Risk means more things can happen than will happen
- Elroy Dimson
I love this simple attempt to describe risk.
Riskier investments absolutely cannot be countED on to deliver higher returns. Why not? It's simple: if riskier investments reliably produced higher returns, they wouldn't be riskier!
- Howard Marks
Riskier assets should provide the prospect for higher returns or higher expended returns, but those returns do not have to materialize. Riskier assets should provide a higher expected returns, the chance for lower returns and the opportunity for loses.
There are many kinds of risk.. But volatility may be the least relevant of them all. "I need more upside potential because I'm afraid I could lose money" makes an awful lot of sense than "I need more upside potential because I'm afraid the price may fluctuate."
-Howard Marks
The risk-is-gone myth is one of the most dangerous sources of risk and major contributor to any bubble.
-Howard Marks
Their increasing confidence [investors] creates more that they should worry about, adjust as their rising fear and risk aversion combine to widen risk premiums at the same time as they reduce risk. I call this the "perversity of risk".
-Howard Marks
You need comfort that the … risks and exposures are understood, appropriately managed, and made more transparent for everyone… this is not risk aversion; it is risk intelligence.
-Rick Funston
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