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[quote=Anonymous][quote=Anonymous][quote=Anonymous]
In a second container, put in one $1 bill and one $20 bill. This is your "aggressive" investment pool.
[/quote]
So a 1% annual return is the worst-case scenario in this exercise? What about a 30% loss when rather than adding $1 and $20 bills you'd need to subtract 30 for a few years? [/quote]

It doesn't make a difference if there are no negative numbers in the hat because the spread is what is relevant for purposes of comparing returns. Arbitrarily reduce the value of each bill, including to negative numbers, and you get the same result. The only thing you need for the math to work in the real world is for the market to trend up over a long enough period of time, because then the average increase in an aggressive portfolio will definitionally outperform the average return in the conservative portfolio given a large enough sample size.

Put simply, if you have thirty years to invest and you believe the market will be higher after thirty years than it is now, the "aggressive" portfolio is easily the not a high risk option.[/quote]

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