Some problems with betting on the tails that make people not do it:
1. Even if you’re right on EV you look crazy and ‘waste’ resources relative to mundane opportunities
1a. You are also associating with other contrarians, who do additional crazy things
2. The overhead of being well informed on a esoteric aspect of some domain
2a. You get less data on whether you are calibrated well so you are less confident to make a bet that would pay off enough to be worth that overhead
2b. Given such overhead it’s hard to be well calibrated on multiple areas and thus diversify your tail bets
3. It’s hard to find people to bet against you exacerbating 2a
4. Since payoff time is unknown, you may win in a heavily discounted time window (late in your investment career)
4a. spiky payoffs are often less useful than predictable cash flow
Some problems with betting on the tails that make people not do it:
1. Even if you’re right on EV you look crazy and ‘waste’ resources relative to mundane opportunities
1a. You are also associating with other contrarians, who do additional crazy things
2. The overhead of being well informed on a esoteric aspect of some domain
2a. You get less data on whether you are calibrated well so you are less confident to make a bet that would pay off enough to be worth that overhead
2b. Given such overhead it’s hard to be well calibrated on multiple areas and thus diversify your tail bets
3. It’s hard to find people to bet against you exacerbating 2a
4. Since payoff time is unknown, you may win in a heavily discounted time window (late in your investment career)
4a. spiky payoffs are often less useful than predictable cash flow