“I think that one of the things you're taught here is that volatility is a measure of risk. Volatility is risk.”
Marks argues academics chose volatility as risk measure because it was quantifiable, not because it was accurate.
“I think that volatility can be an indicator of the presence of risk, a symptom if you will, but it's not risk itself.”
Marks argues academics adopted volatility as the risk measure largely because it was quantifiable, not because it was accurate.
“The academics developing investment theory, largely at the University of Chicago in the early sixties, just a couple years before I got there, adopted volatility as their measure of risk.”