Relatedly, an investment strategy may produce frequent small gains but have the potential for infrequent but extremely large losses. Such a strategy is sometimes described as picking up coins in front of a bulldozer; for example, some hedge fund strategies tend to produce that return pattern. Calculated over a period in which the strategy is working (a large loss has not occurred), this type of strategy would have a high Sharpe ratio. In this case, the Sharpe ratio would give an overly optimistic picture of risk-adjusted performance because standard deviation would incompletely measure the risk assumed. Therefore, before applying the Sharpe ratio to evaluate a manager, we should judge whether standard deviation adequately describes the risk of the manager’s investment strategy.