Start Bank: $198,00
Mr. Kelly's Bank: $179,19 (+ 795,95% profit)
Mr.Kelly's Start Bank: $20,00
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Mr. Kelly went nuts yesterday, winning 7 straight, jamming his bank up to an new high of $179,19. He is now almost where I started from ($198). We are both getting high! I hit 2/2 winners for a profit of $38,97. Mr. Kelly was the winner on the day with a bankroll gain of 55,7% to my paltry 3,4%.
Stomped me pretty good again.
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Half-Kelly Stakes - The big advantage.
I was thinking this morning while I was out on the boat catching my daily fish, that the interesting statistic is that every full-Kelly staker has a 1/3 chance of losing 1/2 his/her bank before he/she doubles it. That's the math.
But someone using half-Kelly stakes has only a 1/9 chance of losing 1/2 their bank before they double it. What's the catch? Well, the half-Kelly staker will have 1/4 lower profit than the full-Kelly staker.
A fair trade off, most gamblers would say...an awful lot less DOWNSIDE in exchange for a little less UPSIDE.
That's why I recommend half-Kelly stakes.
I am using half of bank, however, not my full bank. It occurred to me that this means that there is NO RISK to half of my bank. Half of my bank is never going to be used FOR ANYTHING.
So, why am I keeping it in Betfair? They take our deposits and put them in the dubious, taxpayer-bailed-out,shaky, shameful, bankrupted institution known as the Royal Bank of Scotland...Betfair collects interest on my bankroll, not me.
So why am I doing it this way? I am thinking that a much wiser option for me is to take that half of my bank and set up a Shannon's Demon, to gather interest and profits instead of sitting in my Betfair account at 0% interest.
It should be a way to boost profits, over and above the daily grinding race between me and Mr.Kelly.
I think in this way --- half of the bank that Mr.Kelly and I draw from should be set up in s Shannon's Demon scheme (see my previous posts on Shannon's Demon)>
The profits will be fed in to the demon, which will be working on compounding the unused half of my bank which is now idle.The problem is that i may have to wait until the bank grows a bit more to bother investing. After all, half of $1200 is only $600, which would be a very small demon, to be sure!
Still, this is something that everyone using betfair (or other bookies or exchanges) should consider. But it is especially attractive to a half-bank, half-stakes Kelly investor (like myself) because there is no chance of ever using those funds. (even the most brutal losing streak you can throw at this bank can only ever cost it 50% -- thanks to the beauty of the Kelly Criterion).