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Despite the bullish talk, Wall Street has China reservations

The growth juggernaut is trading at a discount

ANY fool, with a bit of luck, can make a spectacular return by betting on a coin flip. Yet they risk losing everything in the process.

The ultimate outcome for investors is a high return adjusted for the risk associated with it, an idea most famously captured by the “Sharpe ratio”.

This divides the expected return of an asset, minus the risk-free rate that an investor could earn by parking their money in super-safe government bonds, by its standard deviation, a measure of the return’s volatility.

A ratio above one is considered good. The Sharpe ratio of a double-or-nothing coin flip is negative.

These sorts of calculations are on the minds of Western financiers who have made, or plan to...

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