Risk is often expressed as a number. It may be labeled standard deviation or volatility. Either way, it essentially measures how widely the return of an investment (or portfolio) is expected to vary from “normal."
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Replying to @MaxOsbon @EdLatimore
No, Ed, this is wrong. Read
@nntaleb4 replies 0 retweets 13 likes -
Replying to @normonics @MaxOsbon and
Ludic fallacy: Calculating risk in the real world like its a simple card game in a casino. Why the banks blew up in 07/08. Why fund manangers blow up all the time. Risk in complex environments is unknowable.
1 reply 0 retweets 2 likes -
Replying to @MindsFiction @normonics and
Volatility calculations are only one part of the risk assessment process. Being overly reliant on volatility measures creates massive blind spots. Works until it doesn’t.
1 reply 0 retweets 0 likes
You can't calculate the one risk that matters, risk of blowup. But you can somewhat mitigate this risk by knowing you can't calculate it. What you can't know matters more than what you think you know. (Astrology also works until it doesn't)
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