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Investing Strategies / Risk


Subject:  Re: Volatility and returns Date:  6/24/2001  4:14 PM
Author:  solasis Number:  73 of 297

you haven't missed anything. if two assets have the exact same long run total return and have negatively correlated short run returns, then the periodic rebalancing from one asset to the other will produce higher long run returns.

unfortunately, in real life there probably are not any two assets where both conditions are satisified over a long time period.

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