In investment we often come to problems like this:Company A is currently researching 3 different new products. In an upcoming convention, we know that A might going to announce the launch of one of the new products. We can also estimate the impact of different outcomes on the stock price:Launching Product 1: 30% increase in stock price (ROI = 30%). Chance of happening: 20%.Launching Product 2: 10% increase in stock price (ROI = 10%). Chance of happening: 15%.Launching Product 3: 12% increase in stock price (ROI = 12%). Chance of happening: 25%.Failure to launch: 15% decrease in stock price (ROI = -15%). Chance of happening: 40%Now you have $100 dollars in your bankroll, how much would you invest in A's stock so that your bankroll can have maximum growth in the long term?The Kelly Criterion, solving similar problems in gambling, cannot be directly used because it assumes binary outcome. That means it limits the outcomes to be either WIN or LOSE.Advance Stock Pattern Scanner -- Kelly Criterion For Investors
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