Unveiling An Illusion

Decoding Volatility, Risk, and Investment Distractions

Note to Reader: I have spent a long time in and around capital markets in various capacities. I made a lot of observations and took a lot of notes. What follows is one of those, and there are a lot more where this came from. Capital markets are a tremendous place to apply John Boyd’s theories!

In capital markets, the concepts of volatility and risk often intertwine. They create a blurred understanding, especially within the collective consciousness of “The Herd.” Yet, it is crucial to recognize that volatility and risk are not the same. Volatility is a statistical measure reflecting the dispersion of returns. Risk is the potential for a permanent loss of capital. Opportunity lies in exploiting this disparity. It’s an ongoing game played in the minds of investors.

A key contributor to this confusion is the reliance on mainstream financial media. I heard a contrarian once refer to it as “financial pornography.” “The Herd” absorbs information disseminated by these outlets. And they remain…