[macker]

Originally Posted by Slava

You could invest in numerous bonds, bond mandates, bond indexes and make money. Frankly speaking though the amount of risk is somewhat dependent on perspective. I think the financial services industry has done a horrible job in this regard; risk is no volatility despite people putting that theory out there. The thought of high risk/high reward is so prevalent and yet for quite sometime now studies have shown that it's not the case. That issue is entirely based on MPT and the ridiculous notion of purely efficient markets.

Standard deviation is a joke and has no place in assesing risk. I have no idea why someone would bother calculating the beta of a stock either. Yes, I've taken the courses and know how to do this...yes, to get the piece of paper I had to learn why you might do this!

In reality though these things are meaningless. The big daddy of them all though is the risk number that some profess to calculate. Its laughable at best, and to actual investors does nothing positive. Instead it gives investors a false sense of security by saying the company is somehow safer. I hate to say it, but investors have some pretty obvious ways to make money on their investments. It means doing a lot of homework and a lot of reading. They can either do it themselves or have someone do it for them, but there really isn't a substitute in my opinion. Basing investment decisions on some arbitrary concept or a number that boils risk down on some scale like this is a recipe for trouble.

http://www.investopedia.com/articles...#axzz1l9D0QXbr