Re:Bill Hwang of Archegos Capital lost $20B in two days
by dragonwriter on Wednesday May 12, 2021 @01:35PM
(#27132953)
> Any big, overleveraged bet is going to go bad eventually
Gambler’s Ruin proves any open-ended bet (effectively, a series of bets over time) will, “big” and “overleveraged” don’t actually matter here, except in terms of what the consequences are when failure occurs.
Of course, “eventually” is a slippery thing, no one is actually doing it with an infinite time horizon, and over any finite horizon failure is not guaranteed (though increasingly likely the longer the horizon.)
Gambler’s Ruin proves any open-ended bet (effectively, a series of bets over time) will, “big” and “overleveraged” don’t actually matter here, except in terms of what the consequences are when failure occurs.
Of course, “eventually” is a slippery thing, no one is actually doing it with an infinite time horizon, and over any finite horizon failure is not guaranteed (though increasingly likely the longer the horizon.)