Why standard deviation might be failing your portfolio.

Samir Varma, a physicist turned successful futures trader, challenges the common reliance on standard deviation in financial modeling. He explains that market returns are not normally distributed but rather leptokurtotic, meaning extreme events occur far more frequently than traditional models predict. By relying on Gaussian distribution math, many traders and institutions consistently underestimate risk. This perspective highlights why standard deviation can be a misleading metric when navigating the complex reality of market volatility.
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