Is it a mistake that long-term investment reduces risk?
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Now, the theme this time isLong-term investment.
It is often said that long-term investing reduces risk.
However, in my view, that is a lack of explanation, put bluntly,a lie.
Below is based on data from April 9, 2018, showing the range that the Nikkei 225 implied volatility (IV) would cover when it is 21.24%.
From the top, it shows positions of +2 standard deviations, +1 standard deviation, -1 standard deviation, -2 standard deviations.
Seeing is believing.
As time passes, even with the same risk (i.e., the same standard deviation), the range that can be taken becomes larger.
As time goes by, the range that can be taken becomes larger, so it can be said that the risk has increased.
There are some slight problems with this expression, but I think this understanding is more fitting.
Note) The above is my personal view, and is also intended solely to improve financial literacy. Therefore, it is not created for the purpose of investment solicitation. Also, although the blog content is based on data from reliable sources, the administrator does not guarantee its accuracy. Actual investment decisions should be made at your own risk.
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