Your Biggest Risk is Your Broker's ignorance (About Risk)


Here's a question you must ask your broker: What's the risk of my portfolio?

Most likely, he won't be able to answer it. Why? Because he doesn't know, and he doesn't know how to calculate it.

The historical risk of a stock or an entire portfolio is measured by calculating its standard deviation. Before you throw up your hands in despair, just think of standard deviation as a way to measure historical volatility.