Archive for April 23rd, 2008
A costly investment mistake: confusing volatility with risk
Posted by: investment-fiduciary on: April 23, 2008
Confusing volatility and risk could cost you a bundle. Let’s take a look at returns on an investment of $1000 over 50 years from 1958-2007 in five asset classes.
Small cap value: $3,750,000
Small cap growth: $81,200
Large cap value: [...]
Warren Buffet: Volatility does not measure risk
Posted by: investment-fiduciary on: April 23, 2008
- In: Uncategorized
- 1 Comment
Volatility does not measure risk. The problem is that the people who have written and taught about risk do not know how to measure risk. Beta is nice because it is mathematical, it is easy to calculate and it is wrong – past volatility does not determine the risk of investing. In early 1980s, farmland [...]
Author
Michael Zhuang is principal of MZ Capital, a fee-only RIA and DFA-approved advisor based in Washington, DC. He is also a regular contributor to Morningstar Advisor. Michael can be reached at info1@mzcap.com.
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