True, but if most of your statistically expected gains comes from rare events, you can still go broke before you get a winning lottery ticket, even if the lottery is positive expected value. I have no idea if there are any real-world financial instruments that work like this, though.
if most of your statistically expected gains comes from rare events, you can still go broke before you get a winning lottery ticket, even if the lottery is positive expected value.
True—that’s why risk management is a useful thing :-)
And yes, options are real-world financial instruments that work like that.
True, but if most of your statistically expected gains comes from rare events, you can still go broke before you get a winning lottery ticket, even if the lottery is positive expected value. I have no idea if there are any real-world financial instruments that work like this, though.
True—that’s why risk management is a useful thing :-)
And yes, options are real-world financial instruments that work like that.