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> - If you take more risk you get more reward They kind of say this but I don't think they establish it. Bonds return less than stocks and housing but they adm
by mattnewport 7y ago
> - If you take more risk you get more reward
They kind of say this but I don't think they establish it. Bonds return less than stocks and housing but they admit they can't explain equal returns between housing and stocks but lower volatility for housing. They don't look at volatility within stocks where contrary to the theory that risk is correlated with return the data tends to show that less volatile stocks actually have higher returns.
- JumpCrisscross 7y ago> the data tends to show that less volatile stocks actually have higher returns Which data show this? Less volatile stocks can, in certain periods of time, be levered to return more than more volatile ones. But that is dependent on borrowing rates being favourable and very specific, and to my understanding rare, equity market dynamics.
- mattnewport 7y agoThe book The Missing Risk Premium covers a lot of the evidence. The author give a synopsis here: https://falkenblog.blogspot.com/2013/07/missing-risk-premium-synopsis.html https://falkenblog.blogspot.com/2013/07/missing-risk-premium... Low volatility investing is based around the observation that low volatility stocks have higher average returns than high volatility stocks. This article is a good summary: https://www.researchaffiliates.com/en_us/publications/articles/s_2013_jan_making-sense-of-low-volatility-investing.html https://www.researchaffiliates.com/en_us/publications/articl...
- deleted 7y ago[deleted]