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Joined April 2012
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Rafic Daud retweeted
When I say that economics isn't a real science, it's not just because economics cannot achieve the same rigour of proof as the hard sciences.
It's also because a frighteningly large number of theories in modern mainstream economics aren't based on rigorous empirical evidence â or, at best, simplify to the extreme.
Examples include Heckscher-Ohlin trade theory, expected utility theory, the Solow-Swan model, the efficient market hypothesis, and the money multiplier. The list goes on.
Students ought to know that when they enrol in an undergraduate economics degree, they are more likely to learn theories dreamed up from an armchair than ones built on meticulous observation of the real world.
Rafic Daud retweeted
I think about this quote often. The only alpha in markets is your difference in opinion vs consensus
If you just follow consensus, you are generating beta
That is fine for people who just want to track returns, but that is not what LPs pay you for if you are running a fund
Rafic Daud retweeted
Daniel Kahneman: the day Saddam Hussein was captured, the same news "explained" both the bond market going up and going down.
Treasuries rose - Bloomberg's headline said the capture made the world safer. Half an hour later treasuries fell -the new headline said the capture boosted appetite for risk.
Same event, opposite stories. The market moved first; the pundits reverse-engineered a reason. That, he says, is how financial commentary actually works.
"Our confidence comes from the coherence of the story - not the evidence behind it."
"The conclusion comes first. Then we believe the arguments that support it."
"System 1 is largely indifferent to the quality and amount of evidence."
~55 min, free. why the market's "explanations" are stories told after the fact â
Daniel Kahneman - the psychologist who won a Nobel in economics - spent his life proving one thing: your confidence is lying to you
A bat and a ball cost $1.10. The bat costs $1 more than the ball. The answer "10 cents" jumps to mind instantly. It's wrong (it's 5 cents) - and ~50% of students at Harvard, MIT and Princeton say it without checking.
That gap is his whole point: the fast, intuitive mind builds a clean story from almost nothing, and the feeling of certainty has nothing to do with being right.
"Confidence is a feeling, not a judgment."
"Stock pickers can't develop intuition - there isn't enough regularity for it to form."
"You can build a very coherent story out of very little information."
~45 min, free. how your mind fools you - from a man who studied it for 50 years â
Rafic Daud retweeted
Nice illustration of Jensen's inequality: the average km-h is not the inverse of the average hours per km.
Rafic Daud retweeted
Actually, obligatory:
Two economists are walking in a forest when they come across a pile of shit.
The first economist says to the other âIâll pay you $100 to eat that pile of shit.â
The second economist takes the $100 and eats the pile of shit.
They continue walking until they come across a second pile of shit.
The second economist turns to the first and says âIâll pay you $100 to eat that pile of shit.â
The first economist takes the $100 and eats a pile of shit.
Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."
"That's not true", responded the second economist. "We increased the GDP by $200!"
Rafic Daud retweeted
Differentiating skill and luck, and sidestepping the dreaded outcome bias, is an extremely diffcult task in a highly complex domain like investing.
Academia argues that to prove genuine skill over a lucky streak, a fund manager generating a modest 2% excess return (or alpha) annually would need 36 years of data to reach statistical significance.
In plain English, we could be highly confident that their success isn't simply due to chance or luck.
If that manager's alpha drops to just 1%, the required timeframe spikes to over 140 years. And for a manager delivering a decently attractive 4% of alpha per year? To reach statistical significance, you'd need a solid decade.
Rafic Daud retweeted
ChatGPT psychosis is rare if you know how it works.
âHow GPT worksâ should be a required subject.
Primary lesson: a GPT is a function of its data. It can uncover interesting facts and make fascinating correlations. But it will not discover non-governmental demons.
Anything the GPT says is a remix of its training corpus.
But labs benefit from GPT mysticism so they donât say this.
If you internalize the lesson, esoteric responses, when you invariably hit them, will at most make you think âhmm I wonder where it got that from.â And maybe you search or prompt a bit more to find out.
Otherwise youâll think you are revealing some deep universal truth, and thatâs when things go down hill.
Teach your kids that a GPT is a function of its data.
Rafic Daud retweeted
The UAE will gain 9,800 millionaires in 2025 â the most globally. Meanwhile, the UK is expected to lose 16,500...taking $91B in capital with them. This was entirely predictable.
Rafic Daud retweeted
To make it pedagogical, LLM is an autocomplete function that randomizes based on the statistical frequency:
+ Probability matching: if in the frequency space, the autocomplete is at 85% "take an umbrella" and 1/10^6 "have squid ink", it will do 85% of the time "take an umbrella".
+ "Temperature" setting: you can pick up to 100% the highest probability: "take an umbrella".
This may bruise the egos of scaling believers like @sama and @DarioAmodei whoâve bet billions, but, no â AGI wonât magically "emerge" just by making LLMs bigger. No memory. No world model. Just pattern-matching. The problem is the *architecture* â not the size.
Link below
Rafic Daud retweeted
A major new review from Yale (Moen, Baker, Iwasaki, 2025) offers the most comprehensive picture yet of what SARS-CoV-2 does to the nervous system.
The conclusion is stark:
Long COVID is a chronic neuroimmune disorder affecting brain, spinal cord, and peripheral nerves.đ§ľ
Rafic Daud retweeted
I think people who buy based on a cap rate are mostly just making a macro bet on interest rates.
I donât think youâre ready to buy real estate unless you can spot a good deal within minutes.
I donât think you can be the expert at more than one niche.
I think people who sell real estate courses donât make enough money in real estate and therefore canât be that great at it.
I think the hold-forever mentality made sense when rates were dropping for 40 years.
I think you should study your potential upside, but obsess about your potential downside.
I donât think any great real estate investor thinks itâs easy.
I think most people are better off paying the tax and patiently waiting for the next great deal than panic-buying to complete their 1031 exchange.
I donât think buying great deals scales.
I think smaller deals are great for LPs; huge deals are great for GPs.
I think the biggest difference between an amateur buyer and a professional buyer is the amateur focuses on the cap rate, and the professional focuses on the price per foot.
I donât think you should invest with anyone unless you have a clear understanding of what their fee structure is incentivizing.
I think the vast majority of off-market deals are severely overpriced.
I think thereâs an entire generation of investors who only know how to make money by relying on cap rate compression.
I think if youâve reached the âbest and finalâ round, youâve gone too far.
I think ground-up development has a terrible risk/reward ratio.
I donât think amateur buyers realize that appraisals arenât taken seriously by experienced investors.
I think the term âpassive incomeâ is a genius sales tactic geared towards the unsuspecting.
And I think the cold call is by far the most effective way to consistently find great deals.
Rafic Daud retweeted
Something I explained to 13 yo: There is no intrinsically fair price for any commodity, just the market price. Most people have no problem understanding that. Until the commodity is labor. Then suddenly it becomes hard to understand.
