Sam Trabucco of Alameda Research: Find what you’re good at and do a lot of it
UpOnly: Chats with Crypto Experts
The Bear Market
Esnarmanet, Lake and Vasid give their views on a bear market. Esnarmanet: "I've done ok and crypto, despite never being the smartest guy in the room" Am so er, i want to talk e a a little bit about e, how you would approach a bear market." And we'll be back next week with more of our financial procast.
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Show Notes
Sam Trabs Intro
– Sam Trabs is now co-CEO of Alameda Research
– promoted from “trader” lol
– Last time Trabs was on Bitcoin had just dropped to 30k
– Thought it was “predictable” and then buying the bottom was also an easy trade
– Right now there’s a “temporary round number effect” – people will sell at resistance for big round numbers
– Seeing it now with 50k
– “NOT LONG TERM RESISTANCE” – Trabs
– Trabs: “We’ve done quite well at getting long at the bottom and not selling it at all”
New Highs?
– Trabs: “If there continues to be good news I could see it continuing to go up”
– Rally to 65k was very liquidation based – very likely to get undone
– Same the other way [on the way down to 30k]
Positioning In Uncertainty
– The 10 strongest trades make up all the real P&L
– Doesn’t really waste brain power on focusing on smaller, lower conviction trades
– Most days don’t put on big trades
New Ecosystem Plays
– Very quantitative
– Less thesis driven investing, more soaking up APYs with new DeFi plays
Analysis for Wrong Trades
– Cobie: “How do you do postmortems when things go wrong?”
WiFi cutting out, robot overload
Ledger: “I think Sam has an alpha overload filter that makes the WiFi cut out if he drops too much knowledge”
Poor Employee Performance
– If someone has a few bad days, talk to them about their thought process
– Cobie: “Imagine you’re at Alameda, you’ve had a few bad days and a meeting just pops up 9am meeting with the Sams” lol absolute NIGHTMARE fuel
NFT Trading
– Trabs: “I feel remarkably ill equipped to be handling this NFT craze”
– You can use data to learn about trades… you can’t really with NFTs
– Trabs: “There are elements that remind me of DOGE in January”
– Trabs: “Its fairly plausible that its correct to buy most of these things – there is just so much upside”
– The rocks really got in Sams head
– Cobie: “Alameda is coping just like me”
– Trabs: “It is +EV to participate in these because the upside is so high”
– Ledger: “Have you seen the scissors? (in relation to rock, paper scissors NFTs) they are only like 3 ETH, a bargain”
– Cobie: “A bargain relative to rocks? because compared to anything else in life its absolutely ridiculous” lol
Options
– Trabs: “People really overstate the importance of options in crypto”
– In tradfi, options can influence prices
– In crypto, really doesn’t happen
Alameda
– 2019 was a difficult time
– It has since gotten very easy to hire
– Now team is about 30 guys
– Sam can now focus on game theory trading and shitposting on Twitter
co-CEOs
– Cobie: “If you and the other co-CEO took a standardized IQ test, who would win?”
– Trabs: “I took a MENSA test once… it was very easy. She’s better at trivia than I am though”
– For operations, you want to pick one thesis to go with and stick with it
– Trabs: “If someone feels very strongly about something, we tend to just let them do it”
– Trabs: “If we were ever at a true stalemate we’d honestly probably flip a coin”
Alameda Jobs
– Trabs: “We are always hiring”
– Cobie: “What about internships?”
– Trabs: “Hiring interns is our most +EV play we do”
– jk not a real quote but we can dream
– Trabs: “First couple months people take away value, then eventually start to add value”
– Ledger: “In regards to pay, how do you incentivize people to stick around?”
– Mostly copy traditional institutions, based on P&L
Potential Future Scenarios
– Trabs thinks either new highs or crab
– Cobie: “Do you think that Bitcoin dominance can run again?”
– Trabs: “I have an unsatisfying answer that both are plausible”
– Thinks Bitcoin dominance will remain, but could happen like 5x or more from here
– Taxes may cause a liquidity crunch on NFTs by year end, but also maybe not
Ethereum Dominance
– Is EIP-1559 priced in efficiently?
– Trabs: “I don’t think the crypto market does anything especially efficiently”
– ETH rallied in a very inefficient way once burns started
Overcoming Decision Paralysis
– How to make a decision with 10 scenarios that are plausible?
– Trabs: “If I believe I have a good framework, I can picture the expected value of each scenario by weighing probability distributions and bet on that”
– If we nuke and you incorrectly buy all the way down, how do you unwind?
– Trabs: “I believe the term is, ‘slurp the diperino’” TRABS!
– Basically will cut the sunk cost and see how to extract value moving forward
– Trabs: “We are looking for coin flips that are 53/47 and you lose 47% of the time”
When Trabs gets tilted he just goes and buys things, bought a watch once and literally was in a fugue state and doesn’t remember it
Leverage
– Mostly tries to stay unlevered
– Trabs: “We aren’t risking every dollar we have… it’d be kind of a challenge to anyway” lmaooo good flex sir
– Tries to keep maximum bullets available for days that are extreme
Hypothetical Bear Market
– DeFi bear market?
– Trabs: “A lot of the DeFi tech that has popped up is super exciting and there’s no reason to think it won’t continue to grow as a global force”
– Trabs: “We will never see the prices of March 2020 ever again”
Trabs Without Crypto
– Cobie: “So say it all goes to 0 what do you do with your life”
– Trabs: “I like to play interesting games. I think the crypto markets is the most interesting game I’ve ever found”
– Cobie: “Alright no money making allowed, what do you do”
– Trabs: “Probably play like Magic The Gathering”
Q&A
Chance of Bitcoin to 100k by EOY?
– 10%
How can we make it?
– Identify what you’re good at figuring out what to buy
– Bet on the macro-longer term stuff
Do you have anon account?
– No
CMS thinks he is CMS dog
– Cobie thinks I am CMS dog… in classic Trabs fashion I can neither confirm nor deny
– but no I’m not CMS dog unfort
Trabs: “Dan from CMS should write the crypto history book”
FINAL ALPHA
– Trabs: “Everyone has some things they’re good at and things they aren’t good at. Find the things that you are good at and absolutely go nuts at them”
– Trabs: “Identify your edge and try to blow your edge up. Bet as big as possible there”
Gigabrain pod ty Trabs
Notes by Kevin
Music by GiovanniPickle
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