In the News

Title

A 401k Fiduciary Dilemma: The Risk of Using Volatility to Define Risk

Document Type

Article

Publication Date

5-28-2014

Abstract

Like the top officers in Catch-22, the leading thinkers in the financial industry have long used the elegance of statistics – specifically, standard deviation as a measure of volatility – to frame the definition of risk. It worked so cleanly on theblackboards of academia that it just had to be used in the boardrooms of America.

There was only one problem.

The theory was wrong.