"The CAPM uses beta. If the CAPM is flawed (and beta does not explain risk) I am happy to see your alternative model which explains market risk/return better. "
I don't believe in any model, because I dont think returns are explained by risk. They are only good for academic debate but not practical application. I just wanted to see how you could say higher returns = higher risk because there is no 'free cake'. I think there is a lot of free cake in the market if you take the time to look and study it. Do you agree there is no 'free cake' in the market Clark? I.E - being able to achieve excess return without taking on any more risk. When answering dont compare cash to companies, but companies against companies for example.
If you think there is no free cake and all higher returns are explained by the participant having taken on more risk than you are essentially saying you believe in the EMH (efficient market hypothesis). Do you believe in EMH Clark?
"As I said earlier, the market rewards risks. It's all about risk-reward. Fundamental."
