Talk:Risk and return: an introduction

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Plans for Sections
Currently working on improving the Intro and the first section. Will replace current chart with charts showing frequency distribution of returns for Bills, Bonds and Stocks, and will add text to further explain the relationship between risk, dispersion of returns, and expected returns.

Here is a list of sections I'm planning on adding. This is tentative; feel free to contribute ideas on sections to add:


 * Measuring Risk (variance, standard deviation, other)
 * Systemic and Unsystemic Risk (company-specific vs. market; theoretical justification for using mutual funds)
 * Managing Risk (asset allocation)
 * Risk Tolerance (age in bonds (Bogle), ability, willingness and need (Swedroe)
 * Risk vs. Uncertainty (Knight, Bogle, Swedroe))
 * Long-Term Risk (stocks are risky in long run: BKM, Bodie, Bogle?, Bernstein)

--Kevin M 14:22, 29 March 2012 (CDT)

Consider the relative level of difficulty for new investors. I don't think they want to see a full treatise on risk theory when all they need to know is that stocks have a better chance of losing money than other investments. This page should be aligned with Behavioral pitfalls (previously Risk, Uncertainty, and Behavioral Pitfalls) --LadyGeek 15:53, 29 March 2012 (CDT)

Agreed that it should not get too complex. Don't agree with the second statement. I spend a lot of time helping novice investors, not just on the forum, and there's a lot more they need to know about risk than that stocks can lose more money than bonds (stocks aren't the only investments that can lose a lot of money). Also disagree about alignment with the other risk article. There are two many articles with the word "risk" in them, and none of them do a decent job of covering the topic adequately, for novice investors or anyone else, IMO. I can either try to fix that here, or in yet another risk article, or if no one else sees the value in it, not at all (don't mean to sound defensive; it's just taking so much time and energy explaining what I'm trying to do that I can't actually make any progress on doing it). It's turning out to not be so easy to "be bold". --Kevin M 18:25, 29 March 2012 (CDT)

OK, I see your perspective and understand your approach. There's no need to spend any more time explaining. I'll help with formatting and minor corrections, if needed. --LadyGeek 19:50, 29 March 2012 (CDT)

Papers

 * Here, we can include links to papers which may be candidates for suitable references or as candidates for further reading.


 * Bodie, Zvi, On The Risk of Stocks in the Long Run (December 1994). Harvard Business School Working Paper No 95-013. Available at SSRN: http://ssrn.com/abstract=5771 or http://dx.doi.org/10.2139/ssrn.5771
 * Bodie, Zvi, Treussard, Jonathan and Willen, Paul, The Theory of Life-Cycle Saving and Investing (May 2007). FRB of Boston Public Policy Discussion Paper No. 07-3. Available at SSRN: http://ssrn.com/abstract=1002388 or http://dx.doi.org/10.2139/ssrn.1002388