Hello Osama,

Thank you for taking the time to share your thoughts!

Your thought about comparing the risk-free rate to compensating for inflation is an interesting one. You could extend the argument out even further. That is, theoreticlaly the true risk-free rate could be the one that exactly compensates you for your risks. However, the risk-free rate is used prospectively by investment professionals, not retroactively. So this would require you have accounted for every possibility, not just probability. I think this is an impossible task.

On the other side, is my theory that all actions entail preferences, and consequently they also entail risk. Thus, the only way to avoid risk is to have no preferences, or to engage in no actions - an impossibility. In this theoretical direction risk is equal to zero, and is always equal to zero. Zero return for zero risk. If you believe in a returns compensating for risks, which I believe is intelligent, then the zero point must have zero return and zero risk.

Yours, in service,

Jason