Capital Efficiency Matters If you care about long-term CAGR, you actually want volatility. Volatility means your money is working harder per unit of funding. I asked grok to compare simulated returns on two hypothetical investment strategies: 1) Sharpe Ratio = 1, volatility = 20% 2) Sharpe Ratio = 2.5, volatility = 5% Everyone thinks strategy 2 is better, and its certainly easier to hold and harder to build. But after 10 years you are between 80-90% likely to have made more money with strategy 1 than with strategy 2, depending on how correlated they are. (The more correlated their returns streams between 1 and 2, the lower the volatility of the diff, and therefore more likely you are to do better with 1) The challenge, of course, is risk managing the left tail, which is considerably easier to do with strategy (2). And TOO much volatility nearly guarantees permanent capital destruction, so you need a judicious approach. Too much leverage is a really terrible idea. Still, the point stands - for many investors it makes sense to make your money work harder by being willing to warehouse the fluctuations arising from a judicious application of dynamic leverage. This is one obvious path to better CAGR... *if* you can withstand the noise. Some nice charts from grok.