Complex Systems with Patrick McKenzie (patio11)

Patrick McKenzie (patio11) is joined by Byrne Hobart to discuss Byrne’s vantage point as writer of The Diff, a tech and finance newsletter. Byrne explains the toxicity of the 30-year mortgage, the dynamics of the finance newsletter ecosystem, how rationalist epistemics can be applied to hedge funds, and the joy of learning about an industry from scratch.

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Full transcript here: https://www.complexsystemspodcast.com/episodes/writing-history-byrne-hobart/

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Sponsors:  Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast 

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Links:

• The Diff https://www.thediff.co/
• Capital Gains https://capitalgains.thediff.co/ 
• Pre-order Byrne Hobart’s book Boom: Bubbles and the End of Stagnation https://www.amazon.com/Boom-Bubbles-Stagnation-Byrne-Hobart/dp/1953953476 
• Bits About Money https://www.bitsaboutmoney.com/
• Byrne's podcast The Riff: https://podcasts.apple.com/id1716646486

Referenced:

• The Railway Mania of 1860 Paper by Andrew Odlyzko https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4006745 
• Seeing Like a State by James C. Scott https://www.amazon.com/Seeing-Like-State-Certain-Condition/dp/0300078153
• The Dead Pledge by Judge Earl Glock https://www.amazon.com/Dead-Pledge-Mortgage-1913-1939-Capitalism/dp/0231192533
• The Oral History of Travel’s Greatest Acquisition Bookings.com https://skift.com/oral-history-of-booking-acquisition

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Twitter:
@patio11

@byrnehobart
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Timestamps:

(00:00) Intro

(00:25) The 30-year mortgage is an intrinsically toxic product

(04:46) Young households are the socially optimal holders of equities risk

(10:19) The structure of private equity returns

(14:18) Sponsor: Check

(15:32) Meta-analysis of the finance newsletter space

(19:54) Byrne’s aspirations for The Diff

(25:01) The origins of names

(27:19) The epistemics of a hedge fund

(34:26) Venture capital vs hedge funds

(38:13) Understanding scrapers

(41:20) How to learn about an industry from scratch

(45:37) The business of online travel agencies

(49:21) Wrap

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Complex Systems is part of the Turpentine podcast network.

Patrick McKenzie (patio11) and Ricki Heicklen discuss Ricki’s innovative approaches to teaching trading. Trading is traditionally taught only by practitioners, to practitioners. The curricula that trading firms use are not published externally, to avoid empowering competitors. Ricki explains how she teaches trade mechanics, how markets and traders react to new information, and the security mindset necessary for trading, including protecting sensitive information and avoiding signaling strategies inadvertently.

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Full transcript available here: https://www.complexsystemspodcast.com/episodes/teaching-trading-ricki-heicklen/
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Sponsors:  Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast 

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Links:
https://rickiheicklen.com/

https://bayesshammai.substack.com/

https://www.bitsaboutmoney.com/

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Twitter:
@patio11
@tradegal_

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Timestamps:
(00:00) Intro
(00:58) Ricki’s background in trading
(01:07) Teaching trading: pedagogical approaches
(03:47) Challenges in learning trading
(07:08) The importance of adverse selection
(08:02) Crowdfunding and market dynamics
(11:49) Understanding order books
(19:53) Sponsor: Check
(21:07) Liquidity and market microstructure
(27:48) Teaching trading through practical examples
(35:14) Reacting to new market information
(36:47) Understanding order cancellations
(41:29) Order types and other oddities
(56:00) Introduction to arbitrage
(01:05:00) Teaching position sizing and risk management
(01:10:05) Thoughts on quant trading
(01:12:44) Trading simulations and mental models
(01:13:08) Simulated insider trading exercise
(01:20:18) Security mindset in trading
(01:24:41) Information leakage in trading firms
(01:38:17) Final thoughts

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Complex Systems is part of the Turpentine podcast network.