Value Investing

Wilbur Ross on Risk and Return

One nice point that Wilbur Ross made is that there is no proportionality between risk and reward. Whoever invented the saying that reward is proportional to risk was probably some Wall Street guy promoting a very risky deal 🙂 Frequently, you get paid for what people perceive to be the risk, but that may or may not at all correspond to the actual risk.

My own aside is that the value investing approach to risk, is the probability of permanent capital impairment. In essence, the higher the risk, the higher the chance of losing money, however that does not mean that there is a higher chance of making money, or the chance of making more money.



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