In his book on the concept of ergodicity, Luca Dellanna writes of his cousin who was a highly talented skier in his youth, but had a potential future in the sport cut short by a succession of injuries.[i] The lesson that Dellanna draws from this is that it is not the fastest skier that wins the race, but the quickest of those who reach the finish line. The risk of irreversible losses is integral to long-term success. Investors may think that maximising returns is their primary goal, but it isn’t. Survival comes first, and survival comes in several guises.
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