“Once In A Lifetime” Amazon Short Idea Versus Treasury Positioning Black Swan

An observation. Well, more of a thought experiment…

If I write a post and the title is “Hedge Fund Says Amazon Is A Once In A Generation Short Idea,” I can almost guarantee you that nearly everyone who comes across it will click on it (although I wouldn’t).

If, on the other hand, I write a post and the title is “Hedge Fund Treasury Short Now A Four Sigma Event,” almost no one will click on it (relative to how many people click on the Amazon title).

That says a lot about the way our brains are programmed. The title of the first article (the Amazon one) tells you that a hedge fund (one) postulates a scenario in which Amazon falls precipitously.

The second title (the Treasury one) tells you that hedge funds (all of them collectively) are so short Treasurys that their net position is effectively a tail event.

So the second title conveys two important things to the potential reader: i) this is something that’s already happened, and ii) statistically speaking, it’s basically a black swan.

The first title, by contrast, may convey something important, but it’s ambiguous because: i) the thesis is based on something that hasn’t happened yet, and ii) there’s nothing to convey exactly what is meant by “once in a generation” – the definition of that, as far as you know from the title, is completely subjective.

Finally, note that the argument “well, precisely because the first title describes something that hasn’t happened, the article will present an opportunity for the investor whereas the second article won’t,” isn’t valid. In fact, the fact that hedge funds are that short Treasurys likely means one of two things: i) they’re wrong, in which case you can take the other side of the trade, or ii) they’re right and you better get the hell on board before it’s too late. So the second article is actually more actionable than the first!

Why do people choose the first article over the second?



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