[purpleblue]

> Investing in call options on AMD in 2014 or Tesla in 2019 also had huge asymmetric upside. It was clear that these stocks had massive risks, but while the upside wa potentially s huge, the downside was capped at -100%.

This is a terrible example. No one knew that the stocks would skyrocket. So at the time it was asymmetric on the downside because the cost of options were ridiculously expensive.

[redox99]

I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor.

So basically invest in things where there is a big information asymmetry.

[1] https://en.wikipedia.org/wiki/Information_asymmetry

[thunky]

It's really that easy? Care to share another stock pick today with asymmetric upside?

[redox99]

Not financial advise

It's not really that easy because

1) There aren't at least to my eyes that many opportunities, maybe people with domain specific knowledge in other domains, will find their own opportunities. I've only made in the last 10 years maybe 3 or 4 investments in which I was extremely confident that they would succeed.

2) These investments are medium-long term, at least 2 or 3 years.

> Care to share another stock pick today with asymmetric upside?

This will not be liked by the typical HN audience, but the investment where I currently see massive information asymmetry is Ethereum.

Most people who were into crypto were oblivious that the merge was actually coming. A couple of months ago you would see in crypto forums/reddit everybody memeing that it would be delayed again and again for years. But if you were actually knowledgeable of it's development, you would know that it was coming for real (information asymmetry #1). Now that it became widely known that it's coming, ETH/BTC ratio went from 0.06 to 0.08. Easiest 33% ever.

The same way, most people are unaware of the triple halvening. Ethereum miners currently get paid ~20M USD worth of ETH per day. A big chunk of that must be sold to pay for their mining bills. After the merge, that's almost 20M USD of DAILY sell pressure that will be gone (information asymmetry #2). After some months that massive reduction in sell pressure will have an impact on price. In addition, staking rewards cannot be withdrawn until a future update (shangai). Then it will be a limited withdraw queue.

Ethereum at 1000 USD just a month ago was free money in my opinion. Now at 2000 USD I still believe it's a good deal.

To be fair, there is a lot of information asymmetry in the negatives too. There are many things that are quite bad about Eth that most people into it aren't knowledgeable of either.

[muzani]

"This will not be liked by the typical HN audience..."

Not to be rude, but this hits the nail on the head. Most of the asymmetric investments are unpopular. Buying something unpopular seems to be a requirement for doing well -- the whole buy when people are fearful, sell when people are hopeful.

It's not just HN, crypto bros generally won't recommend ETH either.

Maybe having a good risk/reward ratio just isn't interesting. It's why people don't sing praises of PHP or Excel.

[thunky]

It's not obvious to me how to estimate how much ETH should actually cost. A merge or triple halvening may move the price, but how do we know the current price of $1900 is even remotely reasonable? Is it even possible to measure without comparing it to itself or to other crypto coins?

It seems like the absolute price doesn't actually matter. Everyone is only paying attention to relative price changes. But if you look at the absolute price, why does a single BTC cost the same as a 2022 Toyota Prius?

[SR2Z]

I highly supect that GM is undervalued. They were one of only two companies to sell enough EVs to disqualify themselves for the old tax credit, they're heavily invested in mass production of more, you don't need to worry about Elon Musk tweeting something dumb and tanking the stock, and they majority-own Cruise who are way closer to self driving than Tesla probably ever will be.

Despite all that their market cap is less than a tenth of Tesla's. Until 2008, it was the biggest car manufacturer in the world and in raw technical ability they're probably better than Tesla.

I'm biased because I own a lot of stock already but I still think there's money to be made on it.

[hakfoo]

I think GM has two weak spots:

First, they have poor to negative brand equity for some customers.

My family always had Japanese and Korean cars, so when I think of GM, I think of the ugly Cavaliers that so many of my classmates got as first cars in high school, and their long string of equally mediocre descendants. How do you beak that impression? Hyundai did it by giving out enough warranty that people didn't need to trust that the cars were built to last.

For EVs, I could almost see a case for a new psuedo-independent brand like Saturn. You don't need to remind people of those rusting old Chevys, but maybe there's a vague reminder that the endeavour is backed by Daddy GM's finances and infrastructure, so it's a less risky choice than buying a Lucid or Rivian and hoping the firm's still there in five years. Reinventing Hummer is an interesting take on it, but it's hardly selling to the people thinking "I can get the Prius, the Niro, or spend a little more and go full-electric and get even BETTER TCO on my grocery-getter." It's a shame they spun off Electro-Motive-- the branding would have been perfect.

Second, being a large player limits their ability to milk the growth narrative. Tesla can be overpriced (and as someone with WAY too much tied up in $TSLA, it freaks me out), but people can keep treating it like they're buying into the "future #1 brand" rather than the "already #1 brand with only downwards to possibly go"

[enos_feedler]

easy peasy.. nvidia assyemtry to the downside. short

[celim307]

Biggest regret was taking a hedge fund job and liquidating my 5k$ of amd because I didn’t want to deal with the paperwork

[valdagger]

The point isn't whether you "knew" the stocks would skyrocket. It's whether they could with some reasonable/acceptable probability. I remember these stocks being in the doldrums in each of those years and thinking that they could explode with a little execution. I was thinking of buying the stock (but didn't). If I was thinking along the lines of the call option (adding more asymmetry), I might have pulled the trigger. This isn't a "hindsight is 20-20" example.

[accountofme]

No, this is the perfect her care for an option. This gives the buyer and option to buy or sell at an agreed upon price. The buyer of the option pays a premium, and only loses that if they choose to not exercise the option. If they exercise the option they also have to pay the agreed upon price.

As such, there is an asymmetric upside in this case.