In this episode, tutor Sal told us something about law of large numbers.
Let's assume we flip a fair coin by 100 times, and get # of heads which is x
So the E(x)= 100 *0.5 = 50, the expected value is 50.
So for the law of large numbers, people will intuitively think, if we get average like 60 or 70 by previous 10 times of tossing, the God of possibility will get down the average number at later times to make up the difference. And that's kind of misunderstanding that we call gambling fallacy.
The law of large numbers is like, though you get 70 or 60 at fine previous times, there is infinity times left, so eventually it will converge the difference to make it to the expected value 50.
So in Las Vegas, in short term maybe a few people will beat the house, but as long as the casino get enough people, they will still be the winner because the odd of probability stands by them.
This episode inspires me that at investment side says the same thing, if you are a smart investor with good eyes, in short term you might suffer losing of your asset, but as you insist and keep pursuing growth, in long term, the profit created by your intelligence and good learning will converge everything.
So keep on learning and be positive, you will be the winner at the end, Wallace the Tiger :)
