this is a liquidity problem right? guessing you are young and have most of your career ahead of you? if you run out of money you probably move back in with your parents, it kind of sucks but it’s not that bad?
you would be less cavalier if you were betting from the net present value of your human capital (and truly understood the gravity of that bet).
If you’re 65 years old and already sitting on wealth that’s an order of magnitude more valuable than your future earnings/your safety net—then your utility function plausibly is close to and it’s reasonable to adopt a risk taking policy close to Kelly.
But for the majority of people who’ll see this post—the value of their safety net and their human capital is substantial compared to their current wealth—so taking this into account pushes them to bet more agressively than Kelly prescribes (which imo is interesting given how agressive Kelly already feels intuitively).
Personally, I’m 33 years old (that still counts as young?), married with 2 kids so far.
And yes, my family and I could probably move in with my sister or my wife’s parents if we were struggling. I agree if I was betting from the NPV of my human capital (rather than just what my wife and I currently own) I wouldn’t go all in on this bet.
28, married, 1 kid, expecting to have to support my parents in their retirement at least a bit, well past full kelly due to illiquid ai equity but not jazzed about that level of concentration. net worth as fraction of npv of human capital depends on timelines and how you choose to price some of the assets, those concerns do at least anticorrelate though.
this is a liquidity problem right? guessing you are young and have most of your career ahead of you? if you run out of money you probably move back in with your parents, it kind of sucks but it’s not that bad?
you would be less cavalier if you were betting from the net present value of your human capital (and truly understood the gravity of that bet).
Yep, you understood correctly!
If you’re 65 years old and already sitting on wealth that’s an order of magnitude more valuable than your future earnings/your safety net—then your utility function plausibly is close to
But for the majority of people who’ll see this post—the value of their safety net and their human capital is substantial compared to their current wealth—so taking this into account pushes them to bet more agressively than Kelly prescribes (which imo is interesting given how agressive Kelly already feels intuitively).
Personally, I’m 33 years old (that still counts as young?), married with 2 kids so far.
And yes, my family and I could probably move in with my sister or my wife’s parents if we were struggling. I agree if I was betting from the NPV of my human capital (rather than just what my wife and I currently own) I wouldn’t go all in on this bet.
What’s your situation and how much would you bet?
28, married, 1 kid, expecting to have to support my parents in their retirement at least a bit, well past full kelly due to illiquid ai equity but not jazzed about that level of concentration. net worth as fraction of npv of human capital depends on timelines and how you choose to price some of the assets, those concerns do at least anticorrelate though.