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Since compounding interest demonstrates geometric growth, areas of allocation that match the investment rate must go up in either risk or must go down in reward
by 3pt14159 13y ago
Since compounding interest demonstrates geometric growth, areas of allocation that match the investment rate must go up in either risk or must go down in reward or a new form of efficiency must be found that was previously unattainable. In practice this leads to concentrated wealth being misallocated (high risk) or hemorrhaged (inflationary loss) or effectively applied to the growth of a new technology (successfully invested), probably in that order of likelihood.
- discodave 13y agoI thought that the phenomenon of risk aversion and evidence from the investment markets (stocks having higher returns than bonds) showed that people, on the whole, did not take enough risk in their investments.