***Antonio Gracias — Pro-Entropic Investing

Pro-entropic investing Antonio Gracias // Valor Capital

Definitions

• Resilient companies: companies that recover quickly. Will invest in these.
• Pro-entropic companies: companies that are good at chaos. The holy grail of investing.

Thesis

• The world is getting more chaotic. De-globalization, tech disruption, climate change, politics, demographics...so much changing at once.
• We want to find things that get better when chaos goes up.

Examples: valuable service to people that they need no matter what happens

• SpaceX = whatever we can imagine happening in the world, SpaceX just gets better. The world needs it.
• GoPuff = disrupting convenience stores, which tend to do well in all economic environments. Valuable service no matter what happens, and people need it no matter what happens.

Bayesian thinkers

• How does company fare if nothing changes?
• How does company fare if good things happen?
• How does company fare if bad things happen?
• More broadly, how does company fare when unknown things happen?

Is strategy pro-entropic?

Is management pro-entropic?

A great pro-entropic thinker is someone who is able to keep their Bayesian P() state open on options. Keep optionality open until the appropriate moment, then close it for execution. Opening / closing / opening probability tree. THIS IS HOW I THINK. Great to find.