Business & Money
I once had someone say to me “stop losses are for suckers” (a stop loss is when, after buying a certain stock, you set a lower limit on how far it can fall in price before being automatically sold. So if you buy a stock at $100, you might set a stop loss at $80, which means if the stock reaches that point it will automatically sell to protect your down side).
That sentence stuck with me for a long time, probably because I aint no sucker! 😂 But seriously, I had just kind of accepted it at face value without giving it much thought. When you really think about it though, it’s a load of crap for a whole host of reasons, including:
1) Stop losses take emotions out of the equation. Emotions are the investors worst enemy leading her to do incredibly stupid things.
2) Stop losses free up money to pursue other ideas. You obviously want to make your money back, but it might be easier to do so on other companies.
3) Stop losses give you flexibility. The great thing about the stock market is that you can make money whether the market is going up or down. If something important has changed, you need the flexibility to act on that new information. No reason to stay trapped in a losing position.
Now I know what some of you are probably thinking. There are always major drawdowns, even in the market leaders. Amazon, Apple, Google, Facebook, all have seen huge drawdowns and one time or another. Getting stopped out of those means you would have lost out on the incredible gains to come. Fair point. But there’s a far longer list of stocks that have tanked and never came back. Don’t anchor on the outliers. Plus, a stop loss does not mean you can’t come back in at a later point.
These days you often see people writing about the end of Moore’s law (Moore’s law, named after Gordon Moore of Intel, being the principle that computing power, or the number of transistors on a chip, doubles roughly every two years). But, while the pace of improvements to this paradigm are definitely slowing down, to say that Moore’s law is coming to an end is to miss the larger point.
Before integrated circuits (chips), early computers relied on punch cards and vacuum tubes to handle the heavy lifting. It wasn’t until the 1950s when transistors came on the scene.
So, I believe the real idea of Moore’s law is to say that we will continually find ways to improve computing power at an exponential rate, regardless of whether the underlying technology is a transistor moving around electrons on a slab of silicon.
Take quantum computing for example. Once, these are generally available for regular applications, we will see a sudden step increase in computational power. Modern encryption might become obsolete in an instant.
The human brain example of another form factor. Instead of transistors, we have this biological blob inside our heads with about 100 billion neurons layered on top of one another firing in incredibly complex patterns. This is why computer scientists have taken this idea and abstracted it to build what they refer to as neural networks loosely modeled on the structure of the human brain. However, while neural nets are incredibly powerful and this area of research fascinating, we should be wary to spend too much time aiming to replicate the biological version. This was the line of thinking when inventors tried to replicate bird flight by building machines with flapping wings. Then we figured out that a fixed wing system was far more practical and efficient for our purposes.
All this is to say that we’re in the early innings of our computational journey. Regardless of the substrate, we will continue to see exponential improvements with the potentiality of recreating the notion of intelligence altogether.
I often return to this “10 learnings” list by Maria Popova. She published it on the 10 year anniversary of starting her blog. It’s one of my favorites.
The one I love most from this list is “seek out what magnifies your spirit.” The language is simply beautiful and the idea even more so. I’d say it serves any human being well to make sure you find space in your life for whatever it is that magnifies your spirit.
My Latest Discovery
Narcos is back babyyyyy!! (no spoilers please!)