Backward-looking measures do not always predict future asset risk - Orbis

"When you talk to a lot of financial analysts and economists, they discuss risk in terms of betas, Sharpe ratios and volatility - a lot of mathematical numbers that are historically backward-looking," said Lynn (pictured).  She added, however, that was not to say these measures were not important. At the same time, she said: "Remember that most of these ratios came out of the works of Sharpe and Markowitz - they believed in efficient markets." In this instance, if all assets were correctly priced, the only risk would be them randomly moving up or down. Nine in ten risk-targeted ...