Taking advantage of one-sided bets

Clime Investment Management

Clime Investment Management

Last week, I got to work nearly 2 hours late. As I sat in gridlock, it dawned on me how powerful the principle of asymmetry is, the same principle that disrupted my morning, is perhaps the most underrated principle in investing. I live in Manly NSW and our offices are in Sydney CBD – which means I must run the Military Rd gauntlet - a stretch of road that is very sensitive to slight changes in the number of road users. An equation inspired by Nassim Taleb, does a good job of explaining my morning: 15% increase of cars on the road (due to 5mm of rain) = 300% increase in total travel time. As we can see, the increase in travel time was highly asymmetric to the increase in road users. As I learned the hard way, the trick is to have asymmetry working for you - not against you; where the potential gains are greater than the downside risk. So how can one incorporate positive asymmetry within their portfolios? (VIEW LINK)


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Clime Investment Management
Funds Management & Stock Research
Clime Investment Management

The Clime Group is a respected and independent Australian Financial Services Company, which seeks to deliver excellent service and strong risk-adjusted total returns, closely aligned with the objectives of our clients.

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