SBF, LoL, and risk management: a sidenote

  1. SBF put out the thread (in December 2020) basically as an explanation of one of the core tenets of his personal philosophy in relation to effective altruism: summarised, if there’s a 51% chance of winning, pursue that over and over because it’s ++EV. You can agree or disagree with that, but it’s mostly logically consistent.
  2. The red flag here was how SBF treated Kelly bet sizing. In short, if we take 1) as true, you still wouldn’t put 100% of your wealth on that 51% chance because it wouldn’t represent a maximisation of your long-term earnings. If you’ve played poker, traded, played an esports game at a high level, or done any one of a number of other pursuits, you should already get the concept here; it’s just bet sizing.

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Joseph Edwards

Joseph Edwards

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i wear a lot of hats. crypto: Head of Research for Enigma Securities (Bloomberg: NH ENI). esports: coach, LoL 2x LCS champ (TSM 17 TL 18), now Valorant w/ HONK