RupeeCase
Education . Low Volatility . 1 of 3
The oldest rule in investing, quietly broken
More risk, more return.
The data has disagreed for fifty years.
A dollar in the calmest US stocks and a dollar in the wildest ones, tracked from 1968 to 2011. The textbook says the wild one should win. It lost, and it lost badly.
Calmest stocks
$70.50
What one dollar became in the lowest risk US stocks, 1968 to 2011.
Wildest stocks
$7.61
What one dollar became in the highest risk US stocks, same years, same market.
The gap
9x
The calm stocks made about nine times the money of the wild ones.
The line every finance course opens with
Take more risk to earn more return. At the two ends of the scale, the market has spent decades saying otherwise.
Source . Financial Analysts Journal . 1968 to 2011
Tanmay Kurtkoti . Builder of RupeeCase