Positions > Beliefs

My thoughts about WWIII ended with a controversial question: what's the trade? Let me be clear - I'm absolutely against war. No amount of profit justifies human suffering. But "what's the trade?" isn't about war profiteering. It's one of the most important questions I've learned to ask, and not for the reason you might think. Asking "what's the trade?" forces you to translate the complexity of our world into actionable insight. As Taleb would say - it gives you skin in the game. Without consequences, beliefs cost nothing. With consequences, precision matters.

Starting this blog was my first instance of putting skin in the game. I had random notes scattered across Notion and countless thoughts bouncing around my head. Writing them down attached risk - the risk of being wrong publicly, the risk of incoherence, the risk of looking foolish. Anyone who's tried writing knows this: forming a consistent narrative is hard. That brilliant insight that sounds so clear in your head often falls apart when you try to articulate it. Writing forces you to confront the gaps in your thinking.

Taking positions in financial markets is the next step on this path. They involve more risk, so you need even more precision. There's an important distinction between writing and trading. My writing synthesizes things I've observed in the past, connecting them into a coherent model. It's retrospective sense-making, and there's value in that. Positions, on the other hand, only care about the future. Yes, they're guided by the past, but trading demands prediction. You need to formulate what will happen next with enough precision to actually bet on it. This precision requirement is powerful. It forces you to consider details you'd otherwise ignore and helps you avoid black-or-white thinking. Saying "AI is a bubble" is very different from allocating 20% of your portfolio to Nvidia puts. The person just talking about an AI bubble is fine regardless of whether it pops or not. The person with a short position feels material consequences of theta decay.

There's no fitness function for thoughts in your head, so you can grow whatever intellectual abomination your mind feeds you. Trading leaves no space for bullshit. Bullshit positions lead to bankruptcy over a long enough time horizon. Attaching risk forces precision through consequences. This translates abstract concepts into something with real impact on your life.

This is why "what's the trade?" is such a valuable question. It's not about making money. It's about forcing yourself to think clearly enough that you could actually bet on your beliefs. If you can't formulate a tradeable position from your belief, maybe you don't understand it as well as you think. And if you can formulate one but wouldn't actually take it - well, that tells you something too. You don't need to literally trade every idea. Most things in life don't require this level of precision. But when something matters enough that you're forming strong opinions about it, asking the question exposes fuzzy thinking.

The risk determines what's relevant. If I held coffee futures contracts, I'd be following weather patterns, harvest cycles and shipping routes of coffee production in Brazil. But I don't. I enjoy my coffee without overthinking it.