In the Absence of Information, 1/n Investment Makes Perfect Sense

Authors

Julio Urenda, The University of Texas at El PasoFollow
Vladik Kreinovich, The University of Texas at El PasoFollow

Publication Date

6-2019

Comments

Technical Report: UTEP-CS-19-51

Published in Applied Mathematical Sciences, 2019, Vol. 13, No. 12, pp. 585-589.

Abstract

When people have several possible investment instruments, people often invest equally into these instruments: in the case of n instruments, they invest 1/n of their money into each of these instruments. Of course, if additional information about each instrument is available, this 1/n investment strategy is not optimal. We show, however, that in the absence of reliable information, 1/n investment is indeed the best strategy.