Why I Stopped Believing You Have to Choose Between High Returns and Low Risk
- Fabio Capela
- Low volatility investing , Risk management , Portfolio optimization , Systematic investing , Investment strategy , Volatility control , Asset allocation , Risk return analysis
Every investor gets told the same story: if you want high returns, you have to accept high risk. Want to play it safe? You’ll have to settle for mediocre returns. It’s supposedly the fundamental law of investing, as immutable as gravity.
Read MoreThe One Number That Changed How I Think About Investment Risk
- Fabio Capela
- Risk management , Sharpe ratio , Risk adjusted returns , Portfolio analysis , Investment metrics , Systematic investing , Performance measurement , Quantitative finance
For years, I focused on the wrong metric when evaluating my investment performance. Like most investors, I obsessed over returns. How much did I make this month? How much did I make this year? How did my portfolio compare to the S&P 500?
Read MoreHow I Built an Investment Strategy That Beat the S&P 500 by 8% Annually for 8 Years
- Fabio Capela
- Systematic investing , Portfolio management , Investment performance , Market outperformance , Risk management , Asset allocation , Quantitative finance , Financial strategy
Eight years ago, I was frustrated. Like most investors, I was putting money into index funds and watching my portfolio swing wildly with every market tantrum. The conventional wisdom said I should just “buy and hold” the S&P 500, but watching 20% drawdowns every few years while barely beating inflation didn’t feel like a winning strategy.
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