Ask Paula: How to Optimize Your Investments Along the Efficient Frontier (If You Dare!)
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The Sharp Ratio
A lot of times people use the terms volatility and risk interchangeably, when in fact, they are separate concepts. So with oil, for example, oil is subject to not just volatility, but also political risk, yes, as as well as many others. You need to use the sharp ratio realizing that there is no measure that you're going to use that's infallible. Just know what the achilles heel is of the measure before you use it. That's that's the sharp rati it's really neat.
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