Excerpt: "What is sometimes missed is how verklempt the financial world got in August. A wave of deleveraging of hedge funds ensued which resulted in some very strange occurrences, namely cheap stocks, or value stocks, got pummeled..."
John Larry Kelly came up with a formula to determine how much you should bet on a gamble or investment to optimize your bankroll. Now known as the Kelly Formula, the equation determines the optimal percentage of your cash to bet on a favorable bet. Mohnish Pabrai talks about it and applies it to some of Buffett's past purchases
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