A portfolio that gains 20% and then loses 20% does NOT break even. It ends up at -4%. This is volatility drag: the mathematical penalty for large swings. Two portfolios with the same average return bu...
A portfolio that gains 20% and then loses 20% does NOT break even. It ends up at -4%. This is volatility drag: the mathematical penalty for large swings. Two portfolios with the same average return but different volatility will compound to different final values -- the less volatile one wins.
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