Another simple way to understand why the coin flip scenario makes you lose money: If you have $100, double it with heads to $200, then lose 60% on tails, you have $80 - less than you started with.
That’s what I thought when reading this, the opposite of double (100% gain) is half (50%) loss, so if you’ve lost by more than 50% on the negative coin toss result you will tend to lose money over time.
If the negative was less than half (say, 40%), you would gain money over time.
Another simple way to understand why the coin flip scenario makes you lose money: If you have $100, double it with heads to $200, then lose 60% on tails, you have $80 - less than you started with.
That’s what I thought when reading this, the opposite of double (100% gain) is half (50%) loss, so if you’ve lost by more than 50% on the negative coin toss result you will tend to lose money over time.
If the negative was less than half (say, 40%), you would gain money over time.
Thanks for this. I was confused when I first read it, but I had been skimming and thought it meant “keep 60%” (or in other words, lose 40%).