[lordnacho]

This is the epitome of "understands how things work but makes bad decisions".

You do have to be smart to see that there might be a more positive outcome. But you have to be unwise to gamble.

My first boss (trading) told me, "Our job is to be in business tomorrow". Which is relevant because in that business you actually can blow up in a day.

[mekoka]

He's a gambler and gambler be gambling. At the beginning of that interview with Tyler Cowen, he's asked what makes him better. He doesn't sound like he knows, but he doesn't want to acknowledge luck. Instead he speaks like someone who can see patterns in entropy. I think at one point SBF started believing in his own legend and thought that he's actually doing something special that sets him apart. He can read the language of chance. The way that an addict tries to repeat the exact routine of the day that led to a past big win, before his next gambling spree, thinking that "surely, spilling a bit of maple syrup in my coffee that morning had something to do with it".

[pryelluw]

If I were a gambler I’d be furious when compared to such a cereal box criminal.

[kordlessagain]

Why is it we have to insult the loser to make a point?

[otikik]

“Cereal box” is not an insult, and criminal is a fact as far as I can tell.

[michaelt]

> This is the epitome of "understands how things work but makes bad decisions".

I'm not sure I'd even call this 'understands how things work' - everyone who's heard of marginal utility knows that large scale double-or-nothing 51/49 gambles very rarely make sense to take.

To me this sounds more like someone hopped up on a nootropic that causes compulsive gambling, like Emsam.

[idlewords]

If only there was a nootropic that made people stop behaving like an idiot.

[cogman10]

Agree. The St Petersburg paradox isn't about a single 50/50 wager. Both SBF and Cowen seem to not understand that. Instead they simply start jacking off to infinity because lizard brain says Petersburg is related to infinity somehow.

The "logic" that are using here would justify everyone to go to a casino and put their life savings down on black.

It's gambler brain logic just couched in pseudo-intellectual terminology to make them sound smart. The equivalent of techno babble for gambling.

[feoren]

From just that snippet, Cowen sounds like he's challenging SBF on it. I don't see Cowen "jacking off to infinity", but rather seemingly expressing that such a wager is a horrible idea. He says:

> And would you keep on playing that, double or nothing?

The point being that if you'd push that button now, in this world, then what would be different in the new world to stop you from pushing the button again? There's no stopping point, hence the St. Petersburg paradox. Maybe the button has already been pushed, maybe multiple times. If anything, Cowen seems to be presciently pointing out that SBF's attitude will inevitably lead to disaster.

SBF does seem to be misunderstanding: push the button forever, and maybe magic will happen!

[lordnacho]

I took it to mean "I understand the St Petersburg Paradox, but I think I have a way out".

Which is actually why it's both intelligent and dumb at once. You have to have done some reading in your life to understand this thing. As someone who did well at math and worked in trading, he would have come across it. But it's also unwise because actually lots of other people have also studied it for a long time, and they are not declaring victory.

[bombcar]

Almost by definition the only “huge winners” at the roulette table are the people who keep putting it all on black and let it ride. Because the people who take their winnings off can’t ever get the huge payouts.

And some people seem absolutely unable to understand the probabilities involved. It seems to almost be a requirement for startup leaders.

[jacquesm]

> Almost by definition the only “huge winners” at the roulette table are the people who keep putting it all on black and let it ride.

Not over the long run. The house always wins.

[jacquesm]

Your boss wasn't the one to employ Nick Leeson, and you weren't working for Barings.

[lordnacho]

Is it a famous quote or something? I doubt he was the first guy to think of it, and neither was anyone at Barings. Anyone in trading could feasibly have thought of it independently.

[jacquesm]

Leeson certainly wasn't the first guy to think of it but he did in fact bring down the house by using exactly that strategy and Barings ended up not being there tomorrow one day on account of that. Lots of oversight failures.

[lordnacho]

Ah, I thought you meant that the quote was from someone related to Barings, and my boss had nicked (lol) it.

Which could totally have been the case, naturally everyone on the floor had watched the movie and some knew the people involved.

[jacquesm]

I think the mistake is mine, I should have asked if your boss said this before or after Baring's went under.