Quote for the Week
Risk means more things can happen than will happen, that there is a range of outcomes out there. This is a fancy way of saying we don’t know what’s going to happen, but it’s a good way to think about it. If more things are going to happen than will happen, how large is that range, what are the extremes of it, what are the best kinds — risk means good things as well as bad things…
What’s the upside, what’s the downside? What are the consequences to me if I do something wrong and the outcome is different from what I want, different from what I expect? This is how you begin to think about it. It really kind of begins with this idea, first of all, we don’t know what the future holds. This is — heads always shake up and down when you say that, but we tend to act as though we do know, but we have to keep reminding ourselves, particularly in this business.
Particularly, you only look at the last week’s news, and we don’t know what’s going to happen. So you have to think about where am I placed in relation to the possible range of outcomes and where the surprises might be. — Peter Bernstein (source)
From the Archives
Last Call
- If Electrons Had Feelings… – Judgment Call
- Five Lessons from Edward Chancellor – Excess Returns
- Lessons from the Original Tech Bubble – New Yorker
- Can Supply and Demand Predict the Stock Market? – Of Dollars and Data
- You Have to Be Right Twice – Spilled Coffee
- What a New Study Reveals About Sports Betting and Your Finances – L. Swedroe
- How to Earn a Billion Dollars – P. Graham
- The End Isn’t Nigh – The Imperfectionist
- Reality Is Joking About U – Hopeful Monsters
- The Atlas Behind the Revolution – JSTOR Daily