[Reincarnate]

Originally Posted by Litodude

this would make sense if the price of stocks moved 1:1 based on the multitude of calculations of the assets' underlying value but there's differentiation between the two (measured by P/E, or share price divided by earnings per share (EPS)) that doesn't match. and it varies between industries like tech, where the norm might be 100x forward P/E or cyclical industries where the P/E is about 4-7x.

there's also transaction fees or commission fees (normal in the casino as well) but more evident in the market since the commission or 'ante' is taken at the beginning of the trade.

so your $2 initial purchase of X starts off at like 1.98 and the asset that's worth $2 really isn't $2 it's more like .35x but the price to own that stock is increased because more people want it and yadda yadda.

Sure -- in the case of the St. Petersburg paradox, the cost / probability distribution is fixed and known and not open to any other exogenous factors that we'd consider in the real world. A lot of things can change depending on how we reframe the paradox and what assumptions we make, and they'd result in totally different outcomes with respect to things like P/E or EPS if we wanted to somehow cram it into a real-world framework (which would be awkward in the first place and I'm not even sure how well it'd translate without sacrificing key points).

The point I was attempting to make with the analogy was to show how things can depend a great deal on things like wealth and cost.

I can only speak for myself (maybe you know a lot more than I do about this) -- but in my experience, people who spend a great deal of time messing around with complex stocks / options / etc during their off-time? If they don't know what they're doing, then obviously they're going to lose in the long run and they would have been better off playing it safe. But if they do know what they're doing? Then I think they are wasting their time.

I think in that case, you're much better off moving to a big city and working for a trading firm / board where you can trade with a lot more capital / size / sophisticated technology / talented colleagues, and earn a lot more through income than you would with personal accounts. Unless you're a multi-millionaire already, in which case (as per my earlier analogy) it doesn't really matter what you do because you're almost certain to earn a lot of money unless you do something stupid somewhere.