13-01-2015, 03:01 PM
(13-01-2015, 01:45 PM)specuvestor Wrote: Risk as a volatility is so that academics got a number to pluck in and can output a Eureka number. Like I said people are too obsessed with tech and statistics without understanding what it entails.
Frequently small cap stocks perform far better than CAPM predicts but academics say that it is not the model is wrong but that the market underprices the risk ie volatility.
Yes, volatility as risk, isn't entirely right, but it is also not entirely wrong. I would say volatility is a good and convenient proxy of risk.
The same argument as NAV isn't intrinsic value, but it is a convenient proxy, as always advocated by Mr. Buffett.
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