"averaging the actual annual returns"
should have been "geometric"
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It's true regardless of whether you use arithmetic or geometric, right?
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Replying to @SBF_FTX @SBF_Alameda and 3 others
OK, and you're saying that arithmetic mean of annual returns is appropriate?
What happens if you flip the coin not once a year, but once a day? Even faster growth in EV(wealth), right?
But what happens to your arithmetic mean of annualized returns?
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Nope!
The EV of the arithmetic mean of your annual returns goes up the more you can flip because each flip is positive EV.
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The tweet you're referring to never says EV, right? It is talking about what you do when you compute the historical average of returns.
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Replying to @SBF_FTX @SBF_Alameda and 3 others
How do I try to learn what some fund's expected returns are? I'll probably at least look at historical returns, right? (NOT 
INVESTING ADVICE)
Suppose there is 50 years of history. I compute historical returns by averaging the actual annual returns, right?
INVESTING ADVICE)
Suppose there is 50 years of history. I compute historical returns by averaging the actual annual returns, right?1
If you arithmetically average the annual returns, it is extremely likely that 99% company will have a better # than kelly company
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Only if you only flip the coin once a year.
If you flip the coin once a day, then the arithmetic mean returns will almost always be worse, right?
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er sorry actually could you describe the coin that you're saying I'm flipping once per day?
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I might have been making different assumptions than you.
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Are you saying that I take the same coin that gives 60% +99%, 40% -99% each year, and then try to like guess what full time graph produces that yearly result?
No, I’m saying you take that same coin, but you get to flip it every day. So every day a +99% or (somewhat less likely) a -99%. It’s great news for you: EV(wealth) grows 365 times as fast.
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sweet!
yeah ok I'm pretty sure this is gonna be great
I'll whip up a spreadsheet
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