Goldman Sachs Custody Solutions

Mike Shell · Founder & Chief Investment OfficerASYMMETRY® Observations

Mike Shell on markets, risk and asymmetric risk/reward, written as he sees it, while it matters.

Subscribe and each observation arrives by email the moment it publishes.

ASYMMETRY® Observations by Mike Shell
Latest Observations

Read the latest.

  • GLP-1 Has Entered Its Second Act

    GLP-1 Has Entered Its Second Act

    Everyone recognizes GLP-1. The edge now is identifying where the next dollar of economic value it creates will accrue before consensus fully prices it.

  • Convexity Isn’t Asymmetry

    Convexity Isn’t Asymmetry

    A 10-to-1 payoff can still lose money. Convexity is a shape; asymmetry is the relationship between probability, payoff, cost and portfolio consequence.

  • Eight Sectors Rose. The VIX Rose Anyway.

    Eight Sectors Rose. The VIX Rose Anyway.

    The S&P 500 lost 0.5% on Monday while eight of its eleven sectors rose, and the VIX closed above 20 for the first time since July because the…

  • Positive Expected Value Isn’t Enough

    Positive Expected Value Isn’t Enough

    A bet with +10% expected value can still destroy capital. Volatility drag, the Kelly criterion, and why position size decides whether an edge ever compounds.

  • An Edge Doesn’t Size Itself

    An Edge Doesn’t Size Itself

    A strategy with positive mathematical expectation can still destroy the investor using it. The edge never changes; position size decides whether the portfolio survives the sequence long enough…

  • The Shape of the Payoff Matters More Than the Forecast

    The Shape of the Payoff Matters More Than the Forecast

    Forecasts describe what we expect. Payoff structures determine what happens when reality is different.

  • You Can Lose 90% of the Time and Still Win

    You Can Lose 90% of the Time and Still Win

    A 90% win rate can lose money. A 10% win rate can compound. The difference is payoff, and surviving the sequence.

  • Survival Is a Return Driver

    Survival Is a Return Driver

    Returns compound on the capital that remains. Every dollar that survives stays available for the next opportunity.

  • Decide the Risk First. Then Take the Full Position.

    Decide the Risk First. Then Take the Full Position.

    We don’t size by conviction. We define the risk, define the exit, and let those decisions determine the position size. Position size is the output.

  • Short-Term Breadth Broke. The Trend Didn’t.

    Short-Term Breadth Broke. The Trend Didn’t.

    The S&P 500 is one number doing the work of five hundred stocks. It can hide whether participation is broad, narrow, improving, or failing.

  • What Success Starts to Excuse

    What Success Starts to Excuse

    “Success breeds complacency. Complacency breeds hubris. Hubris breeds arrogance.” Harry Da Souza delivers the line in MobLand as a warning to gangsters. It could’ve been written for portfolio…

  • We Rotate—Not Allocate

    We Rotate—Not Allocate

    Allocation fixes the exposure and hopes the environment cooperates. Rotation fixes the process and lets the exposure answer to evidence.