Hello Thang,

It sounds like you’re referencing the Efficient Frontier concept formulated by Harry Markowitz.

Broadly speaking, Bhansali is making the same point that you made earlier — not all stocks expose investors to the same level of risk.

From this perspective, we’re talking about how to make investment decisions for capital committed to equities, which generally assumes more risk than capital invested in safe assets.

The tricky part consists of identifying equities that have relatively lower risks within their peer group while also offering relatively higher returns. That’s where Bhansali recommends looking for places to earn higher returns by diverging from the consensus view.

-Peter