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#1
04-25-2005, 12:30 PM
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EV vs. variance
Just a question that a friend of mine asked me once.
"Would you rather put all your money on the 80% side of an 80/20 (like AA vs KK or something), or put 1/10th of your money on a 70/30 10 times?" I guess it's a question of EV vs variance. 
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#2
04-25-2005, 12:42 PM
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Re: EV vs. variance
[ QUOTE ]
Just a question that a friend of mine asked me once. "Would you rather put all your money on the 80% side of an 80/20 (like AA vs KK or something), or put 1/10th of your money on a 70/30 10 times?" I guess it's a question of EV vs variance. [/ QUOTE ] Are you talking about someone's entire net worth, or the amount of money they might come into a casino carrying? If I was going to bet $500 I'd bet it on the 80/20, but if my bank account and investments were on the line, I'd definitely choose the 70/30.
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