No Risk

Assume you hedge away all risk all the time by hedging some risky assets with a perfect hedge in derivatives. Assume that this hedge works perfectly as assumed. (for example delta hedging to remove all risk all the time works poorly in practice, but that is not my point this time).

Do this mean you have No Risk. Not at all, well only if you like to eat, drink and take your daily bath in dollar bills and coins.

The true meaning of No Risk is the topic of my latest column article:

"The Illusion of Risk-Free and the Deeper Meaning of Risk-Neutral Valuation” Wilmott Magazine (September):

There is actually several indications that our grandparents and parents know/knew more about how to minimize risk than finance professor specializing in Risk-neutral valuation, it is all in my article.