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  • Mark December 2018
Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Mark Hulbert: However You’re Defining Risk In This Scary Stock Market — You’re Probably Wrong

TedTed
in Fund Discussions
FYI: Risk is really how much portfolio volatility you can live with.

When is a 10% gain considered riskier than a 10% loss? When the 10% loss is produced when the broad stock market lost 20%, and the 10% gain occurred when the market rose 20%.

Why does that follow? Because, as defined by some financial advisers and other investment professionals, risk relates to lagging the market — “negative alpha,” in technical-speak.

You might think that it’s absurd to consider a 10% gain as being riskier than a 10% loss. But that just means you’re using a different definition of risk: The possibility of loss.

Welcome to the complicated world of defining risk.
Regards,
Ted
https://www.marketwatch.com/story/however-youre-defining-risk-in-this-scary-stock-market-youre-probably-wrong-2018-12-04/print

Comments

  • MarkMark
    Great quote from the article by Benjamin Graham. In his investment classic "The Intelligent Investor", he wrote that “the best way to measure your investing success is not by whether you’re beating the market, but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

    The plan is where it's at as far as I'm concerned. FWIW - no one plan fits all.
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