After 2022’s stomach-churning roller-coaster ride, we clearly need to be reminded of the most basic rule in finance — the one investors forget most often.
There's only one thing you really need to know about investing in 2023, and it's both stunningly obvious and invariably forgotten: There's no free lunch.
Sure, everybody knows that with higher expected returns comes the bigger risk of loss. But time and time again investors put this most basic rule to the test in a kind of bull-market delirium. That explains the last blood-curdling year in investing, the last 15 years, and even the last thousand years.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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