Quotes & Sayings About Investment Risk

Risk managers and investment bankers and actually, all kinds of investors took on more risk than they expected. So there was a failure of risk management. There was a failure to recognize how much risk there was in some of these securities that people bought. — Robert F. Engle

Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That's what people should be concerned with in their investment decisions and not with whether they can pick stocks, pick winners and losers among the various managers delivering basically the same product. — Eugene Fama

As a country with experience of coping with earthquakes, tsunamis and other natural disasters, Japan believes in emphasizing the mainstreaming of disaster risk reduction. We therefore prioritize investment in disaster prevention and post-disaster improvements under a policy of Build Back Better (BBB). — Shinzo Abe

In the financial world, risk translates to uncertainty. It's measured by "standard deviation from the norm" -- in other words, it's measured by how much the returns swing up and down. Says King, "Most individuals measure risk as their chance of loss, but we measure risk by the variability of returns. — Kathy Kristof

Below, we itemize some of the quite different lessons investors seem to have learned as of late 2009 - false lessons, we believe. To not only learn but also effectively implement investment lessons requires a disciplined, often contrary, and long-term-oriented investment approach. It requires a resolute focus on risk aversion rather than maximizing immediate returns, as well as an understanding of history, a sense of financial market cycles, and, at times, extraordinary patience. — Seth Klarman

I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where you buy and sell. — Tom Basso

No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the "margin of safety" - never overpaying, no matter how exciting an investment seems to be - can you minimize your odds of error. — Benjamin Graham

Eventually private enterprise will be able to send people into orbit, but I suspect initially it's going to have to be with NASA's help. Whether it's going to be a consortium or one entity remains to be seen. I could be wrong. I could be one of the old fogies! Rocket science is tough, and rockets have a way of failing. It happens. A company has to be willing to bear the risk of its rocket failing. It's a very large capital investment. — Sally Ride

Investment decision should be made on the basis of the most probable compounding of after-tax net worth with minimum risk. — Warren Buffett

We understand that you have to create an environment where that those men and women who are entrepreneurs can risk their capital and have an opportunity to get a return on their investment. That's how jobs are created. And that's what Americans are looking for, is that type of vision. — Rick Perry

most important distinction in the investment world does not separate individuals and institutions; the most important distinction divides those investors with the ability to make high quality active management decisions from those investors without active management expertise. Few institutions and even fewer individuals exhibit the ability and commit the resources to produce risk-adjusted excess returns. — David F. Swensen

the higher returns of the largest endowments are not due primarily to greater risk taking but to a more sophisticated investment strategy that consistently produces better results. — Thomas Piketty

Our present tax system ... exerts too heavy a drag on growth ... It reduces the financial incentives for personal effort, investment, and risk-taking ... The present tax load ... distorts economic judgments and channels an undue amount of energy into efforts to avoidtaxliabilities. — John F. Kennedy

It is interesting that the investment industry has invented new ways to lose money when the old ways seemed to work just fine. — John G. Stumpf

Women take a much larger risk, evolutionarily speaking, when they have sex. Sex is also a much larger investment for women than it is for men. For this reason, women have emotional circuitry designed to take this into account. For example, women tend to experience much more anxiety just prior to sex with a new lover. — Mystery

A good starting point [in the measurement of investment risk] is the preservation and enhancement of your purchasing power in real terms. — David Dreman

A realistic definition of risk recognizes the potential loss of capital through inflation and taxes, and would include at least the following two factors: The probability that the investment you chose will preserve your capital over the time you intend to invest your funds. The probability the investments you select will outperform alternative investments for this period. — David Dreman

The purpose of diversification is so that when one investment goes down or is not doing well, you are insulated from the result because of the others you have in place. In a job or career, most of us are trying to specialize so much so that we've ended up with all of our eggs in the same basket. That's not managing risk at all. That's putting yourself at risk. - Chris Lutz — Chris Lutz

I never advise friends to put money in anything,. said Danny. 'It's a no-win situation - if they make a profit they forget that it was you who recommended it, and if they make a loss they never stop reminding you. My only advise would be not to gamble what you can't afford, and never to risk an amount that might cause you to lose a night's sleep — Jeffrey Archer

While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology. — Seth Klarman

J.P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked, 'What should I do about my stocks?' Morgan replied, 'Sell down to your sleeping point' Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well. High investment rewards can only be achieved at the cost of substantial risk-taking. So what is your sleeping point? Finding the answer to this question is one of the most important investment steps you must take. — Burton Malkiel

There are a lot of ways that investment banking models work, but these risks are not internalized by the people that are taking them. — Robert F. Engle

Investment is crucial. Because the truth is, you only get jobs and growth in the economy when people invest money, at their own risk, in setting up a business or expanding an existing business. — John Key

The extent to which beliefs are based upon evidence is very much less than believers suppose. Take the kind of action which is most nearly rational: the investment of money by a rich City man. You will often find that his view (say) on the question whether the French franc will go up or down depends upon his political sympathies, and yet is so strongly held that he is prepared to risk money on it. — Bertrand Russell

Maybe we should teach schoolchildren probability theory and investment risk management. — Andrew Lo

We are not so brazen as to believe that we can perfectly calibrate valuation; determining risk and return for any investment remains an art not an exact science — Seth Klarman

Uncertainty is seen to retard investment independently of considerations of risk or expected return. — Ben Bernanke

He gave a talk in which he argued that the way they measured risk was completely idiotic. They measured risk by volatility: how much a stock or bond happened to have jumped around in the past few years. Real risk was not volatility; real risk was stupid investment decisions. — Michael Lewis

It's the investor who is risky, not the investment. — Robert Kiyosaki

Warren Buffett likes to say that the first rule of investing is "Don't lose money," and the second rule is, "Never forget the first rule." I too believe that avoiding loss should be the primary goal of every investor. This does not mean that investors should never incur the risk of any loss at all. Rather "don't lose money" means that over several years an investment portfolio should not be exposed to appreciable loss of principal. — Seth Klarman

Any investment bought via credit always runs the risk of margin calls and, eventually, liquidation. — Barry Ritholtz

The risk of an investment is described by both the probability and the potential amount of loss. The risk of an investment-the probability of an adverse outcome-is partly inherent in its very nature. A dollar spent on biotechnology research is a riskier investment than a dollar used to purchase utility equipment. The former has both a greater probability of loss and a greater percentage of the investment at stake. — Seth Klarman

The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital ... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy. — John F. Kennedy

Kindness is not about instant gratification. More often, it's akin to a low-risk investment that appreciates steadily over time. — Josh Radnor

Rather, risk is a perception in each investor's mind that results from analysis of the probability and amount of potential loss from an investment. If an exploratory oil well proves to be a dry hole, it is called risky. If a bond defaults or a stock plunges in price, they are called risky. But if the well is a gusher, the bond matures on schedule, and the stock rallies strongly, can we say they weren't risky when the investment after it is concluded than was known when it was made. — Seth Klarman

The best investment with the least risk and the greatest dividend is giving. — John Templeton

Loving someone can be hard at times. You risk a lot when you love - your heart and soul, at the least. Love is the most important and most rewarding investment you can make in another person. — J.E.B. Spredemann

As the industry has matured, real estate has become a very accepted investment. Institutions have used core investments to get comfortable with real estate as an asset class, and now that they're comfortable they're moving up the risk spectrum. — Richard Price

Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as in the fall of 2008 - drives securities prices to especially low levels, they often become less risky investments. — Seth Klarman

Urban America has been redlined. Government has not offered tax incentives for investment, as it has in a dozen foreign markets. Banks have redlined it. Industries have moved out, they've redlined it. Clearly, to break up the redlining process, there must be incentives to green-line with hedges against risk. — Jesse Jackson

There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong. — Seth Klarman

Where you want to be is always in control, never wishing, always trading, and always first and foremost protecting your ass. That's why most people lose money as individual investors or traders because they're not focusing on losing money. They need to focus on the money that they have at risk and how much capital is at risk in any single investment they have. If everyone spent 90 percent of their time on that, not 90 percent of the time on pie-in-the-sky ideas on how much money they're going to make, then they will be incredibly successful investors. — Paul Tudor Jones

Our goal is not to produce immediate results. We've been tasked with producing long-term results. That means that there's more risk in any individual thing we take on. But we still aspire to a strong return on investment. — Astro Teller

The way I see it, gold is headed over $1000 an ounce, probably much higher. At anywhere near current prices, it's the lowest risk, highest potential investment I can think of. — Doug Casey

We like investments where the risk is time, not price. — Richard Chandler

Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management. — Benjamin Graham

A crowdfunding investment involves a risk. You should not invest any funds in this offering unless you can afford to lose your entire investment." All that is required by Section — Douglas Slain

The evidence is inarguable that Australia is becoming too expensive and too uncompetitive to do export-oriented business. Africans want to work, and its workers are willing to work for less than $2 per day. Such statistics make me worry for this country's future. We are becoming a high-cost and high-risk nation for investment. — Gina Rinehart

Now, it has been independently shown that people hate to lose something more than they enjoy gaining it. For example, they don't mind paying for something with a credit card even when told there is a discount for cash, but they hate paying the same amount if they are told there is a surcharge for using credit. As a result, people will often refuse to gamble for an expected profit (they turn down bets such as "Heads, you win $120; tails, you pay $100), but they will gamble to avoid an expected loss (such as "Heads, you no longer owe $120; tails, you now owe an additional $100"). (This kind of behavior drives economists crazy, but is avidly studied by investment firms hoping to turn it to their advantage.) The combination of people's loss aversion with the effects of framing explains the paradoxical result: the "gain" metaphor made the doctors risk-averse; the "loss" metaphor made them gamblers. — Steven Pinker

We cannot rely on trial-and-error approaches to deal with existential risks ... We need to vastly increase our investment in developing specific defensive technologies ... We are at the critical stage today for biotechnology, and we will reach the stage where we need to directly implement defensive technologies for nanotechnology during the late teen years of this century ... A self-replicating pathogen, whether biological or nanotechnology based, could destroy our civilization in a matter of days or weeks. — Ray Kurzweil

We need a president that is sitting down, getting Americans to work, getting this economy going. That is the single most important thing that the president of the United States does, is create a climate where job creators know that they're going to be able to risk their capital and have a chance to have a return on the investment. And it's never too late to start that. — Rick Perry

Unlike return, however, risk is no more quantifiable at the end of an investment that it was at its beginning. Risk simply cannot be described by a single number. Intuitively we understand that risk varies from investment to investment: a government bond is not as risky as the stock of a high-technology company. But investments do not provide information about their risks the way food packages provide nutritional data. — Seth Klarman

Every time in this century we've lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down. — Jack Kemp

When you say ROI, do you mean return on investment or risk of inaction. — Paul Gillin

Smart Risk will shatter the emotional myths to investing and help Canadians see the opportunities in today's volatile market. — Maili Wong

Men are hard-wired for risk taking - particularly young men. The number one killer of fifteen- to twenty-four-year-old males is accidents.6 Female investors hold less risky investment portfolios than their male counterparts and generally take fewer chances with their money.
Churches need men because men are natural risk takers - and they bring that orientation into the church. Congregations that do not take risks atrophy. Jesus made it clear that risk taking is necessary to please God. In the parable of the talents, the master praises two servants who risked their assets and produced more, but he curses the servant who played it safe. He who avoids all risk is, in the words of Jesus, "wicked and lazy". — David Murrow

The essence of investment management is the management of risks, not the management of returns. — Benjamin Graham

There is always risk involved. You can't be a capitalist only when there are investment profits but then a socialist when you experience losses. — Cristina Kirchner

[High income tax rates] not only check consumption but discourage investment and encourage ... the avoidance of taxes [rather] than the production of goods.[ ... ]Our present tax system ... reduces the financial incentives for personal effort, investment, and risk-taking. — John F. Kennedy

I think Barack Obama is a socialist. I think he cares for his country - don't get me wrong about that - but I think he truly misunderstands what this country was based upon, the values that America was based upon, which was free enterprise and having the ability to risk your capital and having a chance to have a return on your investment. — Rick Perry

Targeting investment returns leads investors to focus on potential upside rather on downside risk ... rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk. — Seth Klarman

From a strictly economic point of view, buying gold in a major inflation and holding it probably presents the least risk of capital loss of any investment or speculation. — Henry Hazlitt

The biggest profit center for investment banks is the hefty fees they charge for underwriting stock offerings and giving financial advice, and analysts put those profits at risk if they publish negative conclusions about the companies that pay the fees. — Alex Berenson

The nature of risk may be the single most important argument for the use of quantitative analysis in investment management. Neither Investors nor Analysts can be blamed for this fact. Nor can Harry Markowitz. Nature made risk a quadratic function. Markowitz only discovered it. — William Sharpe

It's important to understand how people perceive risk, and how that translates into investment behavior. — Andrew Lo

That's no doubt why Google took the lead in an astonishingly large $542 million investment round in Magic Leap last October. Whatever it is cooking up has a good chance of being one of the next big things in computing, and Google would be crazy to risk missing out. The investment looked especially prescient in January, when Microsoft revealed plans to release a sleek-looking headset this year. HoloLens, which lets you interact with holograms, sounds as if it's very similar to what Magic Leap is working on. — Anonymous