“The Return That You Obtain on Stocks Is the Result of the Increase in the Value of the Companies. The Increase in Value Is the Same Regardless of How Much Risk We Add by Failing to Practice Price Discipline. Making Stocks Riskier Is a Negative, Not a Positive.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

It is not true that we would ‘see the same 6.5%’. If stocks were not volatile and were risk free they would have the same returns as treasuries.

I don’t agree.Edge.

The return that you obtain on stocks is the result of the increase in the value of the companies. The increase in value is the same regardless of how much risk we add by failing to practice price discipline. Making stocks riskier is a negative, not a positive.

At least that is my sincere take re this question.

Rob