Skip to content

Exposing 2025’s Most Dangerous Investing Myth

Ever since the 1960s, the capital asset pricing model (CAPM) has been something like a bible for most investors… It was an unquestionable “North Star” that tied everything in the belief system together.

And CAPM spent decades upholding its status as finance’s most sacrosanct law … before, of course, being completely disproven.

See, CAPM essentially says there is a positive linear relationship between a stock’s volatility and its expected future return. The more volatile the stock … the higher its expected future return.

Today, we’re going to look at the truth about volatility — starting with the “higher risk = higher return” fallacy.

This post appeared first on Money & Markets, LLC.