As you can see from my columns, I have lately become very interested in the economics and psychology of making and losing money from high risk investments.
This week I want to recount the story of a high volume early stage investor who described to me his experience with an inefficiency in a gambling market that he sought to exploit. This story is relevant because it turns out that this gambling market had a distribution of outcomes very similar to angel investing. It illustrates a key point about successful angel investors: they need to have incredible tolerance for losing streaks, and early wins.
