Howard Marks of Oaktree Capital has written the best explanation of investing risk I have ever come across in one of his Memos - Risk Revisited Again (the title revealing that he has refined and revised and expanded his exposition over many years and much hard reflection with much hard experience to inform him). The point of view is very practical as opposed to the academic theoretical approach and the writing is very readable for the DIY investor. That means he looks at risk in all its many facets and subtle but important nuances (24 different kinds of risk!), as opposed to the single volatility measure academics and regulators so love.
I sure wish regulators like the CSA and the OSC would come to grips with this stuff instead of lazily opting for the misleadingly simplistic use of price volatility for classifying the riskiness of mutual funds.
Saturday, 19 December 2015
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