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I'm not commenting on the article. I agree with the article, which in fact talks only about wagers with quantifiable EV. My comment was a reply to mattmaroon's

by diego 18y ago

I'm not commenting on the article. I agree with the article, which in fact talks only about wagers with quantifiable EV. My comment was a reply to mattmaroon's observation that over the course of a lifetime someone can find enough wagers with a positive value to eventually come out ahead. Please read the entire thread. http://news.ycombinator.com/item?id=560109 http://news.ycombinator.com/item?id=560109

philwelch 18y ago
I have read the entire thread and I just don't understand the point of your comment. Of course people have to pay taxes and spend time on investments. That doesn't make diversified investing a fool's errand. It's like we're trying to build a go-kart and you're saying "it'll never work because there's friction." Maybe there's friction, and we'll work out what that friction is, just as we'll calculate the post-tax EV of our investments.
- diego 18y ago
  To summarize: life usually doesn't offer a succession of quantified wagers like one would ideally like. Nothing to do with friction, you just don't know the expected value of anything other than lotteries or other chance games where a trustworthy entity backs them up. You simply can't assume that you will always be able to pick "real life" wagers with positive expected values. The closest you can get are "traditional investments" for which you can look at past returns and hope for the future to repeat the past. For new situations, there simply isn't enough data. If you decide to start a startup today, what's your expected value? Do you have access to data about all startups ever started, costs involved and payouts? How does that change if you segment it by startup type, decade, etc? Can you say for sure that starting it has a positive expected value in terms of utility to you as opposed to the probabilistic certainty of the expected value of the 9k wager?
  - philwelch 18y ago
    Thanks for the clarification.

by diego 18y ago

philwelch 18y ago

I have read the entire thread and I just don't understand the point of your comment. Of course people have to pay taxes and spend time on investments. That doesn't make diversified investing a fool's errand. It's like we're trying to build a go-kart and you're saying "it'll never work because there's friction." Maybe there's friction, and we'll work out what that friction is, just as we'll calculate the post-tax EV of our investments.

diego 18y ago
To summarize: life usually doesn't offer a succession of quantified wagers like one would ideally like. Nothing to do with friction, you just don't know the expected value of anything other than lotteries or other chance games where a trustworthy entity backs them up. You simply can't assume that you will always be able to pick "real life" wagers with positive expected values. The closest you can get are "traditional investments" for which you can look at past returns and hope for the future to repeat the past. For new situations, there simply isn't enough data. If you decide to start a startup today, what's your expected value? Do you have access to data about all startups ever started, costs involved and payouts? How does that change if you segment it by startup type, decade, etc? Can you say for sure that starting it has a positive expected value in terms of utility to you as opposed to the probabilistic certainty of the expected value of the 9k wager?
- philwelch 18y ago
  Thanks for the clarification.