©2018 IFA Publishing, Inc.
written on May 28, 2006
The lure of fast money
makes you think active
But the record proves
you're better off Passive
Professors came to
a shocking conclusion
The active advantage
was just an illusion
The stock market gamble
can be an addiction
You'll search, but won't find
that winnin' prediction
Traders devour the news
like a school of piranha
While the passive find peace
in a tradeless nirvana
The bets laid down
on predictin' that news
Will surely bring on
the Speculation Blues
Instead of Morgan or Cramer
Barney or Lynch
You're better off with Bogle
Fama or French
The wisdom of crowds
throughout the land
Will act like the force
of the invisible hand
Everyone knows
there ain't no free lunch
But the pickers keep thinkin'
they can win from a hunch
Your broker's out buyin'
himself a fine yacht
And you're gettin' nothin'
from the stocks that he bought
Stock gamblin' can be
like drinkin' that booze
Leavin' you singin'
the Speculation Blues
So before investing
your hard earned green
Catch a good vibe
for the variance and the mean
The smart money man
is best served
By checkin' out
how the bell is curved
For when it's skinny
and the average is high
The trader can't beat it
no matter how he try
A risk taker gots'ta know
his risk capacity
Then hang on for his payout
with true tenacity
While the passive relax
on a tropical cruise
The active are singin'
the Speculation Blues
Calculating risk capacity is the first step to deciding which portfolio will generate optimal returns for each investor.
Each investor has a unique risk capacity and can be identified by a risk capacity score — a measure of
how much risk one can manage.