Risk

The reading materials for a meeting of a corporate board on which I sit – and what turned out to be an eight-hour meeting of the audit committee…

It is from the relationship between risk and return that arises the graphic representation that has become ubiquitous in the investment world. It…

According to the academicians who developed Capital Market Theory, risk equals volatility, because volatility indicates the unreliability of an…

Generally, those who equate volatility with risk look to the historic volatility of an asset as the indicator of its future risk. But most of us know…

Underperformance – Let’s say an investment manager knows she can’t get more money from a client no matter how well she does, but she’s sure she’ll…

The bottom line is that investment risk comes in many forms. Many risks matter to some investors but not to others, and they may make a given…

Let’s say someone makes an investment that works out as expected (or better). Does that mean it wasn’t risky? Or let’s say the investment produces…

Casual onlookers rarely see that as a tough question. But like most aspects of investing, the more obvious the answers seem, the less likely they are…

What about illiquidity? Conventional wisdom says liquid investments are safer than illiquid ones. And small holdings are safer than large blocks.…

When the emerging markets melted down in 1998, accompanied by the collapse of Long Term Capital Management and the crisis in Russia, most investors…

First of all, given the inextricable linkage between analyzing a potential investment and assessing its risks, I question whether anyone else can…

What does it mean to intelligently bear risk for profit? I’ll provide an example. In the early 1980s, a reporter asked me, “How can you invest in…

It’s by bearing risk when we’re well paid to do so – and especially by taking risks toward which others are averse in the extreme – that we strive to…