• Although the Kelly Criterion has been used for investing and other purposes, it was originally introduced as a gambling system.
  • The Kelly criterion was formally developed by John Kelly, Jr., a scientist at AT&T’s Bell Laboratories.
  • The formula is used to determine the optimal amount of money for a single trade or bet.
  • Several well-known investors, including Warren Buffett and Bill Gross, are said to have used the formula for their own investment strategies.
  • Some argue that the limitations of an individual investor can affect the usefulness of the formula.