“Let’s use an example to illustrate why the dispersion of returns matters. Say you’re betting $1 on a…”

Friday, October 19th, 2012 at 10:21 pm

“Let’s use an example to illustrate why the dispersion of returns matters. Say you’re betting $1 on a coin flip. How much would you have to get in return if you win to accept the bet? Would $1 back be enough? Would you need $2 to be willing to play? Now imagine that you’re betting $10,000 on a coin flip. How much would you have to earn in return to take that bet? Would it be more than the 2:1 payout of the $1 coin flip.”

Active funds too risky for most investors – CBS News