William F. Sharpe

Some advisors are really good at articulating their opinion about what they think the future is going to be.

But the truth is, is that even William Sharpe, who invented the Sharpe ratio, which is a financial formula that basically says, he determined, are you getting the reward for the risk that you're taking? I mean, he won a Nobel Prize for this.

He said the biggest, nastiest problem in finance is when you have to live off your savings.

I mean, this is a Nobel Prize winning professor who literally whose formula is used every day in finance on Wall Street.

How the Nobel Prize-winning financial model used by the finance industry is deeply flawed, the role human behavior plays in market booms and busts, and how we can navigate it.

In 1990, William Sharpe, Harry Markowitz, and Merton Miller were recipients of the Nobel Prize in Economics for their contributions in financial and economic modeling.

Their independent work, along with some others, radically changed the framework used by much of the finance industry.

William Sharpe made many contributions to modern financial modeling, but the most notable was his work in developing the capital asset pricing model, or CAPM.

It's a fairly simple formula that allows an investor to compare the expected return of different investments.

Today, the model is a fundamental part of how investment portfolios are managed by professionals, but it's widely criticized, particularly by some of the most successful investors ever, such as Warren Buffett and Howard Marks.

And that's like doors open, doors close.

One of my favorite story from my world of finance is William Sharpe, an economist.

So he was always going to study medicine until his first day at medical school, I think at Stanford, he first saw blood.

And he's like, this is horrible.

be.

Sharpe ratio is a way of comparing two different funds in a very specific way, which is really important.

So that's what it is, and we'll get to the detail in a minute.

Oh, you're a tease.

But if you're comparing two funds which are invested in different stuff.

How do you compare? How do

you compare? And the answer is the Sharpe ratio.

So what Sharpe ratio does, hold this thought, bear with me.