Sublime

Fourth, this artificially expanded opportunity will favor general bigness and concentration in finance itself.

FIGURE 11-8: HISTORICAL ODDS OF STOCK MARKET CRASH WITHIN ONE YEAR This trader must make a call—buy or sell. Then the market will crash or it will not. So there are four basic scenarios to consider. First, there are the two cases in which he turns out to have made the right bet: The trader buys and the market rises. In this case, it’s business as u

When Commodity Futures Trading Commission chairperson (1996–99) Brooksley Born wanted to regulate the derivatives that would later be a major cause of disaster, the PBS program Frontline detailed how she was blocked in 1998 by the triumvirate of Federal Reserve chairman Alan Greenspan, US Treasury Secretary Robert Rubin, and Deputy US Treasury Secr

But Sam Bankman-Fried, of course, thought the Kelly criterion had you wagering far too little. He thought it was for wimps.

Let’s Make a Deal

However, as powerful as the theory claims to be, it comes with a few qualifications. The most important is that it pertains to returns on a risk-adjusted basis. Suppose you pursue an investment strategy that entails a 10 percent chance of going broke every year. This is exceptionally foolish—if you followed the strategy over a twenty-year investmen