Conversation

2) This thread is not exhaustive. It's also not investment advice, or risk advice, or advice at all; you do you.

3) There are 2 types of risk: a) existential risk: the risk that youblow out or inhibit your ability to continue b) other risk: risk where you're not at risk of seriously impeding your ability to operate. By "risk" I mean "risk after EV". Burning $ isn't "risky", it's bad.

4) EXISTENTIAL RISK IS BAD. REALLY BAD! You don't want it. Now 0 isn't really a number when it comes to risk, maybe asteroids will come as we'll all lose all our money (and bodies and shrubbery). But "really fucking low" is.

5) Non existential risk is..... different. a) One view: it doesn't matter much, you win some you lose some. Again here "risk" means "0 EV risk", so upside is as big as downside b) Another view: sure but if you lose a lot of them then you're back at existential risk

6) So, ok, where does this leave us? Well it means that other risk matters to the extent, but not as much. So how much?

7) Here we get to the key point. EV IS LINEAR RISK ISN'T LINEAR. RISK IS SQUARED.

8) Winning $3 is 3X as good as winning $3. Risking $3 is _more than_ 3X as bad as risking $1. In fact it's *9x* as bad. (Assuming law of large numbers.) Why? Well say you have EV = +1 and risk = 1. Then you do that 25 times. You now have EV = +25 and risk = 5 (!!!).