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Episode 93: Risk and Return (The Sequence Trap)
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Episode Summary
This episode deconstructs the conventional financial definition of risk, showing why measuring risk purely as short-term price volatility is a major trap for real-world investors. While standard academic finance defines risk using standard deviation—measuring how much an asset's returns swing around its historical average—we expose the deep flaws in this proxy. Volatility treats upside and downside movements identically, registering an unexpected upward surge as "risky"…
The skinny
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