Fixed income: most people have money coming in through work, not just investment.
This is a very common situation, and the standard recommendation for Kelly criterion usage is “calculate based on your ENTIRE bankroll”. Yes, the point on the logarithm is based on your home equity and expected future earnings, not just the money in your pocket.
This usually translates to “if the expectation is positive, bet the maximum”. Most people don’t think that way, and therefore don’t optimize their lifetime bankroll growth. Also, cases where you actually know that it’s +EV with enough certainty to use Kelly are extremely rare.
This is a very common situation, and the standard recommendation for Kelly criterion usage is “calculate based on your ENTIRE bankroll”. Yes, the point on the logarithm is based on your home equity and expected future earnings, not just the money in your pocket.
This usually translates to “if the expectation is positive, bet the maximum”. Most people don’t think that way, and therefore don’t optimize their lifetime bankroll growth. Also, cases where you actually know that it’s +EV with enough certainty to use Kelly are extremely rare.