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What is the optimal risk adjustment ratio? And it is chosen by reason or by personal preference? Many software engineers are a bit risk averse and just do wha
by lanstin 6y ago
What is the optimal risk adjustment ratio? And it is chosen by reason or by personal preference? Many software engineers are a bit risk averse and just do what they are told to do. Many entrepreneurs would rather experience the rushes of a business roller-coaster and walk away with no money than just sit and program as told.
- darawk 6y agoThere is no optimal ratio per se. You just divide gain by risk and maximize that quantity. This is a scale invariant function, at least, with respect to its maximum.
- lanstin 6y agoI think you must be omitting variables, or simply trying to maximize dollars or some other approximately ordered quantity rather than maximize subjective fulfillment in life.
- darawk 6y agoWhich variables are being omitted? Certainly there are other variables relevant to a quality life than money. But the rules apply to any utility function you might come up with. You want to maximize risk-adjusted return.