Sublime

Back in 1966, a goateed Stanford professor named Bill Sharpe developed a formula that has since become as common in investment-speak as RBIs are in baseball-speak. The formula looks like this:

The risk-free rate is simply the return of Treasury bills. A higher Sharpe ratio is better, and a good rule of thumb is that risky asset classes have Sharpe ratios that cluster around the 0.20 to 0.30 range.