Risk vs. Return

Volatility, drawdowns and risk-adjusted returns.

1. Volatility — What volatility measures, how to read an annualized volatility number, and a real comparison of calm and wild stocks over the same year.
2. Drawdowns — What drawdowns are, why recovering from them takes more than you lost, and what real market declines in 2008, 2020 and 2022 looked like.
3. Risk-Adjusted Returns — Why return alone is not enough, how measures like the Sharpe ratio compare return per unit of risk, and a 20-year comparison of three index funds.
4. Investing, Trading & Arbitrage — Three different ways to try to make money in markets, the kind of risk each one takes, and why “risk-free” arbitrage is much harder than it sounds.
5. Risk Tolerance — Figure out how much risk is right for you by separating your ability, willingness and need to take risk, then match your investments to the answer.
6. Expected Value & Edge — How win rate and payoff combine into expected value, what a trading “edge” really is, and why a strategy can win less than half the time and still make money.