In this episode of UpOnly, Cobie & Ledger talk to Sam Trabucco, co-CEO of Alameda Research. We discuss trading, where the market is, figuring out what we’re good at, cycles, and more.
Audio Version
Links
Show Partner
This episode is presented by FTX. Trade on an awesome mobile interface fee-free, and still get all the great portfolio tracking features you know and love: https://uponly.tv/ftx
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