Comments on: What risk really means to a client http://www.theparaplanner.com/2009/12/10/whate-risk-really-means-to-a-client/ The site for Paraplanners and Paraplanning in the UK Fri, 20 Aug 2010 11:30:44 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Sean Fernyhough http://www.theparaplanner.com/2009/12/10/whate-risk-really-means-to-a-client/comment-page-1/#comment-11561 Sean Fernyhough Wed, 06 Jan 2010 09:18:08 +0000 http://www.theparaplanner.com/?p=503#comment-11561 Standard deviation is a dangerous measurement of investment risk. 1) It's difficult to understand. 2) It's difficult to explain. 3) Even when it's a small number it is actually still a big number. 4) It is based upon mathematics which states that knowing the average (arithmetical mean) and knowing the standard deviation of a distribution of outcomes is all you need to know. This does not correctly characterise the investment world. Standard deviation is a dangerous measurement of investment risk.

1) It’s difficult to understand.
2) It’s difficult to explain.
3) Even when it’s a small number it is actually still a big number.
4) It is based upon mathematics which states that knowing the average (arithmetical mean) and knowing the standard deviation of a distribution of outcomes is all you need to know. This does not correctly characterise the investment world.

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