Pankaj Mani
Looking into account the Quantum Human Behavioral Psychological aspects into the Classical Metrics of Risk, there is need for a New Metric that truly measures the Risk-Return Figure of Investment.
Human Behavior and Psychology are extremely important aspects how an investor feels happiness out of his investment and must incorporate the stress level involved in the current age. Unfortuantely, those are not taken into account in the conventional system of investment world. Human well being is often ignored while trying to maximize the highest risk-adjusted return.We can see why this is important from Nobel Laureates e.g. Daniel Kahneman, Angus Deaton and my own research works on Psychology in Real Human Behavior.
Conventional metrics of simply calculating Risk-Return in the absolute classical way for all, needs to be modified as the Perspective of Risk-Return is a Quantum Phenomenon for different Investors Relatively. In the classical definitions of Risk-Return, the hidden Quantum Human Behavioral Stress Level is often ignored but that’s extremely important for happiness level of an investor at biological mind level.
Keeping into view these different aspects of investment, which are practically very significant, we propose new Quantum Behavioral Metrics of Risk that maximizes the happiness level of an investor by achieving risk-return while managing the hidden stress level to achieve that..
We believe that in order to maintain a healthy balance between risk-return and the mindfulness happiness of an investor, stress factor is extremely important that must be taken into account. This has scientific reason because just having more and more risk-adjusted return may not bring overall maximization of happiness and mindfulness to an investor’s quantum mind because of the hidden aspects like stress, feeling of pain, anxiety..
Hence, based on the above practical points, we propose a new simple Metric that should be maximized while making investments whether in financial markets or otherwise in life rather than just the Numerator part as often conventionally done..
SARR : Stress Adjusted Risk-Return =
Risk-Return Achieved / Stress Level to achieve that Risk-Return.
SARR should be calculated for different choices Relatively not Absolutely as done in Relative Valuation Approach to make better decision making.Stress Level Numbers can be assigned relatively to different choices for quantitative analysis.
