1/ Optionality, volatility and convexity. Three concepts and their interaction that I first learned via @nntaleb and his text on dynamic hedging in the summer of 1998.

Together the three represent the most powerful concept in finance that you can put to work or learn.
2/ Optionality gives the ability to walk away when a bet you have made goes against your view. Or add up to the bet if markets move in your favor or your view is validated.

Non trading example. Adding solar for power in view of looming power shortage is adding optionality.
3/ Optionality becomes valuable in face of future uncertainty. The more volatile future, more valuable is optionality.

Using solar, you now have three power sources. More robust and anti-fragile.

Big client deadline this winter, adding solar just became more valuable.
4/ Convexity is a property of an asset that allows it to rise by more and fall by less.

You can't calculate the true ROI of a solar installation by looking at it in a linear fashion. When you add in optionality, volatility and convexity, the ROI is very different.
5/ Most professionals used to linear thinking, can't think in a non-linear world.

In my non-linear world, power costs, availability and bills are all uncertain. Client deadlines are non-movable. Clean reliable, cheaper power gives you an edge.
6/ While the cost of solar panels and installation is coming down, the cost of power from the grid is going up. Reliability of supply is going down.

In a chaotic world a vendor able to deliver despite disruptions to the grid is more valuable and likely to get more work.
7/ You are not buying cheaper power. You are buying dependable infrastructure which compounds value in a non-linear fashion in another dimension

The cheaper, cleaner power helps but that is not the trade.

Big Chief this one is for you & Nigeria. Our common challenge. @asemota
8/ As a founder or a startup, take some time out and understand optionality, volatility and convexity.

Our world is a non-linear world over run by the three concepts above.

The trade is not what it seems. Identify the real trade.
9/ My super smart super well educated engineering consultant friend isn't aware of the three concepts above.

Despite being a physicist, it doesn't compute in his mind. We disagree on the solar ROI.

Most engineers can't parse this. Most traders can. Level the playing field.
10/ Also they don't teach this in business school. That is not where I learnt and picked this up.

Taleb pointed the way but in the end there is no greater teacher than the market and a log filled with trading losses.

@babushka99 and @Atyab I thought you would enjoy this.
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