Few simplistic tweets: risk means different things to different investors.
A widely overused and subjective term: something can be risky to group A, but not to group B.
Perception of risk (foresight) vs realized risk (hindsight). These are not the same thing.
Institutions look at risk as volatility. We don't.
And Wall Street throws uncertainty with risk into the same bucket. Once again, we don't.
When an American, Brit, or Aussie tells us Emerging Markets are very risky, we partly agree but partly smile at the Home Country bias.
We believe when something has fallen in price due to uncertainty — but not due to quality and its fundamental prospects in the future — there is an opportunity at hand.
"We want to buy them when they're on the operating table," said Warren Buffett famously.
There was a lot covered in hindsight, but those who follow financial markets would have probably found the first part of the podcast either very interesting or too contrarian for their liking.
Here are two key quotes from the podcast, as I was taken in awe of the speculation frenzy in the tech & growth sectors:
"While it's easy to make money today and everything seems to be working, the question for very smart investors is to anticipate what's around the corner?"
Wisdom is often invisible in life and investing because we want to remove or subtract undesired outcomes.
“I have used all my life a wonderfully simple heuristic: charlatans are recognizable in that they will give you positive advice, and only positive advice.” — Nassim Taleb
I don't tweet often about wonderful ideas we will throw our hard-earned capital into because the majority of the opportunities are not wonderful.
Instead, we try to subtract actions that we are more certain are wrong or undesired, instead of adding actions we think are right.
To paraphrase Einstein, geniuses attempt to solve complicated problems, while the wise avoid them.
Let's face it: there is nothing more complicated than predicting the future in the world of investment.
Charlatans have all of the answers: what to buy & where to invest.
It has become quite clear that the growth stock bubble witnessed over the last 12-18 months, with an orgy of speculation has now popped and results are and might continue to be extremely painful.