Shallow Dives

The Kelly Criterion is a mathematical formula that tells you the optimal size for any bet or investment. Developed in 1956, it maximizes long-term growth while avoiding ruin—but it requires knowing your edge and the discipline to follow it.

In most legal systems, your intentions matter when determining guilt. But strict liability cases flip this principle on its head—holding people accountable for outcomes regardless of their state of mind. This legal concept reveals how rules can shape behavior through pure incentive design.

Unlike most legal principles that require proof of intent or negligence, strict liability holds parties responsible regardless of fault. This seemingly harsh rule actually functions as sophisticated social technology—aligning incentives, reducing litigation costs, and forcing risk onto those best positioned to manage it.

Two investors with identical portfolios and identical returns can end up with wildly different outcomes—all because of the order in which their gains and losses occurred. Understanding sequence of returns risk is crucial for anyone approaching retirement.