Professor Bob Merton

We were very fortunate to have Professor Bob Merton present: Capital Market Assumptions/ Expected Returns to members of GAIA in May 2021.

The presentation focused on key aspects of capital market returns, S/D and Sharpe Ratios since 1926. He also compared Expected Returns v S/D of MSCI World to various regions including US, Canada, Switzerland, Sweden, Australia, New Zealand, Singapore, Chile and China.

Professor Merton emphasized that the correct risk-free asset is critical, given the goal.

“If you do not measure risk correctly,

you cannot manage risk correctly”.

He also explained that the only three ways to manage risk are:

1- Diversification

2 – Hedging

3 – Insurance or a combination of each.

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