This chapter explores financial market history. Such a history lesson is useful because it tells us what to expect in the way of returns from risky assets. We summarized our study of market history with two key lessons:

1. Risky assets, on average, earn a risk premium. There is a reward for bearing risk.
2. The greater the potential reward from a risky investment, the greater is the risk.

When we put these two lessons together, we concluded that there is a risk-return trade-off: The only way to earn a higher return is to take on greater risk.