Naval Kelly Criterion: Avoid Ruin
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Jul 10, 2019 Explore the intriguing balance of risk management through the Kelly Criterion. Discover why it’s crucial not to gamble everything on a single bet. Learn how ruining your reputation can be as detrimental as financial loss. Uncover the connections between ethical practices in business and safeguarding your assets. This discussion highlights the importance of calculated decisions in both investing and personal integrity.
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Avoid Ruin
- Don't risk everything on one big gamble.
- Be careful with your bets to avoid losing everything.
Ergodicity and Risk
- Even with an edge, you can still lose everything if you bet too much.
- Consider ergodicity: average outcomes across a group don't apply to individuals.
Russian Roulette Analogy
- In Russian roulette, six players playing once each have better odds than one player playing six times.
- This demonstrates how individual risk differs from group averages.