Other than value, can you think of a more misapplied word in investing? Risk is either maligned or worshipped, not unlike volatility, depending on whether it worked out for you or not.
I've heard a lot of definitions for what risk is. The most common measure, beta, is really a measure of volatility vis a vis the market as whole. That seems lacking. Is VaR sufficient? It should go without saying that the ratings of brokerage firms and ratings agencies aren't worth much, but people still manage billions of dollars based on these complicated fictions.
Joe Nocera recently wrote a piece for The New York Times Sunday magazine about risk. It's a good, thought-provoking, well-reported piece, but it didn't help me invest my money better(I must admit that such a lofty goal probably wasn't Mr. Nocera's point).
My point is that risk is a highly personal topic, no matter how you quantify it. I know that it's easy to look to your mutual fund manager or financial advisor to handle risk management, but don't abdicate this important role. You might not like the job they do.
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