Archive: trade-off

The Truth About Risk and Reward

By Andy Gordon on August 26, 2020

Whether you realize it or not, chances are you believe in the risk-reward trade-off. In its most basic form, it means the lower the risk, the lower the potential returns. And the higher the risk, the higher the potential returns. The basic idea sounds perfectly logical. You have to take on extra risk to get a higher return.  It’s a cornerstone of financial economics. The vast majority of Wall Street thinks in terms of…