For passive investments, it’s partly the Law of Large Numbers at work.
The key to exploiting LLN is to avoid “game over” scenarios. You have to survive and stay in the game in order for LLN to converge.
If let’s say your expectation of winning in the long run is 0.7, you’ll only achieve this if you don’t get wiped out anywhere in the process (if you do your expectation drops to 0 immediately).
The key to exploiting LLN is to avoid “game over” scenarios. You have to survive and stay in the game in order for LLN to converge.
If let’s say your expectation of winning in the long run is 0.7, you’ll only achieve this if you don’t get wiped out anywhere in the process (if you do your expectation drops to 0 immediately).