What Really Matters?
The Memo by Howard Marks
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The Sharp Ratio of Risk Adjusted Return
When I got into the real world of investing in 1969, practice soon caught up with theory. Since volatility isn't risk, the sharp ratio is a very imperfect measure. It should be presumed that favoring lower volatility assets will lead to lower returns. Only managers with superior skill or alpha will be able to overcome this negative presumption.
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