| Yeah. OP might be conflating arithmetic mean with geometric mean. This is a common problem that many investors make. I see it all the time. People mistakenly think that if their investment made 50% and then lost 50% that they broken even, but they're actually down 25% (1.5*0.5=0.75). However, if you invest $100 and make 50%, then invest a second $100 and lose 50%, you do indeed break even. When OP stated that the bet has a positive EV, it's for a flat $1 bet. Indeed, if you always bet $1 (or any fixed amount), it does have a positive return of $+0.05, and you should take the bet. It's only when you change it from a $1 bet amount to an "entire bankroll" amount that you're looking at a geometric mean of 0.949 return per bet. That number is simply the geometric mean of the two possible returns, 1.5 and 0.6. So the actual EV is sqrt(1.5*0.6)-1.00 = $-0.051 per bet (normalized to $1.00). I don't understand the point this article is trying to make about anything else. The entire effect here is explained either by misstating the problem or by using the wrong type of mean for the EV calculation. The idea that some lucky people will make money while the rest lose is explained by simple luck. Run the simulation longer and they will all lose out to the law of large numbers. |