It accounts for a marginal utility of money curve Not necessarily your curve. Each person is going to have their own personal curve. Your betting career is not infinite and the amount of times you will be able to bet up to 100% of your bankroll depending on your skill and bankroll will be limited. Maximizing your median bankroll growth over a 5(or whatever) year betting career is not the same as maximizing your bankroll growth over infinite years. Why do you think old people aren't 100% in stocks?

ITT a person who reads pop science attempts to portray themselves as an expert.

There is a good discussion to be had if each additional dollar of Kelly BR has the same marginal utility as the previous (obviously not, its decreasing so not very interesting) or if our preferences follow a log function (only if we wanna get it as fast as possible). I guess "feels bad man" is a reasonable answer to not betting Kelly since why would anyone actually want to make money as fast as possible?

You are 100% wrong. (atleast in the parts that aren't not even wrong. The first sentence is just buzzword bingo)

I guess your goal is to live like a pauper and maximize your net worth at the time of your death. This is what mindlessly following full kelly betting on every financial decision in your life will achieve. Betting 1/3 of your $2M roll at age 90 on this fight is moronic and the reason is not "it will feel bad to lose 1/3 of your roll if you lose".

It actually maximizes your net worth at every point in time, but expecting you to understand the basics of this is clearly naivete on my part.

And I guess expecting you to understand that when most people reach a certain level of wealth and/or age their goals change from maximizing net worth to minimizing variance and preserving their net worth to actually spend it is naivete on my part.

So what function do you use in your betting?

Assuming your goals are like most people - to get rich reasonably quickly and to never be poor again you should be betting progressively smaller % of kelly the closer to retirement you get.

Using standard 1/2 to full kelly betting can be a poor choice in plenty of scenarios.
-If you take tax rates into account making -EV wagers on December 31 can make sense if you're in a high tax bracket close to the cutoff.
-VC funds are set up to maximize returns over a ~10 year timespan by making as few as ~10 bets.
-If you manage other people's money you need to take into account their risk profiles. Michael Burry's fund almost blew up because he was trading CDOs. Clearly he was maximizing long term gains, but his investors may have preferred him to maximize one year returns. Do you really think he would have gotten a second chance to manage a fund if people pulled their money out and he had to sell at a loss?
-Plenty of hedge funds pay big bonuses based on annual returns in December. Making huge risky bets in December could be a terrible decision for a fund manager's personal long term wealth gain.

Plenty of people will sacrifice long term gains in exchange for a lower % chance of a big draw down and it's a perfectly reasonable goal to have depending on your circumstances. Conversely you have people like Haralabob who have much higher risk profiles that you may define as stupid since it's not pure kelly willing to take a ~75%(or whatever) chance of losing their $70k net worth on a $1M shot.

Please expand.

Not the EV of your net worth. Betting everything does.

andr3w,

Your December 31 tax bracket scenario is 100% wrong. Dropping into a lower tax bracket means you lose more, not less. Do the math. And your inane finance examples simply show the problems with misaligned incentives; they have nothing to do with kelly.

"Plenty of people will sacrifice long term gains in exchange for a lower % chance of a big draw down and it's a perfectly reasonable goal to have depending on your circumstances." Nobody is disagreeing with that. But your half-assed attempts to justify it as something more than "what makes me happy" are laughable.

There are situations where -EV bets can increase expected after tax net income. IRS might not like it though.

100% wrong huh? You can't come up with a single -EV transaction/wager that saves you taxes? All you have to do is add expense to this year that you would otherwise have put on next year or defer income to next year that you would otherwise have on this year assuming you know next year will be a lower tax bracket. Selling shares in your favorite stock for a loss and rebuying 31 days later to avoid the wash sale rules would be an example. How about selling a futures bet for a loss?

They're not inane examples. They're real world examples where many people would make the mistake of blindly trusting full kelly criterion because they don't actually know what they're maximizing. We don't live in a fantasy world where we live to infinity and get to make unlimited bets in our lifetimes. It's not "what makes me happy" It's what makes most people happy which is not blindly betting full kelly in many scenarios.

One more for you if you are looking for a pure sports betting wager. Parlaying a +EV play on 31st with a 50/50 game at -110 on Jan 1st to shift the winnings to next year.

That's funny, I thought we were talking about -EV wagers. Not +EV wagers. And not prepaying expenses or stock tax-loss harvesting (wtf?).

True or false?

Paying $100 for a note that pays $99 tomorrow is -EV.

The Gambling Genius has logged on

old people should be banned from the internet

Mihkel05 disappeared.Great contributor to this forum but only the 20% of the time when he is not resorting to his one sentence vague arguments.

I have a question about kelly betting and just thought Id post it here. Lets say I cap a bet at 60% and the book is laying -120. After a big sample of making similar type bets my win % is ~57%. So I have an edge but likely not as big as my initial calculation. I am unsure what to put in as my odds for determining the kelly stake. It seems to me like it should be 57% but I need a big sample to get to that number. Is it safe to use 60% but then bet like 1/4 Kelly?

It is a pretty common spot for me so any help would be great.

Have any of you guys heard of Long Term Capital Management? I bet those guys thought they were geniuses and talked down to everyone too. How much did they lose in a few months? Like 5 billion?

Actually they were ****ing morons with no grasp on proper staking. All of their investments turned out to be correlated. Not even remotely applicable to (real advantage) sports betting poogs.

I bet they sounded exactly like that.

I know what happened to them and Im not saying the exact same thing is going to happen or could happen. Just that the world is a weird place and things happen that no one would ever expect. You think its really completely out of the realm of whats possible that something unforseen could change and your tiny as it is edge would disappear without you knowing?

yes for sure that could happen.

edges disappear/lines get sharper -- more clowns with $50 have +Ev models to move soft openers every day. if you aren't getting better every year you have no chance. eventually computing power will render beating sports impossible with models and you'll have to front run injury info to win. hopefully i'll be retired before then, but probably end up broke or in jail like most gamblers.

Have you really not noticed that the successful people in this forum are hypersensitive to the idea that their edges could disappear?