: what did Charlie Munger mean when he said “gambling has a negative Net Present Value”?
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it means you lose money, or at least would make more money if you invested it into government bonds or other safe instrument.
Net Present Value is a formula that adds up current and future money flows, but discounts future flows, and discounts them more if they are further into the future. So negative NPV means that a huge win at some distant point in the future does not compensate for all the money you would have to spend to get that win.
The reason for discounting future money is that people are impatient (and mortal), and the fact that you can get interest on investments. If you want $100 in a year, and can get 5% interest on your invesments, then you only need to invest $95 now. So $95 is the present value of “$100 in a year”.
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