---
entity_slug: common_returns_of_stock
evaluator: null
evaluated_at: '2026-02-23T05:00:51.959132'
overall_score: 4.2
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly distinguishes "common returns" as typical/average
    profits under normal conditions, with the specific criterion that they should
    compensate for losses plus provide surplus profit comparable to insurance returns.
    This creates a precise, measurable concept rather than a vague umbrella term.
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This concept is directly grounded in Smith's analysis in Book I, Chapter
    10, where he explicitly discusses how different trades should offer returns that
    compensate for their risks and uses this to analyze market efficiency. The smuggling
    example cited is authentic to Smith's text.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: '"Distribution" is the correct domain placement, as this concept deals
    with how profits are allocated across different employments of capital and what
    constitutes fair compensation for risk. This is fundamentally about the distribution
    of returns rather than production or exchange mechanisms.'
- name: vsm_relevance
  value: 3.0
  max_value: 5.0
  rationale: This concept has moderate VSM relevance, primarily mapping to S4 (intelligence/environmental
    adaptation) as it involves market intelligence about risk assessment and adaptation
    to varying risk environments. However, it's somewhat abstract and doesn't clearly
    belong to operational systems.
- name: explanatory_value
  value: 4.0
  max_value: 5.0
  rationale: This entity provides significant explanatory power by illuminating the
    mechanism of risk compensation in markets and revealing structural inefficiencies
    (systematic underpricing of risk). It goes beyond surface description to explain
    why certain trades have higher bankruptcy rates despite higher nominal returns.
---

# Evaluation: Common Returns Of Stock

## definition_precision — 4.0 / 5.0

The definition clearly distinguishes "common returns" as typical/average profits under normal conditions, with the specific criterion that they should compensate for losses plus provide surplus profit comparable to insurance returns. This creates a precise, measurable concept rather than a vague umbrella term.

## source_grounding — 5.0 / 5.0

This concept is directly grounded in Smith's analysis in Book I, Chapter 10, where he explicitly discusses how different trades should offer returns that compensate for their risks and uses this to analyze market efficiency. The smuggling example cited is authentic to Smith's text.

## domain_placement — 5.0 / 5.0

"Distribution" is the correct domain placement, as this concept deals with how profits are allocated across different employments of capital and what constitutes fair compensation for risk. This is fundamentally about the distribution of returns rather than production or exchange mechanisms.

## vsm_relevance — 3.0 / 5.0

This concept has moderate VSM relevance, primarily mapping to S4 (intelligence/environmental adaptation) as it involves market intelligence about risk assessment and adaptation to varying risk environments. However, it's somewhat abstract and doesn't clearly belong to operational systems.

## explanatory_value — 4.0 / 5.0

This entity provides significant explanatory power by illuminating the mechanism of risk compensation in markets and revealing structural inefficiencies (systematic underpricing of risk). It goes beyond surface description to explain why certain trades have higher bankruptcy rates despite higher nominal returns.
