Comment by danielscrubs
6 hours ago
Can you explain it in another way? What you are saying is that instead of loosing 100% they loose 70% and loosing 70% is somehow good? Or are you saying the risk adjusted returns are then 30% better on the downside than previously thought? Because if you are, I think people here are saying the risk is so high that it is a given they will fail.
Let's say they are paying for "research". The research is very expensive and has a high likelihood of being worthless, but a small likelihood of having value later. So by claiming the financial loss, they can offset the cost of the expensive research by 30%, making it an even more attractive gamble.