The Magic Coin Game - Main Topic #67

The main topic covers an example Jay calls "The Magic Coin Game."Show more

In this game, you gamble money by placing it on a table. A coin is flipped. If it is heads, you double your money. If it is tails, you lose half of your money. In the game, the house is willing to play with you as many times as you would like. Gambling everything every time does not result in any statistical advantage for you. However, you can play this game 100% by the rules and twist the odds in your favor. There can be mathematical certainty that you gain money if you play in a particular way.

This is what makes the coin game magic!

In the end, Jay describes how this game can be an analogy for asset allocation theory in the investing world. At the very least, it is a proof of concept in a simplified context. The math on this one might hurt your brain a little bit!

Watch the full episode here: https://youtu.be/5iRDAfbkqh8

Main Topics Playlist: https://www.youtube.com/playlist?list=PLo6Zlf1BSGrZM50_NAabg7tOhASym2xxD

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