How do assess risk versus reward in stocks/funds before investing? One measure of risk.

The long-term data show that although the stock market has generated fairly steady returns over the years, there have been periods of considerable variability, and therefore, risk for the investor. To quantify this risk, several measures are commonly utilized. One of them is the Standard Deviation (SD). I will briefly examine the rest over the next few postings. 
Standard deviation is a measure of the range of an investment’s return or the scatter of a set of numbers over a period of time. For instance, Bernstein estimates the SD for Cash: 2-3 percent; for Bonds: 3-5 percent; for conservative domestic stocks: 10-14 percent; for Foreign stocks: 15-25 percent; and for emerging market stocks: 25-35 percent. The standard deviation as used in mutual funds signifies the deviation of the returns from the expected normal returns. Most mutual-fund rating companies, including Morningstar, list the standard deviation of annual returns for the past five years or 10 years for rated mutual funds. A portfolio of 100-percent foreign stocks had a much greater risk (standard deviation of 22) with a better return than domestic stocks with a standard deviation of 16. A mix of 50-percent domestic and 50-percent foreign stocks was expected to have a return of 15 percent, but with reduced risk (standard deviation of 14). 
So, the next time you look at your portfolio look at the SD for mutual funds or even your entire portfolio to give you some idea where you stand in terms of risk versus reward.