Hedge Your Bets

Never go all in, because you can never be 100 percent certain of anything. Hedge your bets, every time.

Hedging

Never risk everything. Always hedge your bets. Always.

22. April 2024 by Click insider / Business

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Why you should always hedge your bets. In business, investing, trading, in health, in life in general. Always hedge your bets. Why? Because if the thing fails, if the business fails, or any other thing, the error will be of no big deal. You made a mistake. Now learn from it, and you are wiser and stronger because of the mistake you made. If you did a proper hedge, you will be able to move on immedeately.

Never bet against the house, and don't bet your own house. Never go all in. Learn how to hedge in life and business.

“Who wishes to fight must first count the cost”
― Sun Tzu, The Art of War

Kelly Criterion

The Kelly criterion is the formula when it comes to bet sizing. It's the best strategy known for long run plays, given that you have information concerning expected returns. To know how much you should bet, maximize the expected value of the logarithm of wealth, which is essentially the expected geometric growth rate. You'll then bet a fraction of your assets.

The Kelly bet strategy has been used in gambling, but has wide application outside of gambling as well. It's not just something you should look into if you're interested in doing gambling scientificaly. There will be many times in life we're gambling. Life's a gamble. And there will be bets in business. The point is that whenever you make a bet, make sure you place your bets in a way that always will make it possible to continue playing afterwards, regardless of the outcome of that one bet.

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