The Secret of Risk vs Return

One of the dirty secret is a simple one, and it derives mostly from investor behavior.  You don’t always get more return on average if you take more risk.  The amount of added return declines with each unit of additional risk, and eventually turns negative at high levels of risk.  The graph above is a vague approximate representation of how this process works.

Why is this so?  Two related reasons:

1. People are not very good at estimating the probability of success for ventures, and it gets worse as the probability of success gets lower.  People overpay for chancy lottery ticket-like investments, because they would like to strike it rich.  This malady affect men more than women, on average.
2. People get to investment ideas late.  They buy closer to tops than bottoms, and they sell closer to bottoms than tops.  As a result, the more volatile the investment, the more money they lose in their buying and selling.  This malady also affects men more than women, on average.

Antara Pilihan dan Takdir

Pilihan.....yep....saya termasuk orang yang percaya bahwa hidup yang kita jalani adalah hasil sebuah pilihan....

Takdir....yup.....saya juga termasuk orang yang pasrah dengan takdir....

Hidup....yap....adalah sebuah takdir tak terhimdarkan....

Kehidupan....yep....adalah perjalanan....menuju takdir sekaligus juga pilihan kita....

Takdir....saya percaya bukan sebuah keabsolutan mutlak....

Pilihan....bukanlah melulu tak bisa mengubah takdir....

Hidup....berisi perjalanan kita dalam menghadapi takdir dan pilihan....

Kehidupan....bergerak dari takdir ke pilihan dan sebaliknya dari pilihan ke takdir....pada awal dan akhirnya....

Takdir bisa mengubah pilihan....pilihan juga bisa mengubah takdir....

Suatu malam ditengah tayangan sinema Inside Man.....