The Holy Grail of investing is to find assets that are low in risk, and high in return.
Unfortunately, the two are anticorrelated: putting money in your mattress isn’t very risky, but unlikely to make you rich. Whereas investing in some dropout’s startup is extremely risky, but could make you a billionaire.
One way that institutional investors, like top hedge funds, global family offices, and the best investment clubs, quantify that tradeoff is with a quantity called the Sharpe Rat