Howard Marks：Risk, Excerpt 3

According to the academicians who developed Capital Market Theory, risk equals volatility, because volatility indicates the unreliability of an investment. I take great issue with this definition of risk. It’s my view that – knowingly or unknowingly – academicians settled on volatility as the proxy for risk as a matter of convenience. They needed a number for their calculations that was objective and could be ascertained historically and extrapolated into the future. Volatility fits the bill, and most of the other types of risk do not. The problem with all of this, however, is that I just don’t think volatility is the risk most investors care about.

Source： https://www.oaktreecapital.com/docs/default-source/memos/2006-01-19-risk.pdf
Locator：Memo, excerpt 3 · Verified：2026-10-19 · Verification：Short excerpt

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