If you make a bad investment and lose 50% of your net worth, you now need to increase your net worth by 100%, not 50%, in order to get back to where you started from.
Expressing probabilities as percents gets a bit weird, because subtraction doesn’t really work like it should. The difference between a 1% chance and a 2% chance is bigger than the difference between a 2% chance and a 3% chance. (1% is 1 in 100, 2% is 1 in 50, and 3% is about 1 in 33.)
Expressing probabilities as percents gets a bit weird, because subtraction doesn’t really work like it should.
I don’t understand. The expected value is what you’d get by straight subtraction.
Are you implying that the difference between 2% and 3% should be 1 in 50-33=17, or 5.9%? In that case, the difference between 100% and 99.99999% would be 100%, when they’re really almost exactly the same.
Random thoughts:
If you make a bad investment and lose 50% of your net worth, you now need to increase your net worth by 100%, not 50%, in order to get back to where you started from.
Expressing probabilities as percents gets a bit weird, because subtraction doesn’t really work like it should. The difference between a 1% chance and a 2% chance is bigger than the difference between a 2% chance and a 3% chance. (1% is 1 in 100, 2% is 1 in 50, and 3% is about 1 in 33.)
Are you implying that the difference between 2% and 3% should be 1 in 50-33=17, or 5.9%? In that case, the difference between 100% and 99.99999% would be 100%, when they’re really almost exactly the same.