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https://boards.fool.com/what-does-this-mean-it-means-that-the-more-34167167.aspx
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| Subject: Re: Ot Variance drag | Date: 3/27/2019 7:08 AM | |
| Author: DrBob2 | Number: 273754 of 274591 | |
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What does this mean? It means that the more volatile your returns, the lower your returns. A simple example will show this. You have 1.00. It goes up 50% the first year and down 50% the next year (or vice versa). What do you end up with. 75 cents. True, although it applies when compounding. If you have a constant position size then the regular average will work. DB2 |
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