A high return on any sub-market of the total financial market always reflects a higher risk. – Sometimes this principle is compared with the Pythagorean theorem (in a right triangle, the sum of the squares over the cathets equals the square over the hypotenuse) for geometry. Both times an immediately certain judgment (axiom; axiom) and thus an immovable directional theorem is expressed. – Occasionally during the subprime crisis it became clear that many and even professional investors acted contrary to this principle. It was completely overlooked that double-digit returns cannot easily be expected on the financial market, when in the production sector of the economy six percent is already considered a masterly achievement. After all, the financial market ultimately reflects the goods market. – See secret tip, go-go funds, hell-and-flood contract, junk bonds, penny stocks, pump and dump, yield chasing, risk capital, risk appetite, government debt, denied, super profit, terror papers, trembling premium.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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