Where Diversification Comes From
<p>That’s a positive expected payoff so you should probably flip. Still half the time when you do flip you will end up losing whatever you put up. So there is risk. If a very large number of people were to wager all they had on such a coin flip, roughly half would walk away up 200% and half would walk away broke. There’s no happy medium, its either financial bliss or destruction.</p>
<p>Thus, it would be unwise to risk your entire life savings on one flip of such a coin. Still, because of that nice expected payoff, you would want to wager at least something.</p>
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