David Orr, founder of Militia Capital, discusses his transition from professional poker to hedge fund management, emphasizing the application of expected value principles to investing. Orr highlights the importance of systematically cutting out losing bets, a lesson learned from poker's rapid feedback loops, and contrasts this with fund managers who stubbornly hold onto losing positions. He recounts discovering the "Bet Against Beta" paper, which challenged conventional academic investment theory, and details his exploration of various asset classes, including Euro dollar futures options and prediction markets. Orr also critiques the pod shop model for its short-term focus and risk management, advocating for a long-term, theme-based investment approach. He envisions a future for hedge funds with lower fees and a vertically integrated financial services model.
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