I was reading this and thought of the Kelly criterion. The choice is not binary, you already know the optimal bet sizing here. The kelly fraction at 0.25 gives you what a 3% growth rate? f=1 is obviously a flawed scenario that should not be happening. ( i dont know enough to know whether SBF made the same point. 3AC did bet the house though). Culprit is all in bet, not linear sizing.
Survivorship bias and worshipping is not a new phenomenon either existed since atleast last 40 years in tech where a median dev is not paid as much as one at Google or Microsoft.
If i were to grant the premise that every individual should use log sizing, how does that ensure that we are devoting enough resources to home run outcomes in biotech, space etc.? That is where the toy model breaks because these spaces demand a lot of money to get started and have any meaningful breakthrough. Beyond the individual level, there is clearly a civilizational utility to be swinging for the fences and maximizing the expected value. At an individual level, if people are making sub optimal choices, perhaps the solution is more financial education.
I was reading this and thought of the Kelly criterion. The choice is not binary, you already know the optimal bet sizing here. The kelly fraction at 0.25 gives you what a 3% growth rate? f=1 is obviously a flawed scenario that should not be happening. ( i dont know enough to know whether SBF made the same point. 3AC did bet the house though). Culprit is all in bet, not linear sizing.
Survivorship bias and worshipping is not a new phenomenon either existed since atleast last 40 years in tech where a median dev is not paid as much as one at Google or Microsoft.
If i were to grant the premise that every individual should use log sizing, how does that ensure that we are devoting enough resources to home run outcomes in biotech, space etc.? That is where the toy model breaks because these spaces demand a lot of money to get started and have any meaningful breakthrough. Beyond the individual level, there is clearly a civilizational utility to be swinging for the fences and maximizing the expected value. At an individual level, if people are making sub optimal choices, perhaps the solution is more financial education.