Kelly Criterion / Alternative Investments

[BigWillJr]

I do pretty much all my own investing, and not only do I enjoy it but I do well for the most part. I'm relatively young, (30), and I don't mind some risk, so lately I have been diversifying my portfolio into other areas. One thing I have done is start betting on sports more consistently. I think it can be beaten long-term by using statistics, and the ROR has the potential to be great. One of the major differences I have seen is the need to manage money much more vigilantly than with traditional investments. Even if yo lose some money with a stock, buy for $40 sell for $30, you only lost 25%. With sorts betting, you either double up or have 0. This makes for some huge swings in your investments bankroll. To account for this I have been using the Kelly criterion I first heard about it because of Warren Buffett, to determine my optimal bet size. Things have been going really well so far, but I'm still open. I'm looking for any advice, feedback, critique, questions etc.

[Ad Orientem]

Hi BW and welcome to the forum. I think you will find most people here are pretty conservative investors who are generally skeptical of any system designed to beat the index or in your case, the bookie. That said, posts on ideas for speculative investments are welcome. We have a special forum for those kinds of discussion called "The Variable Portfolio." On the main menu page it's the 2nd from the bottom.

Good luck with your wagers. I have seen worse ideas.

[rocketdog]

Good luck with your wagers. I have seen worse ideas.

I would like to hear about some of the worst investing ideas.  Maybe we start a new thread in "Other Discussions"?  Might be entertaining to hear some of the stories people are likely to have. 

[Reub]

I've got an idea. Become the bookie and take bets from both sides. You never know who will win so you're better off profiting from all of the possibilities.

Wait a minute, that sounds a lot like the Permanent Portfolio!