Trading strategy should adapt to personal temperament on the tech adoption curve. If you're always buying high and selling low, maybe you're not as cutting edge as you think you are in that domain.pic.twitter.com/NhNlIMjCnA
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e.g. if you think you're early to crypto b/c you've read a bunch of articles on macro-economics but haven't actually gotten your hands dirty then you might be late majority but think you're an early adopter. (since no one will admit to being a laggard)
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there are plenty of people who think they are early adopters but haven't even used the product. See this thread for an illumination:https://twitter.com/NeerajKA/status/1339619705192124418?s=20 …
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It's a late majority temperament that fools itself(FOMO) into believing that it's part of the early majority. It *can* be an effective strategy since it's using the crowd to calibrate, but b/c the temperament is faked, the unexpected volatility often shakes loose the position.
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Likewise, many early adopters were "lucky". They acted when value was *not* at all clear but in order to maintain the position of leadership as a thought leader, have to delude themselves(and thus others) that it was obvious all along.
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What this collective self-delusion creates is sth I'll term the seed/sapling delusion. The belief that you're buying seeds when you're actually buying saplings. You've already missed out on the massive % growth from seed -> sapling and it's now the sapling -> establishment phase
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The seed -> sapling phase is mostly innovative and experimental. It's an entirely different set of philosophies than the sapling -> established tree phase. It's like the difference between science and engineering.
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The two phases have fairly different capital deployment strategies. VC firms and hedge funds are different and can have wildly different valuation strategies.
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VC has a *much* higher tolerance for failure. Also this means you should never take a job rec from them:https://twitter.com/a_yawning_cat/status/1253741871509041152?s=20 …
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What the seed/sapling delusion often does is that it attracts larger sums of capital because the money going in thinks it can get seed level gains but the requirements for entry are higher since the sapling has a higher metabolism.
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Since the sapling is not established, the volatility remains high and are *not* offset by potential seed level returns b/c it's already past that stage.
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One way to mitigate this trap is to fill your life with technologies that span the categories all the way from innovator to laggard. You're personal response to these things will keep you informed to your actual temperament and not how cool you actually wish you were.
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Personal example. I recently considered buying PAWZ b/c I felt an insight of "ppl buy pets for pandemic loneliness." The jump at this chart's end though makes me suspicious that this wasn't a personal insight but cultural osmosis. My 'insight' is lagging the market, not leading.pic.twitter.com/j2Hlh2mdq4
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End of conversation
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