kebko: " Much of investing is earning rents on uncertainty, so that if you're even slightly skilled at picking the right uncertainties, you can make huge returns."

The last year has demonstrated that it is not always trivial to differentiate between earning rent on uncertainty and running a variation on the martingale.

IMO, a fair amount of the profit in the highest flying risk arbitrage schemes is based on leveraging with the bankruptcy put.

If I am allowed to run martingales with an exposure of 5-10 times my actual capital, I will make me and everyone who invests with me some very high and consistent returns *most of the time*. But when the returns go bad, they go devastatingly bad. This is pretty much what happened in large segments of the financial markets over the last 20 years. 20% across the board drops in housing prices was the casino cutting us off before we could double down again.