The Mathematics of Consistency: Why AI Beats Intuition

In venture capital, one "Home Run" investment pays for 10 failures. In trading, one failure (liquidation) can wipe out 10 wins. The mathematics are different.

Consistency > Intensity.

The Flaw of Human Bias

Humans suffer from cognitive biases that destroy wealth:

1. Recency Bias: "It went up yesterday, so it will go up today."
2. Loss Aversion: Refusing to sell a losing bag because "it will come back." (Psychology Trap).

The AI Advantage: Probabilistic Thinking

An AI model doesn't care if it lost money yesterday. It evaluates the Current Probability based on data.

• If the Backtest shows a strategy has a 65% win rate, the AI takes the trade every time.
• A human might hesitate after two losses. The AI executes.

Compounding requires avoiding "Zeros"

If you grow your portfolio by 50% for 4 years, and then lose 100% in year 5, you have zero.

• AI Risk Management (Stop Losses) prevents the zero.
• If you prevent the catastrophic loss, the math of compounding takes over.

Trust the math, not your gut.