Nassim Taleb On Bitcoin: It’s an Excellent Idea

The White Dragon : A Canadian Dragon Portfolio

Alright guys, Ive been working on this for a while and a post on here by a guy describing his portfolio here was the final kick in the ass for me to put this together. I started writing this to summarize what Im doing for my friends who are beginners, and also for me to make some sense of it for myself
Hopefully parts of it are useful to you, and also ideally you guys can point out errors or have a suggestion or two. I'm posting this here as opposed to investing or canadianinvestor (blech) because they're just gonna tell me to buy an index fund.
This first section is a preamble describing the Canadian tax situation and why Im doing things the way that I am. Feel free to skip it if you dont care about that. Also, there might be mistake regarding what the laws are here so dont take my word for it and verify it for yourself please.
So here in Canada we have two types of registered accounts (theres actually more but whatver). There is the TFSA "Tax Free Savings Account", and RRSP "Registered Retirement Savings Account"
For the sake of simplicity, from the time you turn 18 you are allowed to deposit 5k (it changes year to year based on inflation etc)in each of them. That "room" accumulates retroactively, so if you haventdone anything and are starting today and you are 30 you have around 60k you can put in each of them. The prevailing wisdom is that you should max out the TFSA first and you'll see why in a minute.

TFSA is post tax deposits, with no capital gains or other taxes applied to selling your securities, dividends or anything else. You can withdraw your gains at any time, and the amount that you withdraw is added to the "room" you have for the next year. So lets say I maxed out my TFSA contributions and I take out 20k today, on January of next year I can put back in 20k plus the 5 or whatever they allow for that year. You can see how powerful this is. Theres a few limitations on what is eligable to be held in the TFSA such as bitcoin/bitcoin ETFs, overseas stocks that arent listed on NYSE, TSX, london and a few others. You can Buy to Open and Sell to Close call and put options as well as write Covered Calls.

The RRSP is pre-tax deposits and is a tax deferred scheme. You deposit to lower your income tax burden (and hopefully drop below a bracket) but once you retire you will be taxed on anything you pull out. Withdrawing early has huge penalties and isnt recommended. You are however allowed to borrow against it for a down payment as a first time home buyer. The strategy with these is that a youngperson entering the workforce is likely to be in a fairly low tax bracket and (hopefully) earns more money as they get older and more skilled so the RRSP has more value the greater your pre-taxincome is. You can also do this Self Directed. Its not relevant to this strategy but I included it for the sake of context.
Non registered accounts ( or any other situation, such as selling commercial real estate etc) is subject to a capital gains tax. In so far as I understand it, you add all your gains and losses up at the end of the year. If its a positive number, you cut that number IN HALF and add it to your regular pre-tax income. So if I made 60k from the dayjob and 20k on my margin account that adds up to 70k that I get taxed on. if its a loss, you carry that forward into the next year. Theres no distinction between long term and short term. Also physical PMs are treated differently and I'll fill that part in later once I have the details down.
The reason why all that babble is important is that my broker Questrade, which isnt as good as IB (the only real other option up here as far as Im aware) has one amazing feature that no other broker has: "Margin Power"
If you have a TFSA and a Margin account with them, you can link them together and have your securities in the TFSA collateralise your Margin account. Essentially, when it comes to the Maintenance Excess of the Margin Account QT doesnt care if its in the TFSA *or* the Margin!
You can see how powerful this is.
So as you can tell by the title, a lot of this is heavily inspired by Chris Cole's paper "The Allegory of the Hawk and the Serpent". You can read it here:
Between it, his interviews and my mediocre options skills at the time my mind was blown. Unfortunately I didnt know how to do the Long Volatility part until after the crash in March but I've since then had nothing but time to scour the internet and learn as much as I could.
The way I interpret this isnt necessarily "what you should have right now", but what abstracted model they were able to backtest that gave them the best performance over the 90 years. Also, a lot of my portfolio I already had before I started trying to build this.
As such my allocations dont match the proportions he gave. Not saying my allocations are better, just showing where they are at this time.
I'm going to describe how I do Long Volatility at the end rather than the beginning since the way *I* do it wont make sense until you see the rest of the portflio.

Physical PMs 22%
I'm not sure wether he intended this to be straight up physical gold or include miners and royalty streaming companies so I will just keep this as physical.
I consider Silver to be a non-expiring call option on gold, so that can live here too. I am actually *very* overweight silver and my strategy is to convert a large portion of it to gold (mostly my bars) to gold as the ratio tightens up.
If youre into crypto, you can arguably say that has a place in this section.
If an ETF makes sense for part of your portfolio, I suggest the Sprott ones such as PHYS. Sprott is an honest business and they actually have the metal they say they have. If you have enough, you can redeem your shares from the Royal Canadian Mint. The only downside is that they dont have an options chain, so you cant sell covered calls etc. Simple enough I suppose.
One thing to bear in mind, there is a double edged sword with this class of assets. They're out of the system, theyre nobody's business but your own and theres no counter party. That unfortunately means that you cant lever against it for margin or sell covered calls etc. You can still buy puts though (more on that later)

Commodity Trend (CTA) 10%
Patrick Ceresna gave a good presentation on what this strategy is. Until I watched this video I just thought it meant "buy commodities". A real CTA does this with futures also so aside from the way he showed, there are two other ETFs that are worth looking at.
COM - This is an explicit trend following ETF that follows a LONG/FLAT strategy instead of LONG/SHORT on a pile of commodity futures. So if they get a "sell" signal for oil or soybeans they sell what they have and go to cash.
COMT- Holds an assortment of different month futures in different commodities, as well as a *lot* of various related shares in producers. Its almost a one stop shop commodities portfolio. Pays a respectable dividend in December
If you want to break the "rules" of CTA, and include equities theres a few others that are also worth looking at
KOL- This is a coal ETF. The problems with it are that a lot of the holdings dont have much to do with coal. One of them is a tractor company. A lot of the companies are Chinese so theres a bit of a red flag.
Obviously Thermal Coal, the kind used for heating and powerplants isnt in vogue and wont be moving forward...but coking coal is used for steel manufacturing and that ain't going anywhere. The dividend is huge, pays out in December. A very very small position might be worth the risk.
Uranium- I'm in URA because thats the only way for me to get exposure to Kazatoprom (#1 producer), which is 20% of the holdings. The other 20% is Cameco (#2 producer)and then its random stuff.
Other than that I have shares in Denison which seems like its a good business with some interesting projects underway. I'm still studying the uranium space so I dont really have much to say about it of any value.
RSX- Russia large caps. If you dont want to pick between the myriad of undervalued, high dividend paying commodity companies that Russia has then just grab this. It only pays in December but it has a liquid options chain so you can do Covered Calls in the meantime if you want.
NTR- Nutrien, canadian company that was formed when two others merged. They are now the worlds largest potash producer. Pretty good dividend. They have some financial difficulties and the stocks been in a downtrend forever. I feel its a good candidate to watch or sell some puts on.
I'm trying to come up with a way to play agriculture since this new phase we're going to be entering is likely to cause huge food shortages.

EURN and NAT- I got in fairly early on the Tanker hype before it was even hype as a way to short oil but I got greedy and lost a lot of my gains. I pared down my position and I'm staying for the dividend.
If you get an oil sell signal, this might be a way to play that still.

Fixed Income/Bonds 10%

Now, I am not a bond expert but unless youre doing some wacky spreads with futures or whatever... I dont see much reason to buy government debt any more. If you are, youre basically betting that they take rates negative. Raoul Pal of Real Vision is pretty firm in his conviction that this will happen. I know better than to argue with him but I dont see risk/reward as being of much value.
HOWEVER, I found two interesting ETFs that seem to bring something to this portfolio
IVOL- This is run by Nancy Davis, and is comprised of TIPS bonds which are nominally inflation protected (doubt its real inflation but whatever) overlayed with some OTC options that are designed to pay off big if the Fed loses control of the long end of the yield curve, which is what might happen during a real inflation situation. Pays out a decent yield monthly
TAIL- This is a simpler portfolio of 10yr treasuries with ladder of puts on the SPX. Pays quarterly.

Equities 58% (shared with options/volatility below)
This is where it gets interesting, obviously most of this is in mining shares but before I get to those I found some interesting stuff that I'm intending to build up as I pare down my miners when the time comes to start doing that.
VIRT- I cant remember where I saw this, but people were talking about this as a volatility play. Its not perfect, but look at the chart compared to SPY. Its a HFT/market making operation, the wackier things get the more pennies they can scalp. A 4% dividend isnt shabby either.
FUND- This is an interesting closed end fund run by Whitney George, one of the principals at Sprott. He took it with him when he joined the company. Ive read his reports and interviews and I really like his approach to value and investing. He's kind of like if Warren Buffett was a gold bug. Theres 120 holdings in there, mostly small caps and very diverse...chicken factories, ball bearings all kinds of boring ass shit that nobody knows exists. Whats crucial is that most of it "needs to exist". Between him, his family and other people at Sprott they control 40% or so of the shares, so they definitely have skin in the game. Generous dividend.
ZIG- This is a "deep value" strategy fund, run by Tobias Carlisle. He has a fairly simple valuation formula called the Acquirer's Multiple that when he backtested it, is supposed to perform very well. He did an interview with Chris Cole on real Vision where he discusses how Value and Deep Value havent done well recently, but over the last 100 years have proven to be very viable strategies. If we feel that theres a new cycle brewing, then this strategy may work again moving forward.

I want to pause and point out something here, Chris Cole, Nassim Taleb and the guys at Mutiny Fund spend a lot of effort explaining that building a portfolio is a lot like putting together a good basketall team. They need to work together, and pick up each others slack
A lot of the ETFs I'm listing here are in many ways portfolios in and of themselves and are *actively managed*. I specifically chose them because they follow a methodology that I respect but I can't do myself because I dont have the skill, temperament or access to.
The next one is a hidden gem and ties into this. I'm not sure how much more upside there is in this one but man was I surprised.
SII- Sprott Inc. I *never* see people listing this stock in their PMs portfolios. A newsletter I'm subscribed to described this stock as the safest way to play junior miners. Their industry presence, intellectual capital and connections means that they get *the best* private placement deals in the best opportunities. I cant compete with a staff like theirs and I'm not going to try. I bought this at 2.50, and I liked the dividend. Since then they did a reverse split to get on the NYSE and like the day after the stock soared.
When it comes to mining ETFS I like GOAU and SILJ the best. None of their major holdings are dead weight companies that are only there because of market cap. I dont want Barrick in my portfolio etc.
SGDJ is a neat version of GDXJ.
Aside from that my individual miners/royalty companies are (no particular order)
RIO- Rio2 on the tsx, not rio tinto
Options/Volatility: varies
So this is where we get to the part about options, Volatility and how I do it. I started out in the options space with The Wheel strategy and the Tastytrade approach of selling premium. The spreads and puts I sell, are on shares listed above, in fact some of those I dont hold anymore.
Theres tons of stuff on this in thetagang and options so I wont go into a whole bunch (and you shouldnt be learning the mechanics from me anyway) but theres one thing I want to go over before it gets wild.
If I sell a Cash Secured Put, from a risk management perspective its identical to just buying 100 shares of the underlying security. You are equally "Short Vol" as well, it just that with options
its a little more explicit with the Greeks and everything. But if I use my margin that I was talking about earlier, then I can still collect the premium and the interest doesnt kick in unless Im actually assigned the shares.
But if I sell too many puts on KL or AG, and something happens where the miners get cut down (and lets be real, they all move together) my margin goes down and then I get assigned and account gets blown up
So what I need to do, is balance out the huge Short Vol situation in my portfolio, be net Long Vol and directly hedge my positions. Since the overwhelming majority of my equities are all tied to bullion this is actually a very easy thing to do.


So I set this up so the vast majority of my margin is tied up in these 1-2 or even 1-3 ratio put spreads that *I actually put on for a small credit*, and roll them every once in a while. I run them on SLV, and GDX.
I keep enough room on my margin so I can withstand a 10% drawdown before it sets off the long end of the spreads and then I can ride it out until it turns around and we keep the PM bull market going.
Theres another cool spread I've been using, which is a modified Jade Lizard; if already hold shares, I'll sell a put, sell a covered call, and use some of the premium to buy a longer dated call. Ive been running this on AG mostly.
I have a few more spreads I can show you but Im tired now so it'll have to wait for later.
As I said multiple times, I do intend to trim these miners later but now isnt the time for that IMO. I'm also monitoring this almost full time since I have an injury and have nothing better to do until I heal :p
submitted by ChudBuntsman to pmstocks [link] [comments]

Bitcoin is winning; currency without government is great, says Nassim Taleb (current BTC/USD price is $6,938.46)

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Bitcoin is winning; currency without government is great, says Nassim Taleb
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Fun facts about ViaBTC: Founded by expert in distributed, highly concurrent networking from "China's Google". Inspired by Viaweb (first online store, from LISP guru / YCombinator founder Paul Graham). Uses a customized Bitcoin client on high-speed network of clusters in US, Japan, Europe, Hong Kong.

He Quit Tencent ("China's Google") and Started the World’s Sixth Mining Pool: ViaBTC
The founder of ViaBTC has a wealth of experience in the development of distributed, highly concurrent network servers.
He almost ran out of his two years' savings to buy Bitcoins in May 2014. [1]
All the data of ViaBTC is transparent so users can check the historical curves of each mining machine on the website, which provides better user experience.
In terms of fees, ViaBTC is different from other mining pools, the transaction fee is also distributed to the miners.
ViaBTC is a self-built high speed network of Bitcoin blocks, featuring a lowered orphan block ratio.
After the launch of the mining pool, a lot of optimizations were done, and the speed in discovering new block is promoted to be the highest in the industry, which also means that the main "key performance indicator" - orphan block ratio of the mining pool - will be the lowest in the industry.
Based on the self-built high speed Bitcoin block network, ViaBTC can discover and broadcast new blocks of Bitcoin rapidly and efficiently, so as to effectively reduce the orphan block ratio.
The so-called high speed Bitcoin block network is actually the Bitcoin client developed by ViaBTC, and has many clusters deployed all over the world including the U.S., Japan, Europe and Hong Kong.
ViaBTC was inspired by Viaweb [which went on to become the first on-line multi-tenancy shop Yahoo!-store, originally developed by LISP guru Paul Graham, godfather of Silicon Valley Start-Ups and founder of Y-Combinator], and its vision is Via Bitcoin Making the World a Better Place.
[1] I like this. It means he's "hungry" - he has "skin in the game". He wants - he needs - the price to go up - and (unlike the incompetent corrupt CTO of Blockstream, u/nullc Greg Maxwell), the head of ViaBTC clearly understands that higher price and higher volume go together.
submitted by ydtm to btc [link] [comments]

3-flag RBF (which includes FSS-RBF) would have been safer than 2-flag RBF (with no FSS-RBF). RBF-with-no-FSS has already been user-tested - and rejected in favor of FSS-RBF. So, why did Peter Todd give us 2-flag RBF with no FSS-RBF? Another case of Core ignoring user requirements and testing?

Here are your Artificially Limited!TM "options" under Peter Todd's "Opt-In Full RBF":
0 - Original / "classic" version of Bitcoin (where the transaction is not replaceable).
1 - FSS-RBF (where your txn is replaceable by a later txn only if using the same outputs, just with a higher miner fee).
2 - Full-RBF (where your txn is replaceable by any other double-spending transaction).
Yeah. Peter did all that work and gave us the middle finger by not giving us that simpler & safer middle option.
Once again Peter Todd / Core appears to be ignoring user requirements and testing, by giving us a more-complicated and more-dangerous feature that has already been tested and rejected (Full RBF - where the sender can arbitrarily double-spend any outputs) - and omitting a simpler and safer feature which users have favored (FSS-RBF - where the sender can only resend the same the transaction using the same outputs, now with a higher miners fee).
If Peter Todd had given us "3-flag RBF" (which includes FSS-RBF) then this would have been safer than the 2-flag RBF he actually gave us (which does not include FSS-RBF).
Feter Todd had already implemented a form of RBF which was field-tested and rejected in the first few hours due to an outcry from users (F2Pool), and replaced with the safer FSS-RBF:
Peter Todd talked F2Pool (Chun Wang) into implementing his RBF patch. A few hours later Chun realises want a terrible idea that was and switches to FSS RBF (safe version of RBF).
With Opt-In Full RBF, Core appears to be once again ignoring user requirements and testing, by giving us a more-complicated and more-dangerous feature that has already been tested and rejected by users, who clearly preferred FSS-RBF.
  • 3-flag RBF (which includes FSS-RBF) would have been the safer form of RBF (0 = no RBF, 1 = FSS-RBF, 2 = Full RBF).
  • So, why did Peter Todd give us the more-complicated and more-dangerous 2-flag form of RBF (0 = no RBF, 2 = Full RBF ... omitting the simpler & safer "FSS-RBF" option) even after the more-complicated and more-dangersous version had been field-tested and rejected (within hours) by F2Pool, which ended up going back and implementing the safer form?
RBF supporters are wrong or lying about what "problem" RBF is supposed to "solve"
RBF supporters claim they just "want to allow the sender increase the fee on a txn that's not getting mined."
They're either wrong, or outright lying, because we've already gotten two proposals for better (simpler and safer) solutions for stuck transactions:
(1) If RBF supporters had really wanted to just help solve this "stuck transaction" problem, then the simpler and safer form of RBF (which would be totally sufficient to achieve the above) would have been FSS-RBF - not (Opt-In) Full RBF.
(2) Or even "more" safer and simpler: just impose a "transaction timeout" - after say 72 hours, a stuck txn (which no miners have been mining) simply gets dropped from the mempool. More below on this proposed transaction timeout:
RBF is being sold as a lie. A true Trojan Horse. We are being told that it was created to solve the stuck transaction problem but that is a lie.
In a recent exchange with an RBF apologist he admits that there is already a clean and simple fix for stuck transactions.
Another patch by Garzik introduces a 72 hour timeout for stuck transactions. This is the correct and clean fix. If you were so boneheaded that you sent a high value transaction without a proper fee then a 72 hour penalty seems perfectly reasonable.
What is not reasonable is using stuck transactions as an excuse to Trojan horse in a fee market system that turns the bitcoin blockchain into an auction house.
The "leading" supporters / apologists for RBF (eg, nullc Gregory Maxwell) are probably smart enough to know that those other simpler & safer solutions are indeed out there - so it does make sense to assume possible bad faith on their part here, and assume that they're not merely "wrong" - they're actually lying.
From the KISS principle to Nassim Taleb, everyone agrees: Simpler is better
FSS-RBF (First-Seen-Safe RBF) is the safer and simpler form of RBF where the sender can increase the fee for only the same outputs/UTXOs.
It solves the "stuck transaction" problem without introducing any other new complexities (and potential vulnerabilities) to the system.
There was a post on the front page today from Nassim Taleb talking about this simplicity concept in general: that a solution should be at least as simple as the problem that it intends to solve.
Nassim Nicholas Taleb: "Solutions need to be at least as simple as the problem they solve. (Anything else brings multiplicative unintended side effects.) #FatTails"
So... Why didn't Peter Todd give us the simpler and safer solution **FSS-RBF".
  • Why did he instead give us the more-complicated and more-dangerous (Opt-In) Full RBF?
  • Don't be fooled by the "Opt-In" part. That's just the part where he lets you turn "Full RBF" off or on for any given transaction.
  • There's already been some shadiness already as to whether this should "opt-in" or really "opt-out".
    • A few days after Peter Todd's "Opt-In RBF" got merged into the github repo, another Pull Request (PR) came up, to change it from "Opt-In" to "Opt-Out" (ie, "On-by-Default") - but Gregory Maxwell quietly closed that Pull Request (PR).
    • There are posts on-line from RBF supporters who say that the real plan is to quietly migrate from Opt-In Full RBF to On-By-Default (Opt-Out) Full RBF, eg:
opt-in RBF -> 2-4-8 -> opt-in RBF with wallets opting in by default -> LN -> full RBF
We need to learn that the only consensus that matters is among us, the users.
And the devs need to learn to listen and respond to what the users are saying, instead of ignoring us.
PS - We don't need to speak C/C++ in order to communicate our requirements to the devs. Any dev who cannot understand and intelligently respond to the following English-language user-requirements specification should GTFO:
0 - Original / "classic" version of Bitcoin (where the transaction is not replaceable).
1 - FSS-RBF (where your txn is replaceable by a later txn only if using the same outputs, just with a higher miner fee).
2 - Full-RBF (where your txn is replaceable by any other double-spending transaction).
Question for petertodd
(1) Why did your first draft release of this "feature" fail to implement the above simpler and safer specification?
Bonus question for petertodd
(2) You've already implemented an RBF feature, at your suggestion, for F2Pool.
You implemented your more-complicated, more-dangerous Full RBF - and after few hours of community outcry, it was removed, and F2Pool re-implemented it the simpler safer way: with FSS RBF.
What did you learn from this experience with the users?
Inspired by:
Why don't go the safe way? RBF would allow double spending attacks. It would be much better if a transaction in mempool can only be replaced by a new one if the transaction outputs are the same as in the original transaction (FSS-RBF). So you cannot replace it by a completely different transaction and you cannot double-spend.
Maybe it would be nice to mark the initial transaction by either one of three flags:
  • Old transaction version (non replaceable).
  • FSS-RBF (replaceable by a similar transaction with higher miner fee).
  • Full-RBF (replaceable by any other double-spending transaction).
As a merchant you could safely accept 2 but not 3. I don't see any good reasons why one would favor 3 over 2.
submitted by BeYourOwnBank to btc [link] [comments]

Why Nassim Taleb is still betting on crypto - YouTube Peter Warren om Nassim Taleb, Ray Dalio, Bitcoin, Nicolai Tangen og USA  Christopher Vonheim  BYNN Nassim Nicholas Taleb vs David Birch on The Bitcoin Standard - Bitcoin News Nassim Taleb Almost All Bitcoiners Are ‘Total Idiots’ CVM  Nassim Taleb on Bitcoin

Nassim Nicholas Taleb, famed philosopher, offers up a mighty, full-throated defense of the world's most popular cryptocurrency, bitcoin. Nassim Taleb, Universitätsprofessor und Autor von Black Swan, hält Bitcoin für eine gute Idee, aber die meisten Investoren können die Feinheiten nicht verstehen. Ist Bitcoin für Idioten? Laut einem Tweet von Nassim Taleb am 21. Juni ist Bitcoin (BTC) eine gute Idee, aber “fast alle Bitcoiner sind totale Idioten”. There was a clash on Twitter between Nassim Taleb and Giacomo Zucco about Bitcoin and libertarian philosophy.. Taleb is a Lebanese (naturalized American) philosopher, essayist and mathematician very famous for having elaborated the so-called “black swan theory”, which is the metaphor describing the unfolding of an unexpected event of great magnitude with great historical consequences. Nassim Taleb was changing posts with Bitcoin enthusiast Giacomo Zucco, who challenged Taleb’s views on imposing central planning by bureaucrats and politicians with “no skin in the game” as the best risk management strategy. “Bitcoin is a good idea but almost all bitcoiners are total idiots, can’t get nuances beyond fortune cookies ... — Nassim Nicholas Taleb (@nntaleb) June 4, 2020. With Coinbase out, other cryptocurrency exchanges took this opportunity to shill their exchanges with Kraken co-founder and CEO Jesse Powell asking Taleb to check out Kraken and “contact me directly if you have any problems.”

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Why Nassim Taleb is still betting on crypto - YouTube

Nassim Taleb on Bitcoin, Stocks, Portfolio and The Crash 🧠Enroll with Crypto University Courses Now: Subscribe To My Channel:h... Nassim Nicholas Taleb vs David Birch on The Bitcoin Standard - Bitcoin News Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system ... Nassim Nicholas Taleb in an interaction with Ami Shah of on the sidelines of Times Network India Economic Conclave talks about what makes him b... Nassim Taleb, author of “Skin in the Game”, got into a small Twitter feud in which he explained that most investors can’t understand the nuances of a cryptocurrency like Bitcoin. Peter Warren er en pionèr innenfor finanssektoren i Norge og har over 30 års erfaring som trader innenfor råvarer, metaller, valuta, aksjer og renter. Han startet det norske markedet for ...