The biggest risk investors face isn’t inflation. It’s not rising interest rates either. In fact, it has nothing to do with the market.
The biggest risk investors face is trying to eliminate every risk.
- How do I hedge against inflation?
- How do I limit volatility?
- How do I avoid drawdowns?
- How do I hedge against tail risk?
I know this is “No shit Captain Sherlock,” but the only reason why people who take risk are rewarded is that they take risk in the first place. Without one, there can’t be the other.
Of course you can take risk and not be rewarded, but you can’t be rewarded if you don’t take any risk.
Instead of trying to eliminate everything that can go wrong, the best investors find their sweet spot and let time do the rest.
Josh and I are going to talk about the spectrum of risk and much more on tonight’s What Are Your Thoughts?