Seth klarman’s thought on risk
. Foremost principal of operations is always maintain a high degree of risk aversion.
.Rule#1 : Don’t loose money . Rule #2 Don’t forget Rule #1
. Limit bets only those situations which have a probability of winning that is well above 50% & in which the downside is limited.
.Cash is the ultimate risk aversion
.using Beta & volatility to measure risk is nonsense
. Average down – as stock fall ,the risk is lower
.Targeting investment return shifts the focus from downside risk to potential upside.
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