The future is always unclear, and therein lies the chief source of risk in the investment challenge. The degree of risk isn’t continuously steady. It ebbs and flows, like market prices and the careers of Hollywood actors.
The fact that risk levels are dynamic suggests a connection. But our ability to model the connection and draw lessons is limited. In fact, at some points the relationship between risk and expected return is especially foggy.
This is one of those times, a state of affairs that creates unusually large opportunities and equally above-average risk. As such, all the usual caveats, and then some apply. Yet recognizing this condition is the first step toward exploiting the opportunity and/or defending oneself against the higher risk.