Risk And Return From A Value Investing Perspective The thinking in traditional finance theory is that, to gain higher returns; you need to take on more risk. Thus, higher returns are the reward for taking on risk. Further, depending on your tolerance for it, you can take on as much risk as your utility function makes you comfortable with. So, the investor with the higher risk tolerance should expect to earn higher returns. But in value investing, risk is not a thing to endure to be rewarded. The perception of risk and how it influences investors decisions is the subject…
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