Kelly Criterion

A mistake is made if you had legit confidence about something but you fail to act big

(Extracted from University of Berkshire Hathaway by Daniel Pecaut and Corey Wrenn) Munger observed that the most extreme mistakes in Berkshire’s history show up as opportunity costs. … In his younger...

Circle of Competence, Investing, Kelly Criterion, Life Read More

Ed Thorp on Kelly Criterion

(Excerpt from A Man for All Markets by Ed Thorp) Kelly’s criterion is not limited to two-value payoffs but applies generally to any gambling or investing situation in which the probabilities are known or can be...

Investing, Kelly Criterion, Nonlinearity Read More