge decisions by outcomes. If the result is good, the decision must have been correct. If the result is bad, the decision must have been flawed. In deterministic environments that reasoning often works. In probabilistic environments it fails. Markets, forecasting, and sports betting operate under uncertainty.
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Three Mistakes the Market Punished Me For This Week
Markets punish mistakes quickly. For anyone operating in probabilistic environments – whether trading, investing, or betting – drawdowns are inevitable. What matters is not the loss itself, but whether the loss reveals something useful about the system being implemented. This week, the market delivered three such lessons. Context: Progress Before the Setback At the beginning