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Burton Malkiel - Applying 'A Random Walk' to the World Today | #483

The Meb Faber Show - Better Investing

CHAPTER

Risk Parity: A New Method of Portfolio Selection

I'm someone who believes the market is pretty damn good and pretty hard to beat. But there's a systematic bias in that the launch shots go off at much lower odds than they should given their probability of winning. If you bought every long shot, you don't lose 20%, you lose 40 or 50%. So this is the general idea that markets typically misprice things. And so what you ought to do is buy very safe securities and lever them upso that you increase their risk and rate of return.

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