positive skewness of a return distribution

would have frequent small loss and a few large gain… why not : frequent small gain and a few large gain… I am confused about the term “loss”, I think it should be “gain” anyone can help me?

Positive skewness means that the tail is on the right side, therefore few large gains and the “hill” is on the left side (so negative side) with MANY small losses. It’s called small, because the frequent losses are situated close to the mean. Whereas the few LARGE gains are ouliers (only a few) but massive to the right placed points. for your question why not "FREQUENT SMALL GAIN AND A FEW LARGE LOSSES) that would be the definition of NEGATIVE SKEWNESS OF A RETURN DISTRIBUTION. I would suggest you take a look at the graphs of skewness it would help. I hope I got it right.

"frequent small loss and a few large gain… " = positive skew "frequent small gain and a few large gain… " = positive skew, also. I like my investmets in the latter category, if possible. An example of the first is buying cheap OTM calls. Usually, you just lose your premium but sometimes you strike it rich. An example of the second is shucking oysters. Usually, you get to sell an appetizer but once in awhile you find a pearl.

vanessa Wrote: ------------------------------------------------------- > I am confused about the term “loss”, I think it > should be “gain” This is a pretty important concept in investment.

Vanessa asked me to pass on a message: “Bite me”

thanks Joey. I think you understood my question perfectly. it almost like small gain is a bit better than small loss…but similar…correct? I have no background of finance hence all these “linguistic” questions. JoeyDVivre Wrote: ------------------------------------------------------- > "frequent small loss and a few large gain… " = > positive skew > "frequent small gain and a few large gain… " = > positive skew, also. > > I like my investmets in the latter category, if > possible. An example of the first is buying cheap > OTM calls. Usually, you just lose your premium > but sometimes you strike it rich. An example of > the second is shucking oysters. Usually, you get > to sell an appetizer but once in awhile you find a > pearl.

I am more like :" sue me" lol…ya ya ya…I failed my last exam…now I am on CFA green books instead of schwizer…I regret I didn’t do that earlier…cuz I found out i had so many things I could have understood, while with schwizer, I could at best memorize it. chrismaths Wrote: ------------------------------------------------------- > vanessa Wrote: > -------------------------------------------------- > ----- > > I am confused about the term “loss”, I think it > > should be “gain” > > This is a pretty important concept in investment.

vanessa Wrote: ------------------------------------------------------- > thanks Joey. I think you understood my question > perfectly. it almost like small gain is a bit > better than small loss…but similar…correct? > Small gains much better than small losses. Finance is all about taking alittle crumb of the golden cake and building your pile of crumbs.