How to Manage Money Using Statistics

P() - Probability Function

E() - Estimated Value Function

InvestorRipCord - Investor  "Panic Sells"

GlenAggressive - Glen Trades Investors' account as if it is his own

GlenDoesThis - Glen understand investor is a threat to himself and dials down the trading style for that portfolio to be in line with the investors unrealistic expectations of how markets work.

P(InvestorRipCord|GlenAggressive) = 90% P(InvestorRipCord|GlenDoesThis) = 10% E(GlenProfit|InvestorRipCord) < E(GlenProfit|!InvestorRipCord)

Thus: GlenDoesThis

Anyway, this explains why I would trade in such a way that is not actually the most reward while taking what I perceive to be the least amount of long term risk. Heck, I can do whatever I want to in my portfolio though.

Funny thing is that as the deals and opportunities get better, the probability that the investor pulls the rip cord also go up. In other words the two below can increment simultaneously:

E(Profit)++

P(InvestorRipCord)++

This would be directly out of line with the expectations that "markets are efficient" as better expected profits actually come with increasingly selling oriented attitudes from investors.