A coward’s primer for investors per Paul Samuelson
Kahneman is telling us that an ordinary person might, without being thought silly or irrational or cowardly, reject the single bet but decide to take on the 100-bet game.
expected return
The price of risk in equity markets
Mr. Market demands a very high expected return before he will invest in stocks. Whereas Mr. Bond suffers money illusion.
Luck and taking a flyer
The notions of coherence, plausibility, and probability are easily confused by the unwary.
Putting a world of turmoil in perspective
Today’s investor cannot tell from this record what percentage gain in earnings, dividends and prices he may expect in the next ten years, but it does supply all the encouragement he needs for a consistent policy on common-stock investment.
Expected future returns
Today’s investor cannot tell what percentage gain in earnings, dividends and prices he may expect in the next ten years
Many investors just don’t understand the risk/reward trade-off
Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain.
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