Charles Brandes on risk
From Brandes on Value
Risk has now been popularly redefined as the impact of short-term volatility, not as what it really is, which is the permanent loss of capital. In my more than 40-year career, I have never seen risk as misunderstood yet as overemphasized as it is today, especially in the institutional world. Many people are fixated on reducing short-term volatility, not positioning for long-term growth. In this process, indexing is now taking a front seat, whether because of its perceived cost benefits, its supposed lower risk profile, or someone’s viral idea that active investing just doesn’t get the job done over the long run.