I think the first question that you will face is if you agree with the Efficient Market Hypothesis (EMH) and the random walk. Basically they say that prices reflect all available information and that you cannot "beat" the market (there's a subtle difference between EMH and random walk). The return on an investment is a direct reflection of the risk. Good reading to get an understanding for this are "A Random Walk Down Wall Street" and papers by Eugene Fama (EMH will be covered by any intro to finance book as well). For a good overview of EMH, I like this paper: http://www.cs.ucl.ac.uk/fileadmin/UCL-CS/images/Research_Stu... (http://www.cs.ucl.ac.uk/fileadmin/UCL-CS/images/Research_Student_Information/RN_11_04.pdf) The investment takeaway is that you should invest in passive index funds with low management cost (typically ETFs).…
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