How to cope with volatility
A high volatility 5-to-10-year return stream that might see several 30% drawdowns on the way to a superb 10 year record
risk
My thoughts on asset allocation
They looked at the allocation between stocks, bonds and cash. They found that over 95 percent of the funds’ returns came from their asset allocation.
Let’s clear up misunderstandings about risk and volatility
A risky investment may be volatile, but not every volatile investment is risky.
How much riskier are stocks than bonds?
In such an environment, many investors actually consider investments they are making are low risk when, in fact, they are higher risk.
Let’s cut to the heart of how risk and uncertainty impact diversification
Diversification is inadequate as a risk management technique and too primitive for the new environment of volatility and uncertainty.
The joy of higher return with no more risk
If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying
Many investors just don’t understand the risk/reward trade-off
Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain.
The great investors and extreme volatility
Be prepared financially and psychologically to live through a series of bull markets and bear markets because in the long run common stock will pay off enormously and the next bull market will carry prices far higher than this one
The psychology of risk
Risk aversion is an unwillingness to take on a risk in spite of the fact that the reward amply justifies the risk taken
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