I’ve posted Entry #139 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Our Mixed-Up Ideas About Stock Investing Risk.
Juicy Excerpt: No one deliberately tries to drive in a risky manner.
No one starts out a school year saying “I want to risk getting an “F” this semester, so I am going to try to get in the habit of never doing homework.”
No football player practices how to drop the football with the aim of increasing the risk of a turnover.
It drive me crazy that Buy-and-Hold investors describe how investing works in such a manner as to suggest that risk is a good thing. They tell investors that stocks pay high returns because they are a risky asset class. The clear suggestion is that taking on risk is inherently a good thing.
The idea of an effective investing strategy is to avoid risk.