Risk of Ruin
The probability that a sequence of compounded risky bets will draw down to a level from which recovery is either impossible (the capital is gone) or practically impossible (the time required to recover exceeds the investor's remaining horizon, or the behavioral damage of the drawdown has terminated the practice). Kelly-style sizing is unforgiving on this dimension because over-sized bets compound geometric losses that take exponentially larger gains to recover from. Fractional Kelly exists primarily to shrink risk of ruin while keeping most of the long-run growth.
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Active Management · Active Share · AI Revenue · Anchoring Bias · Cost of Capital · Creation Unit
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