Volatility Management

Variability Drain: The Silent Killer of Long-Term Compounding

• Fabio Capela
• Systematic investing , Portfolio mathematics , Compounding , Risk management , Quantitative finance , Volatility management , Long term investing , Portfolio optimization

You spend years refining your strategy. You optimize your entries and exits. You backtest it across decades. On paper, it shows strong returns. Maybe even impressive alpha. But something keeps bothering you. Despite solid average returns, your portfolio isn’t growing the way you expect. You’re not losing in any dramatic way — no catastrophic drawdowns, no obvious mistakes. But something subtle is bleeding your wealth. Quietly. Relentlessly.