To be honest, what you just said went right over my head, but I really want to learn more. Can you recommend where to start given that the strategy I'm evaluating is akin to levering up 1x and investing in index funds?
@smabie: Thanks a lot for the post. I am for the first time understanding concepts that in words were very hard to process. The math connection you make really helps, as basic calculus as statistics are part of an engineering background.
I really appreciate it! Finance can be a really opaque topic and there's a lack of rigorous yet straightforward material about the subject.
Most information about trading either falls into the total bullshit camp designed for idiot retail investors, or complex papers/books designed for academics or professionals.
My blog tries to straddle the two: providing rigorous material but geared to those without a background in finance.
Diversification, Risk and Leverage https://cryptm.org/posts/2019/11/28/div.html
If I was rewriting the post today, I would make some changes, but by and large, I stand by the post.