"Volatility is the academic’s choice for defining and measuring risk... because volatility is quantifiable and thus usable in calculations and models of modern finance theory." Howard Marks. "Using volatility as a measure of risk is nuts.” Charlie Munger. google.com/amp/s/25iq.com…
"Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return.” Munger. Howard Marks makes the point that risk itself cannot be counted on to generate higher financial returns, since if this was the case the assets would not actually be riskier.
Seth Klarman writes: “some insist that risk and return are always positively correlated…yet this is not always true. Others mistakenly equate risk with volatility, ignoring the risk of making overpriced, ill-conceived and poorly managed investments.”
