Comment on Piketty, inequality and volatility: How can r exceed g?parentComments−dojomouse12yNo, volatility can increase as well as decrease returns.−yummyfajitas12yDownward volatility hurts you more than upward volatility helps you (on average). That's where the -sigma^2/2 term comes from.−dojomouse12yYes, so you could writer + (amount that upward volatility helps) - (amount that downward volatility hurts) > g
Comments
No, volatility can increase as well as decrease returns.
Downward volatility hurts you more than upward volatility helps you (on average). That's where the -sigma^2/2 term comes from.
Yes, so you could write
r + (amount that upward volatility helps) - (amount that downward volatility hurts) > g