Don't Worry About the Vase
Or at least while claiming to use Riverian principles, since Silicon Valley doesn’t fit into the schema as cleanly as many other groups. That’s where we begin this section, starting at the highest possible conceptual level.
First law of trading: For you to buy, someone must sell. Or for you to sell, someone must buy. And there can’t be someone else doing the trade before you did it.
Why did they do that, and why did no one else take the trade first? Until you understand why you are able to do this trade, you should be highly suspicious.
“Every single thing we do, I can point to, like, ‘here is the person who was doing a thing wrong,’ ” said Hall. “We build a map of all of the players in the world…who are trading for reasons other than they want to generate some alpha.[*15] You know, somebody got added to the S&P 500. So now all the S&P 500 ETFs out there have to buy this company. Or it’s a CEO of a startup, he’s now a billionaire. He has ninety-nine percent of his net worth in the company. He’s allowed to sell his shares on this day [and] he’s probably going to sell a bunch.” (4330)
One could argue that we used to live in a Moneyball-vulnerable world. Gambling lines were terrible, baseball teams didn’t go after players who get on base, traders didn’t even know Black-Sholes and there was treasure everywhere, this theory says. But then it says, now Everybody Knows all that. There’s tons of competition. You can’t get ahead purely with statistics, or at least the basic versions, anymore?
