Tag Archives: gambling
Horses and volatility
Two items struck me as being connected. Maybe they are. The items: Payoff of betting on horses versus the odds The Missing Risk Premium by Eric Falkenstein As you can see there is a unicorn on the cover, but that is not the horse connection I had in mind. Horses The post at Thinking in … Continue reading
An investment lottery
Can fund managers capture money that is now gambled away? Investing versus gambling A clean, though imperfect, distinction between investing and gambling is: if the expected return is positive, it is investing if the expected return is negative, it is gambling Other views on gambling versus investing can be found here and here. An investing … Continue reading
Who are the innocent bystanders?
High volatility stocks are, in general, nonsensical. Who’s to blame? The high vol gamble Theory says that investors demand higher returns for higher volatility assets. Reality says that the most volatile stocks have the lowest expected returns. See, for example, The volatility puzzle solved? — specifically Figure 2. That this particular theory doesn’t hold means … Continue reading
