Read: Head to head: What’s riskier right now: investments in private equity or public equity?

The first lesson is to avoid outsized allocations to an investment, market segment or asset class because investing will always involve unpredictable risk. In 2015, few would have imagined that a decade after the Paris climate conference, the U.S. would withdraw from the agreement and the head of the Environmental Protection Agency would champion regulations with the aim of “driving a dagger through the heart of climate-change religion.”

A decade ago, the Federal funds rate sat at 0.11 per cent, but by 2022 it was 5.5 per cent — after the fastest and most aggressive tightening cycle in decades. Toronto’s office market also quickly reversed course in recent years: Class A vacancy rates reached a decades‑low of 1.8 per cent in 2018 and then climbed to 15.6 per cent by 2024. And in 2015, when Nvidia was still a $20‑billion gaming‑focused company, no one could have seen it becoming the world’s most valuable public company by 2025, with a valuation of roughly $5 trillion.

Big bets expose investors to the risk of significant underperformance if they end up on the wrong side of such dramatic changes. This........

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