Jigsaw

@lfg_cap @evrgn11112231 @Beutty I have an excel with a few hundred stocks mapped with a simplified IRR framework and some portfolio construction analyses - it is basically the only spreadsheet I actually need

@JigsawCap @evrgn11112231 @Beutty Don’t u use excel for that or keep in your mind for 100 stocks?

Have you made a single dollar of alpha from your new Claude Code workflows that you are confident you wouldn’t have earned otherwise?

@evrgn11112231 @lfg_cap @Beutty I say this with mucho love and respect for Hem, everyone has a diff process, but I only try to really triangulate 1 LT earnings metric and everything else is directional, loose, qualitative, the art side of things

@JigsawCap @lfg_cap @Beutty And if it takes you more than 10 min on napkin math to figure that out the idea in probably not that good either tbh

@evrgn11112231 @lfg_cap @Beutty Why you letting people in on the secret that the quarterly calculation of ROIIC doesn’t mean anything? Just figure out 5-10y fwd eps within a reasonable band then make sure business momentum + revisions broadly moving the right direction

The more important question is how important is the roiic? Think the “gifted mental math” Buffett types are prob doing less complicated math in their heads than that and are just very very good at zeroing in on the few things that really matter. That’s kind of my point on Claude is that if increases the amount of noise potentially so disastrous for those without a good filter prob.

@ChairliftCap Yeah, I only listened to the short clip, but I felt like there has to be a definitional issue here — surely he has thought about biases to some extent — otherwise, he really hit the luck jackpot to coast through to success without knowing why he made the decisions he made lol

Aside from the debate on famous historical figures introspecting or not, isn't introspecting the entire job of an investor?

@Citrini7 I don’t think markets changed really, they were just retarded in 2021-22

Have markets gotten smarter about inflation or more complacent?

To those of you who can’t spell “Strait” correctly — for your own sake and dignity, just start saying “Hormuz” or “SOH” — you’re embarrassing yourselves and just don’t know it

@buccocapital x.com/jigsawcap/stat…

Biggest own goal of all time $FICO

Whenever you get bearish, just remember, IWM is the one you short… High inflation — shitcos without pricing power Weak economy — shitcos that blow up in recessions High rates — shitcos that can’t handle higher cost of capital LT — shitcos that compound less

@smoeka @JavierBlas I tend to think ~1 month is the base case. Call it 400M SPR/Russia inventory drainage vs 15M bpd lost = 25-30 days However, if no resolution on horizon soon, people will look through that bandaid and say we have fewer mitigants in a disaster scenario

Maybe months is ambitious, I agree. Weeks for sure, not days. Iran is getting badly pummeled and with each day has less striking ability, while escorts thru hormuz and China tankers directly from Iran ramp up. Then add *coordinated international* reserve releases. Now add Russian oil re-entering (potentially). We're good for longer than most pundits realize. And the market agrees.

Assuming that Javier has done his homework, these numbers imply that together with coordinated SPR releases and easing of Russian sanctions, the U.S. will be able to keep the war going for months without major impact on oil prices. Nat gas and helium might be a different story though.

@evrgn11112231 @ShanuMathew93 lol, yeah, it’s always been crazy to me how simply knowing basic things and putting together the pieces in your head is an under-appreciated skill Moving from deep excel to napkin math is when you find the best ideas

@ShanuMathew93 For me there has been strong correlation between the people I know who are good at mental math and good fundamental investors. May not be causation though. Usually means they are also good at reasoning from first principles and remembering things too.

I think the ability to process and retain large amounts of raw information the old fashion way (without AI, in your brain) is going to be an increasingly serious competitive advantage for thinkers who choose to keep that skill sharp (or whom actively limit their use of AI).

@buccocapital All the answers you’re getting seem to ignore that <10% organic EPS algos should simply not trade at >30x p/e and should be more like market multiples… but yeah, they also overearned a lot too

What happened to TMO and DHR? I’m not close to these names but they were investor and FinTwit darlings for years and years and years and years And then they just…died. What gives?

@Citrini7 What if the strait doesn’t open immediately upon TACO, and it’s actually a medium term thing where parts of the world literally can’t turn on their machines?

A very small price. Like maybe a 1-2% increase to all prices. Never been an issue before.

@evrgn11112231 Longer convo — but shorting for absolute return and longs with high IRRs is a good combo as long as you avoid Texas hedging — supplementing it with macro can be v additive + keeps me plugged into market better

Ya I add a lot of excess return from long size flexing up and down counter cyclically in response to stock price moves. And intra months moves can create far more return than even the pnl benefit or something like a 10-30% index hedge in a down month. Which is why I ask - what’s the point? And when you consider basis risk it feels like greater chance index hedging would actually cost me money over time as well for little benefit.

What can go right?

@evrgn11112231 Not explicitly, but the performance breakdown from fund admin risk models suggest it has been very additive I find that LT IRR benchmarking with long bench solves a lot of behavioral issues vs just winging it on net exposures

Curious if you track your realized actual performance over time vs fixed exposure versions of your portfolio to see if you are adding value from swinging nets? I’m skeptical many funds are good at this and think most likely have substantial negative alpha as people tend to do it at the exact wrong time (at least from experience). But so many firms still run variable net so trying to figure out if there’s something I’m missing and if many have figured out how to do it well..

@evrgn11112231 Well, I’m thinking about (a) this lasts a month and causes a recession, (b) technical flows setup seems precarious, (c) degross means AI underperforms and/or correlations go to 1 And gross/net are reflexive with performance, so can’t be wrong for long w/o exposures getting messy

I’m pretty risk parity driven but it’s not vol based rather intrinsic value downside. Works really well. So in the current environment you basically are trying to figure out if the Iran situation causes a regime shift that impacts your macro model and tells you to move exposures?

@evrgn11112231 Intrinsic value methodology most aligned with TCI + look for SP-like inflection ideas Macro frameworks determine gross exposure, factor nets, etc — no quant model but have ways I break down risk Also, worth noting a decent amount of risk parity influence in port construction

@JigsawCap How do you determine gross and net? Is it systematic or more vibes based? TCI is basically always levered long and def not optimizing for monthly numbers.

@evrgn11112231 Structure ~110/70=40 (150-200 gross, 10-70 net) Mostly focused monthly abs return, but if beta is crushed, looking at alpha / protection to capture rebound Want to be long right factors / sectors / themes / geos and ideally alpha within those Elements of TCI / Druck / Slate Path

Now I’m just curious not trying to argue: Probably more a function of how long momentum a portfolio is right? Or general factor tilts? And how one defines risk (monthly underperformance? Something else?) I guess for you I’m curious what you are optimizing for short term. Are you trying to just protect alpha or maybe position to gain it? Reduce beta? Something else? Are you flexing net? Thinking out loud: I have positive alpha this month long only at beta 1. And think my portfolio is balanced enough already that I actually think I will keep making alpha in a down market. But I’m never trying to neutralize beta. Putting myself in a LS low net mindset: If I was 100/100 with zero net using an index hedge I would think I should be fine. If I was 130/100 30 net maybe I wouldn’t be but if I was 100/70 30 net I would be ok. So really I think if I’m not trying to make a call on beta ever (hard to consistently do?) then again my risk really is just my gross and specifically if I’m levered long or not. Which I wouldn’t be in this environment given bottom up risk/reward (technically I can be 120% gross/net if I wanted but haven’t gone about 100%). I know a lot of funds swing nets so maybe that’s what all of this is about but I generally don’t think that is a winnable / repeatable game.

@evrgn11112231 Yeah, agree to disagree I guess 1) imo portfolio construction is way more important when leverage is involved 2) strait closure and gulf energy shut ins fundamentally can / are / will further change the world — though AI is less affected than most things

Portfolio construction and position level gross is as important or more for risk mgmt in my model imo. So everything is relative risk/reward. And one reason I can be relaxed is my semis currently are smallest they’ve ever been and I would love for them to go lower at which point I would likely add more. But nothing fundamental has materially changed about the world over the last 2-3 weeks imo which is why I view all of this noise as odd. (Yes I know about Iran but that should be ex ante captured in risk mgmt - preparation for unexpected random exogenous shocks).

@evrgn11112231 As a constant 100% gross LO, your decision tree is just different, right? In a levered, directional structure, been thinking about gross/net to various factors for different outcomes — feeling better about AI and worse about IWM types, but portfolio construction matters more

@JigsawCap Ha hard to tell the difference as a guy who only takes directional bets.

@evrgn11112231 No one I talk to has gotten less bullish AI alpha. Most people have gotten more bearish market beta. My convos would suggest you’re conflating the two … or just baiting people, which is fine, carry on

I’m not an ai maxi but I’m disappointed to learn so much of their confidence was only driven by the tape. Was a lot more fun when it felt like they really believed this stuff.