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Billionares probably give bad advice

Why?

Because in scenarios where you make decisions that have a combination of changes to variance and changes to mean, selecting for the highest value (and maximizing the odds of passing an arbitrary threshold), sometimes increasing variance increases your odds of being in the top bracket more than increases in mean. Specifically, for a given threshold over the mean, increasing variance means increases in the chance to pass it, and similarly for skewness. This occurs for both absolute, and compared to a proportion drawn from a fixed distribution (which is statistically similar to an absolute threshhold).

Buisness hypersuccess has as much to do with doing high variance things as it does with doing high-EV things

This checks out with annecdotal evidence from things like Forbes top 200 by wealth, (most have concentrated holdings and are CEOs in high variance industries) and other measures of things like elite athletes.

(Probably comes from things like the tails separating).

I could work out the precise sizes of these effects for gaussians.

2leogao2y

Not necessarily. Returns could be long tailed, so hypersuccess or bust could be higher EV. though you might be risk averse enough that this isn't worth it to you.

Maximize EV is probably a skewed distribution. But maximize skewness+variance+EV is lower EV than maximize EV for almost certain.

1Raphael Roche2y

The comparison with elite athletes also jumped to my mind. Mature champions could be good advisors to young champions, but probably not to people with very different profiles and capacities, facing difficulties or problems they never considered, etc. We imagine that because people like Bill Gates or Jeff Bezos succeeded with their companies, they are some kind of universal geniuses and prophets. However, it is also quite possible that if these same people were appointed (anonymously or under a pseudonym, without the benefit of their image, contacts, or fortune, etc.) to lead a small family-owned sawmill in the remote parts of Manitoba, in a sector and socio-economic environment very different from anything they have known, they might not necessarily do better than the current managers, or even, significantly, might do worse. We too often overlook the fact that successful people are not just individuals with potential, but also those who found themselves in the right place at the right time, allowing them to fully express their potential. A kind of alignment of the stars, a mix of chance and necessity, somewhat like the theory of evolution, where an individual combined a good genetic heritage, a favorable environment, and luck in their interactions, resulting in considerable offspring