Ep20 "Risk and the Fundamental Tradeoff of Corporate Finance"
All Else Equal: Making Better Decisions
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The Importance of Diversification
Risk is an important driver of the outcomes that we see, says David Frum. The idea of diversification can be seen in two types of insurance companies: fire and earthquake insurers. If you have a well-functioning fire department your house may not burn down but if it doesn't, you'll pay something every single year. With a large enough town, I literally have removed all the risk from my own life by having others insured against their houses burning down for me.
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