Things we are reading today - March 15, 2023 - SVB and how to beat the odds

Silicon Valley Bank

This is an interesting read that covers the reasons that led to the SVB Crisis.

lets take a look at how the US reacted to the SVB Crisis in the first 72 hours:

Another article that I came across offers an interesting take on VCs:

The industry is overconcetrated—enmeshed, as Geri Kirilova at venture capital firm Laconia Group puts it—and structurally drives capital into a few well-connected hands who pile it into larger funds, cut it into larger checks, and hand it off to a tightly knit network of entrepreneurs and startups.

In a comprehensive case study of the VC industry, UC Davis law professor Peter Lee argues that these are structural deficits that fundamentally undercut venture capital’s ability to actually provide social utility

What lessons Indian banks can learn from Silicon Valley Bank collapse:

How to beat the odds

This is an interesting read on how you need to alter your thinking in order to play the odds to the best.

The betting philosophy was pretty straightforward: Basically, if you bet enough money, covering a high enough percentage of possible winners, you’ll win often enough to come out ahead. Never mind that you’ll lose more often than you’ll win, because when you win, you can win big.

This is a central tenet of the Yass philosophy: If the odds are in your favor, go all out. At Susquehanna, when a trader takes the right position on an option, he buys big. It’s house money, and there’s a ton of it. It’s the opposite of gambling: The right decisions will yield positive results — what Yass calls “positive expectancy.” Maybe not in the short term, but certainly down the road.

What can you learn from playing poker?

At first blush, poker would seem to be at odds with the rational decision-making that Yass preaches. But poker — well-played poker — is all about making decisions, again and again and again, that are most likely to succeed: when to bet, and how much; when to call, when to fold, based on the cards dealt and actions of other players. Which makes poker played well the opposite of gambling.

Making the rational decision, again and again and again — it’s the Susquehanna mantra. Over time, you’ll come out ahead. Poker is akin to trading in other ways: The decisions have to be made fast, under pressure, and there’s the lurking risk that what you want to happen, or the bad result that just happened, will color your decision now. Poker tutorials are designed to bleed out such stupid emotion.