My situation is a bit different in that I have excellent weather and could own (with mortgage) a house tomorrow in the same locale if I were bad at math.

It is more the freedom that the 1M would offer that would have exponentially diminishing returns for me. I am not married to a particular locale, but I am currently married to having a work-based income. I'm saving up for a divorce from that. She is nice and all, but I need to take into account my fickleness.

An additional M would put me in the position of playing the field. I could drive a cab if I wanted to, or flip burgers, or retire comfortable in a less-perfect locale, or whatever whim I had on any particular day.

It would be acceptable/unacceptable results rather than good/bad results, if you were to think more clearly.

I've not noticed any difference between my enjoyment of experiences I've attained due to luck or correctness. It all spends the same.

If you change the conditions, of course my answer changes. Under certain conditions, I gamble a bit more easily.

Cliffs: If I had 1M more, I couldn't afford to gamble much at all.

I disagree with you and I dont think its close, taking the million would be a horrible decision for me, we can call it risk averse but this would just be fear. Offer me 1M or 90% chance of 2M and I'd take the 1M but this is turning down something of a totally different order..

From your post I feel that roughly in a hand wavy type manner we're in the same position as regards the 1M but I see a lot more value in the alternative than you seem to, I could have such fun and if I ever did need a lot more money for something that mattered to me I would hate myelf for giving into the fear but could live with the other guy dying on me before I got much.

I think this idea of being 'wrong' for the right reason being far better than being 'wrong' for the wrong reason applies to a lot of areas.

I have no idea of whether it is 90%, 99% or 50% from the OP. I'm working with purposeful blindness to the odds, and basing my answers on the level of $$$ that would make a big difference in me getting what I want out of life.

I want freedom from the golden handcuffs I willingly put on (a worthy goal, I'm extremely sure you will agree). You want a better life and have no such handcuffs. The cost of your better life and the cost of the key to my handcuffs are different.

My 1M is definitely a rough estimate. I'm making loads of assumptions and not even bothering with back of envelope calculations. It might be 500k, and it might be 2M. It definitely isn't below 250k unless he is wheezing heavily, and it definitely isn't more than 4M unless suddenly I develop expensive tastes.

I'd probably bother to do a more thorough calculation if the opportunity presented itself in real life. I'd definitely buy insurance.

I'll have quite sufficient fun even if Mr. Doubleyouup never introduces himself to me. Fun isn't really something I need to purchase.

To the point of your greed/fear thingy, this is why it is wise to make all financial decisions ahead of time. I am obviously not too worried about Mr. Doubleyouup this very moment.

It is quite useful. Of course, it needs to be chucked in the bin whenever you get lucky or you will fail to enjoy your luck to maximum extent.

I think we both want the freedom, not convicned we value it differently in the context of this thread. Normally we dont even bother thinking of a level beyond that because its implausible. Faced with the OP type scenario this changes, suddenly the top level is there for the taking (with a really quite small risk)

You talk of the value of freedom to play the field but I think you're not considering properly the leap in expected results between playing the field comfortably off and playing the field incredibly rich.

Some people cant handle being rich, they might be better off with the 1M or with nothing. I think I'd do incredibly rich rather well.

but chuicking it in the bin isn't an option. Its back to this rationalization thing, if something bad happens to me as the result of a decison I make then I will attempt to rationalize the decision which will largely be considering if it was the result of bad luck, this is a very easy rationalization if its basically true that it was bad luck and a very hard rationalization if its totally false. For some its easy to persuade themselves of any old self-serving tosh but the rest of us need to cocnern ourselves more with making good decions.

eI admit I haven't done much more than assessed the risk as existant.

You are correct. I just don't worry about such things in real life, and am too lazy to do the math on imaginary futures.

Given my lack of interest in worrying about things that won't happen, I think I might to incredibly rich quite well.

Agreed, but if we are worrying about things that aren't going to happen, would you enjoy being incredibly rich any less if it were due to dumb luck?

I don't think I'd find any difference in enjoyment between being incredibly rich if it were due to an inheritance from some aunt I never knew about, some great idea I had had, or some -ev bet I had made.

Do you guys buy the argument that using the stock market and other investment ideas one can attain 20% per year up to 100 mil starting from 1 mil beating the avg 6-7% super easily? Would you buy such argument if one is a great trader using Kelly betting methods? Such capacity might enter the 1 mil right away as a decent proposition if say N>100. It looks like even with N=100 you do better for the next 10 years with risk of getting nothing not allowed. Hedge funds cannot have such returns because they start with many millions to billions to manage making it hard to play the market without being noticed or getting in liquidity trouble when you get signals to act etc. A sector between 10k and 100 mil is a nice portfolio range that such returns using options are not instantly rejected as unrealistic.

Same here. I have no responsibility for my luck and it doesn't bother me to profit form it. The only tricky bit it trying to remember/realise that it was luck, over-confidence due to luck is a huge problem.

Bad luck doesn't bother me much either (beyond the dislike of the results)

I buy it (I'd amend the returns to being a bit less consistant)

I'd even bet you $30000 that on-paper (including all real costs/problems) I could do it.

I would.

I agree with the rest of your post as well. dont need to know anyhting about the environment to know that fast growth becomes significantly harder as you grow.

The bigger problems in practice are withdrawing money to spend on life and that there is normally a dominent strategy that produces worse results but uses other peoples money.

Take the money now every time, never know what $hit might happen if you delay.

Yes but we cant introduce fantasy cheating (offer violations etc) scenarios here. Otherwise the thread is unspecified and worthless. Here we established as single risk the death of the other side (or us).

If you are saying that the trick is to adapt and change when appropriate and not to adapt and change when change is inappropriate, I agree.

That is the trick, in a nutshell.

The real problem is one of having good data and interpreting it correctly.

No. And it isn't even close.

I could easily double up every year pretty easily if I guessed correctly and ignored the other versions of me who guessed incorrectly. However, there would be many more of me who would do much worse.

I could do a percent or so above average over a couple of decades, from what I understand currently.

If I were to aim for higher than average results, I'd expect 30% average swings yearly on my way.

You dispute the possibility to have portfolio fluctuations that are better than some avg 20% over a decade?

If one gets 15 great signals a year and risks 10%of portfolio in them each time and is correct 70%of the time (70% double up 30% bust to 0) after10 years and 150 trades you have 105 up and 45 down so it goes like 1.1^105*0.9^45 =1.69^10 way better than 20% per year.

If you are 60-40%(super easy by the way with patience and good information and technical analysis and other algorithms that exploit stock properties) you can have
1.1^90*0.9^60=9.5=1.25^10 still better than 20%

Seriously its very easy but it requires extreme discipline and not trying to double up your position in record time etc. It take persistence and permanent checking of your skill to improve it.

In fact even the most ridiculous of safe trading can beat the market but hedge funds cannot replicate it in size.

Data is nice but apriori thinking is the real problem

re the other posts: its ironic (peverse might be a better word) that you dont believe the market is efficient but claim it definitely cant be beaten wheras I believe the market is efficient but can be beaten.

I definitely think it can be beaten.

Just not by that much, unless you take into account lottery playing styles. If you want to take them into account, of course someone will get 10,000% yearly returns quite easily.

From what I have figured (and, yes, based on a priori homework and tested), is that it is possible to develop a strategy that will beat the market by a couple of percentage points (geometric returns) is certainly possible under all market conditions over a decade.

To beat it by 10% (getting us very roughly to the 20% mark using the most favorable of assumptions*) is a wee bit silly of a goal, given the only possibility is using a lottery-style investment plan.