Sublime

FIGURE 6.

there is a possibility of ruin, cost-benefit analyses are no longer possible.

going long after 5 up days in a row followed by a down, and short when you get the exact opposite.

Monthly Close Model (1933) This model will simply enter long if the current month closes above the previous month's close. It will reverse and go short if the current month closes below the previous month's close. The strategy is always in the market and is referred to as a stop and reverse strategy.

It’s different from being conservative. Conservative is avoiding a certain level of risk. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival. Its magic is that the higher your margin of safety, the smaller your edge needs to be to have a favorable outcome.

You can think of leverage more abstractly as an induced vulnerability to shocks — “exogenous” or otherwise — in exchange for a magnified gain in their absence.