The Two Sides of Risk | And How to Manage It
Two Quants and a Financial PlannerFebruary 12, 202400:51:25

The Two Sides of Risk | And How to Manage It

We all know risk in investing when we see it. But defining it can be a much bigger challenge. In this episode, we work through the concept of risk from both an investing and financial planning perspective. We discuss the ways to measure it, how active investors can think about it, the importance of considering it in a behavioral context and a lot more.

00:00 - Intro
04:01 - A high level definition of risk
05:28 - Volatility as risk
09:07 - Risk as permanent loss of capital
14:40 - Tracking error and risk in active strategies
21:09 - Helping investors understand risk in active strategies up front
28:29 - The risk an investment strategy will fail
33:33 - The importance of living risk to understand it
38:50 - How risk attitudes from other areas translate to investing
46:26 - Quantifying risk in active investment strategies relative to investor behavior

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