Nuggets of Investing Wisdom

Nuggets of Investing Wisdom

A website for serious investors in common stocks – Read by investors in over 150 countries around the world

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Sharpe Ratio

Volatility and risk – How the investment industry got it wrong

  • by Rodney Smith
  • Posted on July 13, 2025July 13, 2025
  • Part 1: The Field of Play

The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability — the reasoned probability — of that investment causing its owner a loss of purchasing power over his contemplated holding period.

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Let’s clear up misunderstandings about risk and volatility

  • by Rodney Smith
  • Posted on May 30, 2021January 29, 2023
  • Part 1: The Field of Play

A risky investment may be volatile, but not every volatile investment is risky.

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