4min chapter

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Stock market returns are lumpy. Get used to it!

Capitalmind Podcast

CHAPTER

The Negative Expectancy of Lottery Trades

In a lottery ticket, there is a very small chance of winning, but you win a huge amount. But lotaries are by definition negative expectancy trades. You lose most of your money, all of your investment every single time. This lumpy nature goes towards the loss, not towards the profit. In an arbitrage, you're going to leave yourself up. I don't want 2% a year; I want 14%. So, I borrow another 7 or 8% of my, 7 or 8 times my capital. There is an arbitrage in an F.D.You will never tell me that. You will be like, I'm winning every day until one day you lose.

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