The Financial Media’s Idea of Risk-Reward

The financial media’s idea of risk-reward is generally nebulous and may be made more complex with such mention of technical terms as the Sharpe ratio, which I have referred to on a number of past occasions in books and commentaries.

But the idea that taking risk will add to income, is of little comfort to most average investors. What it does is imbue them with false hope that just taking risk will add up positively for them over the longer-term. This is a misreading of the Sharpe and other research and what I have done over decades in evaluating over 1,500 commonly used investment strategies.

It also adds the danger of actually decreasing the odds that hey will be successful. (See the Earl J Weinreb NewsHole® comments.)