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| Subject: risk Risk concerns the expected value of one or more results of one or more future events. Technically, the value of those results may be positive or negative. However, general usage tends focus only on potential harm that may arise from a future event, which may accrue either from incurring a cost (“downside risk”) or by failing to attain some benefit (“upside risk”). (Wikipedia Feb 2010) Morningstar ratings By John Schroy, on May 28th, 2006 |  Leave a comment  Mutual funds are sold primarily on the basis of ‘performance’ measured by historical ‘total return’. The famous Morningstar ’star’ rating system is based on ‘total return’, in this case ‘risk-adjusted total return’ relative to funds of the same asset category. A general’s stars are a clear indication of rank. People presume that ‘five stars’ are better than ‘three stars’, just as they presume that a ‘five star general’ is higher ranked than a ‘three star general’. May 28th, 2006 | Print Article |  Email Article |  Topics: Baby Boomers, capital flow analysis, efficient market hypothesis, investment advisor, Morningstar, mutual funds, Nobel prize in economics, risk, Total Returns, US SEC, William Sharpe | Category: US SEC | Leave a comment |  Short urlFeatured articles on inside pages
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