Variance drain

Variance drain — the gap between an asset’s average return and what a holder actually compounds, caused by volatility’s asymmetric arithmetic: +50% then −50% averages 0% but leaves ₱100 at ₱75, and a −50% year needs +100% to undo. Wild assets therefore compound meaningfully worse than their advertised averages — one more quiet argument for the boring, bounded-drawdown core.

First used in: 1.8 · Risk: what you’re actually paid for