Market Risk Quotes & Sayings

If you roll dice, you know that the odds are one in six that the dice will come up on a particular side. So you can calculate the risk. But, in the stock market, such computations are bull - you don't even know how many sides the dice have! — Nassim Nicholas Taleb

We were taking out mortgages we couldn't afford because they were camouflaged to look as if we had a reasonable chance of paying them back. Banks then changed the bankruptcy laws so that we could not get out of our obligations once the rates changed. Lastly, they sold us back our own mortgages, shifting back to us any of the risk through our money-market accounts and pension funds. — Douglas Rushkoff

Consider the clinicaltrials by which drugs are tested in human subjects.5 Before a new drug can enter the market, its manufacturer must sponsor clinicaltrials to show the Food and Drug Administration that the drug is safe and effective, usually as compared with a placebo or dummy pill. The results of all the trials (there may be many) are submitted to the FDA, and if one or two trials are positive - that is, they show effectiveness without serious risk - the drug is usually approved, even if all the other trials are negative. — Marcia Angell

The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike. — George Soros

If we didn't have greed, market economies wouldn't be as innovative as they are. But in my view, greed has to be contained by the fear of losses, so there has to be a system where, if you take too much risk, you go into bankruptcy. You don't systematically bail out people who take excessive risks. — Nouriel Roubini

Americans have always pursued our dreams within a free market that has been the engine of our progress. It's a market that has created a prosperity that is the envy of the world, and rewarded the innovators and risk-takers who have made America a beacon of science, and technology, and discovery. But the American economy has worked in large part because we have guided the market's invisible hand with a higher principle - that America prospers when all Americans can prosper. That is why we have put in place rules of the road to make competition fair, and open, and honest. — Barack Obama

Fair value and change are therefore two sides of the same coin; the more ways in which a security can lose value from a future market move, the less it should rationally be worth today, and hence the mantra: more risk, more return. This difference between the quant's view of value as an average versus the trader's need to worry about any change makes this kind of professional cross-communication difficult. Tour — Emanuel Derman

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

However, if one has been playing the buy-and-hold game with quality securities, one has been exposed to a substantial amount of market risk because the valuations placed on these securities have implied overly rosy scenarios prone to popular revision in times of more realistic expectation. This is one of those times, but it is my feeling that the revisions have not been severe enough, the expectations not yet realistic enough. Hence, the world's best companies largely remain overpriced in the marketplace. — Michael Burry

Money you know you need or want to spend in the next few years is savings. Money you keep handy for an emergency belongs in savings. Money you hope to use soon for a down payment on a house belongs in savings. And all savings belong in a low-risk bank savings account or money market account. — Suze Orman

A gambler must think of three main quantities, stake, odds, and prize. If the prize is very large, a gambler is prepared to risk a big stake. A gambler who risks his all on a single throw stands to gain a great deal. He also stands to lose a great deal, but on average high-stake gamblers are no better and no worse off than other players who play for low winnings with low stakes. An analogous comparison is that between speculative and safe investors on the stock market. In some ways the stock market is a better analogy than a casino, because casinos are deliberately rigged in the bank's favour (which means, strictly, the high-stakes players will on average end up poorer than low-stake players; and low-stake players poorer than those who don't gamble at all. — Richard Dawkins

Outperforming the market with low volatility on a consistent basis is an impossibility. I outperformed the market for 30-odd years, but not with low volatility. — George Soros

Today the strategies of many companies in the real estate industry are premised on low interest rates, an assumption that has resulted in the rapid expansion of the real estate securitization business. This trend could be regarded as a risk factor, as it exposes the real estate sector to at least three potential problems: first, interest rate hikes; second, revisions to securitization business accounting standards; and third, overheating in the real estate market. — Akira Mori

If you don't want my services, then it's only fair you cut me loose so I can make another girl or two happy this summer. Or three." He shifts my papers into a neater pile.
"What will they do once I take you off the market?" I ask. "I can only imagine the poor girls wandering around like a lost herd of sheep all summer, wondering where you went." I risk another glance at the staring girls and shudder. "Do they even blink? Baa. Baa. Baa. — Anne Eliot

Books can create a depth of story, a background of information and ideas, that televison and movies can't. Sure, the television shows may shock, but only on a superficial level. They'd never risk market share to really explore the issues. They report, but don't analyze or suggest any new ways for living our lives. — Chuck Palahniuk

Back in the 1980s, the original stated purpose of the mortgage-backed bond had been to redistribute the risk associated with home mortgage lending. Home mortgage loans could find their way to the bond market investors willing to pay the most for them. The interest rate paid by the homeowner would thus fall. The goal of the innovation, in short, was to make the financial markets more efficient. Now, somehow, the same innovative spirit was being put to the opposite purpose: to hide the risk by complicating it. The market was paying Goldman Sachs bond traders to make the market less efficient. — Michael Lewis

I believe that the banks and the financial services industry take more than their fair share of our profits by using unfair business tactics. It now appears that our entire financial system has taken far more risk than is warranted by its capital structure and that this will lead to a market crash affecting economies worldwide. Gordon L. Eade — Kenneth Eade

It's bad enough that you have to take market risk. Only a fool takes on the additional risk of doing yet more damage by failing to diversify properly with his or her nest egg. Avoid the problem-buy a well-run index fund and own the whole market. — William J. Bernstein

Stock market risk is ok, but not for Social Security. — Barack Obama

However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty. — Daniel Kahneman

It was Greenspan who through some excessive deregulation prepared the monetary ground for the rise of the subprime mortgage companies: a lending market that specialises in high-risk mortgages and loans.
'Innovation', said Greenspan in April 2005, 'has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants'.
It is almost touching to find out that Greenspan cares so much about immigrants. — Gilad Atzmon

When traders were able to earn a million dollars, of which base pay was $150,000 to $200,000 and the rest was bonus, they would go for it. Now if you're sitting there earning $600,000, you become less risk-seeking. And if you have less risk-seeking, the ability of the market to be incredibly volatile is increased. — Michael Hintze

People are putting their money into treasuries because they worry that the risk of putting their money into the bond market, the stock market or even the money markets is very high. — Michael Hudson

The risk from terrorism remains acute and the private market cannot continue to operate without a government backstop. — Michael Oxley

Once the brokerage house, rather than the bank, became the locus for American savings, that money would find its way into the stock market, because the broker was someone with a much higher tolerance for risk than the banker. — Ron Chernow

While big business gain subsidies and political access, small businesses drown in red tape, and individuals now risk being classified as terrorists for complaining about it. Economic globalisation is about homogenising differences in the worlds' markets, cultures, tastes and traditions. It's about giving big business access to a global market. — Zac Goldsmith

Yet we feel obliged to risk our long-term health in order to work extremely hard at jobs we don't particularly enjoy in order to buy things we don't particularly want. This is otherwise known as free-market capitalism. According to politicians, CEOs, and bankers, this is also supposedly the highest form of social organization that human beings have attained. — Anonymous

Market risk is like taking a plunge into a cool pool ... a lot of people are finding out right now what their risk tolerance is. — William J. Bernstein

The technical explanation is that the market-sensitive risk models used by thousands of market participants work on the assumption that each user is the only person using them. — Avinash Persaud

Climate change is a result of the greatest market failure the world has seen ... We risk damages on a scale larger than the two world wars of the last century. — Nicholas Stern

In places where government priorities and market imperatives create a world so capricious that to help a neighbor is to risk your ability to feed your family, and sometimes even your own liberty, the idea of the mutually supportive poor community is demolished. The poor blame one another for the choices of governments and markets, and we who are not poor are ready to blame the poor just as harshly. — Katherine Boo

There is no progress without risk, and in an environment where change is accelerating, risks are multiplying and businesses are increasingly complex, companies need strong, innovative partners to help manage their risk. Our brand clearly sets XL apart as the strong, innovative partner needed in today's market. — Mike McGavick

Risk, as first articulated by the economist Frank H. Knight in 1921,45 is something that you can put a price on. Say that you'll win a poker hand unless your opponent draws to an inside straight: the chances of that happening are exactly 1 chance in 11.46 This is risk. It is not pleasant when you take a "bad beat" in poker, but at least you know the odds of it and can account for it ahead of time. In the long run, you'll make a profit from your opponents making desperate draws with insufficient odds. Uncertainty, on the other hand, is risk that is hard to measure. You might have some vague awareness of the demons lurking out there. You might even be acutely concerned about them. But you have no real idea how many of them there are or when they might strike. Your back-of-the-envelope estimate might be off by a factor of 100 or by a factor of 1,000; there is no good way to know. This is uncertainty. Risk greases the wheels of a free-market economy; uncertainty grinds them to a halt. — Nate Silver

If you put these five things together - you can't use money to attract talent, you can't advertise, you can't take risks, you can't invest in long-term results, and you don't have a stock market - then we have just put the humanitarian sector at the most extreme disadvantage to the for-profit sector on every level, and then we call the whole system charity, as if there is something incredibly sweet about it. — Dan Pallotta

Index funds eliminate the risks of individual stocks, market sectors, and manager selection. Only stock market risk remains. — John C. Bogle

I think if you go beyond a year - if this continues into the system in the out years, I think there is a risk and that - that we could have a negative reaction in the bond market and that will offset the good that was attempted to be done. — Franklin Raines

Because our brains make a mountain out of a molehill of uncertainty, we tend to prefer competitive risk because it feels more secure. But the empirical evidence says that market risk is less risky than competitive risk. — Whitney Johnson

Business schools are failing to teach the students about the risks of market failures. We need to include some material on market failures in the core of curriculum. — Pankaj Ghemawat

If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes — Peter Lynch

You will never be a greater risk-taker in the markets if you approach life with a completely different attitude. — Henrique M. Simoes

The Muslim women that I have met are super-powerful and amazing and smart and they are, they're not allowing themselves to be held back by the laws that exist. And you know, the Internet exists now, and mobile phones are freeing up stuff. I have a really good friend who's from Iran and a really good friend who's from Kuwait, and they talk about getting music on the black market and how that's such an intense, amazing experience. And how they value the music so much more, because it's such a risk to own it. — Larkin Grimm

What we have at present is a system of loss socialism. Whatever goes wrong is shouldered by the general public and anything that works is privatised. Worshippers of market freedom have suspended the most important economic principle: Risk and liability go hand in hand. — Sigmar Gabriel

As value investors, our business is to buy bargains that financial market theory says do not exist. We've delivered great returns to our clients for a quarter century-a dollar invested at inception in our largest fund is now worth over 94 dollars, a 20% net compound return. We have achieved this not by incurring high risk as financial theory would suggest, but by deliberately avoiding or hedging the risks that we identified. — Seth Klarman

Pressure to produce over the short term - a gun to the head of everyone - encourages excessive risk taking which manifests itself in several ways - fully invested posture at all times, the use of leverage, and a market centric orientation that makes it difficult to stand apart from the crowd and take a long term perspective. — Seth Klarman

The Marshall Plan was the ultimate weapon deployed on this economic front. After the war, the German economy was in crisis, threatening to bring down the rest of Western Europe. Meanwhile, so many Germans were drawn to socialism that the U.S. government opted to split Germany into two parts rather than risk losing it all, either to collapse or to the left. In West Germany, the U.S. government used the Marshall Plan to build a capitalist system that was not meant to create fast and easy new markets for Ford and Sears but, rather, to be so successful on its own terms that Europe's market economy would thrive and socialism would be drained of its appeal. — Naomi Klein

Sustainability is today's freedom crusade, because the next generation will not live free - will not have the freedom to pursue its economic dreams or to delight in all that nature has to offer - if our approach to the financial world and the natural are not grounded in sustainable values. That lack of sustainability will constrict everything in our lives. It will limit everything we might want to do. Unless we become less dependent on hydrocarbons, and unless we find a balance between the need for markets to be free enough to reward innovation and risk-taking but not so free as to reward recklessness that can destabilize the whole global economy, our lives will be reduced, redacted, and restricted. We will be overwhelmed by all the toxic assets we will produce in the Market and in Mother Nature. It will feel worse than had the Soviet Union won the Cold War, because we and our children will be enslaved by our financial debts and constricted by our ecological debts. — Thomas L. Friedman

FDA classifies devices according to the risk they pose to consumers. Premarket review is required for moderate- and high-risk devices. There are two paths that manufacturers can use to bring such devices to market. One path consists of conducting clinical studies, submitting a premarket approval (PMA) application and requires evidence providing reasonable assurance that the device is safe and effective. The other path involves submitting a 510(k) notification demonstrating that the device is substantially equivalent to a device already on the market (a predicate device) that does not require a PMA. The 510(k) process results in FDA clearance and tends to be much less expensive and less time-consuming than seeking FDA approval via PMA. — Judith A. Johnson

Risks and benefits always go hand in hand. The reason that a project is full of risk is that it leads you into uncharted waters. It stretches your capability, which means that if you pull it off successfully, it's going to drive your competition batty. The ultimate coup is to stretch your own capability to a point beyond the competition's ability to respond. This is what gives you competitive advantage and helps you build a distinct brand in the market. — Tom DeMarco

Repealing drug laws would remove the risks involved with producing and distributing drugs, bringing 'street prices' crashing down (it's estimated that a 'spoon' of heroin would cost about a quarter in the free market), thereby eradicating any incentive that criminals might have to compete with legitimate businesses, and greatly reducing if not eliminating altogether any economic reason to ' push ' drugs on children. — L. Neil Smith

Combating myopic risk aversion is the most difficult emotional task facing any investor. I know of only two ways of doing this. The first is to check on your portfolios as infrequently as possible. ... The other way to avoid myopic risk aversion is to hold enough cash so that you have a certain equanimity about market falls. — William J. Bernstein

He will risk half his fortune in the stock market with less reflection that he devotes to the selection of a medium-priced automobile. — Jesse Lauriston Livermore

You can invest with less risk and make more money in the stock market. All you have to do is not be an average investor. Intelligence is the ability to make finer distinctions. — Robert Kiyosaki

In plucking the fruit of memory one runs the risk of spoiling its bloom, especially if it has got to be carried into the market. — Joseph Conrad

I AM A CONSISTENT WINNER BECAUSE: 1. I objectively identify my edges. 2. I predefine the risk of every trade. 3. I completely accept the risk or I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me. 6. I continually monitor my susceptibility for making errors. 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. — Mark Douglas

A big Wall Street bank's biggest advantage was its access to vast amounts of cheap risk capital and, with that, its ability to survive the ups and downs of a risky business. That meant little when the business wasn't risky and didn't require much capital. High-frequency traders went home every night with no position in the stock market. They traded in the market the way card counters in a casino played blackjack: They played only — Michael Lewis

The United Kingdom has traditionally been a very small market, and even though you had such a creative group of designers, they represented a risk to department stores. — Natalie Massenet

Acquiring new skills and adapting to complex, uncertain environments isn't easy, though. It requires persistent attention and near-constant effort to maintain a trajectory of growth. As such, it's easy to grow tired or lose your drive. However, when you stop growing, you start dying. In much the same way that an organization needs to be persistently innovative in order to maintain market share, individuals must make a personal commitment to lifelong personal innovation through skill development, risk-taking, and experimentation in order to avoid stagnation. The seeds of tomorrow's brilliance are planted in the soil of today's activity. — Todd Henry

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system. — Henry Paulson

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

Rip Van Winkle would be the ideal stock market investor: Rip could invest in the market before his nap and when he woke up 20 years later, he'd be happy. He would have been asleep through all the ups and downs in between. But few investors resemble Mr. Van Winkle. The more often an investor counts his money - or looks at the value of his mutual funds in the newspaper - the lower his risk tolerance. — Richard Thaler

It is true [the risk for travel is greater] for we now operate in a global market. Business travelers are conducting business all over the world as if they are conducting business in their own backyards. — Mark Hall

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

When you have risk aversion in Japan, the normal day-to-day outflows that happen in a normal market environment slow down. — Jens Nordvig

Bringing an 'emerging market' under the aegis of the British Empire was the surest way to remove political risk from investors' concerns.51 Even those outside the Empire risked a visit from a gunboat if they defaulted, as Venezuela discovered in 1902, when a joint naval expedition by Britain, Germany and Italy temporarily blockaded the country's ports. The United States was especially energetic (and effective) in protecting bondholders' interests in Central America and the Caribbean.52 — Niall Ferguson

The more evident it is that a certain company is going to become the market leader in a big market space, then the higher the valuation goes because the risk has been dramatically reduced. — Audrey MacLean

Do not trust financial market risk models. Despite the predilection of some analysts to model the financial markets using sophisticated mathematics, the markets are governed by behavioral science, not physical science. — Seth Klarman

Finance is concerned with the relations between the values of securities and their risk, and with the behavior of those values. It aspires to be a practical, like physics or chemistry or electrical engineering. As John Maynard Keynes once remarked about economics, "If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid." Dentists rely on science, engineering, empirical knowledge, and heuristics, and there are no theorems in dentistry. Similarly, one would hope that nance would be concerned with laws rather than theorems, with behavior rather than assumptions. One doesn't seriously describe the behavior of a market with theorems. — Emanuel Derman

In the financial markets, however, the connection between a marketable security and the underlying business is not as clear-cut. For investors in a marketable security the gain or loss associated with the various outcomes is not totally inherent in the underlying business; it also depends on the price paid, which is established by the marketplace. The view that risk is dependent on both the nature of investments and on their market price is very different from that described by beta. — Seth Klarman

The credit crunch was based on a climate (the post-Cold War victory party of free-market capitalism), a problem (the sub-prime mortgages), a mistake (the mathematical models of risk) and a failure, that of the regulators. — John Lanchester

Two-thirds of professionally managed funds are regularly outperformed by a broad capitalization-weighted index fund with equivalent risk, and those that do appear to produce excess returns in one period are not likely to do so in the next. The record of professionals does not suggest that sufficient predictability exists in the stock market to produce exploitable arbitrage opportunities. — Burton G. Malkiel

RBGH poses an even greater risk to human health than ever considered. The FDA and Monsanto have a lot to answer for. Given the cancer risks, and other health concerns, why is rBGH milk still on the market? — Samuel Epstein

RE: GSEs like Freddie Mac & Fannie Mae: "creditors will continue to underprice the risk-taking of these financial institutions, overfund them, and fail to provide effective market discipline Facing prices that are too low, systemically important firms will take on too much risk." — Gary H. Stern

Burke's admonition
"The effect of liberty to individuals is, that they may do what they please: We ought to see what it will please them to do, before we risk congratulations"
never seems to have occurred to Hayek. The Arnoldian ideal of the disinterested intellectual willing to criticize one side and then the other in order to create balance and counteract the one-sidedness that led toward fanaticism: That, too, was as alien to Hayek as it had been to Marcuse. If it was partisanship that led Hayek to push forward intellectually to new insights, it was also partisanship that kept him from a balanced and rounded philosophy.
Perhaps a familiarity with "the best that has been thought and said" about the market will aid us in obtaining a more disinterested and informed perspective. Such a perspective might well begin with Hayek's insights. But it would by no means end with them. p. 387 — Jerry Z. Muller

The discovery of the good taste of bad taste can be very liberating. The man who insists on high and serious pleasures is depriving himself of pleasure; he continually restricts what he can enjoy; in the constant exercise of his good taste he will eventually price himself out of the market, so to speak. Here Camp taste supervenes upon good taste as a daring and witty hedonism. It makes the man of good taste cheerful, where before he ran the risk of being chronically frustrated. It is good for the digestion. — Susan Sontag

What went wrong is we had tremendous concentration in the sense we put a lot of our money to work against U.S. real estate. We got here by lending money, and putting money to work in the U.S. real estate market, in a size that was probably larger than what we ought to have done on a diversification basis. — Vikram Pandit

Since the 1970s, we have witnessed the forces of market fundamentalism strip education of its public values, critical content, and civic responsibilities as part of its broader goal of creating new subjects wedded to consumerism, risk-free relationships, and the destruction of the social state. — Henry Giroux

Money, while clearly helpful in solving myriad problems, can often conceal a business's real flaws. It can also risk rigidifying a company's business model at the very moment it should be in 'customer discovery' mode or iterating around market opportunities. — Maelle Gavet

I don't trust painting. At least not in New York. Most painting here relies on formula and repetition, whoring itself to the market. There seems to be no risk and once a painter gets a strategy, very little exploration. As a result, I stopped thinking about painting. I prefer forms of art that are more market-resistant, more idea-based, more - for lack of a better word - risky. — Kenneth Goldsmith

You don't want too much fear in a market, because people will be blinded to some very good buying opportunities. You don't want too much complacency because people will be blinded to some risk. — Ron Chernow

I just like to keep my money in the bank; I'm not a big risk-taker. I don't know anything about the stock market ... I stay away from things I don't know anything about. — Wayne Gretzky

The pace of change for entrepreneurs is rapidly accelerating, and the cost and risk of launching a new business and getting off the ground is just amazing. The ability to gain user feedback really quickly and adapt to what your consumers want is totally different with the web as it is now. But finding a new market, helping people and taking that original idea and turning it into a business is really exciting right now. — Matt Mickiewicz

Somehow, when ownership interests are divided into shares that bounce around with Mr. Market's moods, individuals and professionals start to think about and measure risk in strange ways. When short-term thinking and overly complicated statistics get involved, owning many companies that you know very little about starts to sound safer than owning stakes in five to eight companies that have good businesses, predictable futures, and bargain prices. — Joel Greenblatt

One of their most famous coups was underwriting a $10 million loan for a growing mail-order house called Sears, Roebuck, headed by Goldman's distant relative. It was the first time a mail-order security had ever been on the market-a calculated risk, but one that paid off. — Kenneth L. Fisher

There's something else about this list that really jumps out. Take another look at the top five attributes listed there - the key characteristics defining a world-class sales experience: Rep offers unique and valuable perspectives on the market. Rep helps me navigate alternatives. Rep provides ongoing advice or consultation. Rep helps me avoid potential land mines. Rep educates me on new issues and outcomes. Each of these attributes speaks directly to an urgent need of the customer not to buy something, but to learn something. They're looking to suppliers to help them identify new opportunities to cut costs, increase revenue, penetrate new markets, and mitigate risk in ways they themselves have not yet recognized. Essentially this is the customer - or 5,000 of them at least, all over the world - saying rather emphatically, "Stop wasting my time. Challenge me. Teach me something new. — Matthew Dixon

Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on. Some people say, "I was only playing with the market's money." That's the most ridiculous thing I ever heard. — Bill Lipschutz