Some thoughts on “RISK”

Hello everyone – It’s been quite a while since I have posted anything. Two of my very close school friends got married recently. I guess a friend’s wedding is a great escape for a good vacation and a reunion of school buddies.

I am currently reading this amazing book written by Howard Marks – “The Most Important Thing”. I believe Howards’s core DNA of Investments is built around recognizing, assessing and managing risks.

How Howard defines Risk  – Risks means more things can happen than will happen. 

AND

When somebody asked Howard, What is an experience? – Experience is what you got when you didn’t get what you wanted

In light of current corrections in the Mid Caps and Small caps, I believe it’s worth spending some time thinking about this quote and revisiting some of the classical stories which are being beaten down by the market.

“The received wisdom is that risk increases in the recessions and falls in booms. In contrast, it may be more helpful to think of risk as increasing during upswings, as financial imbalances build-up, and materializing in recession.”

Also, for those who believe – “Quality at ANY Price”. Again a quote from the same book:

“Investors think quality, as opposed to price, is the determinant of whether something’s risky. But high-quality assets can be risky, and low-quality assets can be safe. It’s just a matter of the “price paid for them”... Elevated popular opinion, then, isn’t just the source of low return potential, but also of HIGH RISK.

Have a great Sunday!


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