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Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.
by doomslayer999 8mo ago
Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.
- conformist 8mo agoBy “not terrible” you mean “bad but not very bad” and not “good” right?
- kibwen 8mo ago"High variance, slightly-negative EV shots on a long time horizon" is a gambling addict's way of justifying the old adage, "sure, we're losing money on each sale, but we'll make up for it in volume!"
- hattmall 7mo agoDisagree, it's way more like overall our sales are losing money, but the long term plan is to get a buy out. A strategy that works for a non-trivial amount of startups. The idea is that if you play incorrectly long enough eventually a bigger better that's more wrong then you will come along.
- tyre 8mo agothis is the "lose money on every sale but make it up on scale" version for gamblers and I love that for you.
- doomslayer999 7mo agoDefinitely not. It’s more like either winning a 1B B2B contract or going bankrupt. Like I said above you don’t want to scale up taking high variance shots because it will reduce variance and converge towards the mean
- c22 8mo agoI feel like the longer your time horizon the worse -ev games are for you? I bought one lottery ticket, I don't think my odds are gonna get any better than that.
- doomslayer999 7mo agoTo be clear, I meant the opposite. I meant that if you take a high variance swing and you lose, you have capped downside, so you can rebuild and recover hard long term. Conversely if you win you have a huge head start and can deploy the capital quickly. Of course you DONT want to repeatedly take -EV bets. That would reduce variance and converge you to the mean which is negative by the central limit theorem.