Volatility

Prefer to watch? This post is also a 6-minute animated video, narrated by a raccoon with a candlestick tail: Ask anyone what risk means and you’ll get something close to the textbook definition: the probability of a harmful event occurring, combined with the severity of its consequences. That’s the risk of security audits, insurance, aviation. By that definition a Ponzi scheme is high risk - decent probability of total loss, maximum severity. And the S&P 500 - five hundred of the most regulated, audited, litigated-against companies on earth, wrapped in one of the most supervised products in existence - reads as pretty safe. ...