A Quote by Benjamin Graham
No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the "margin of safety" - never overpaying, no matter how exciting an investment seems to be - can you minimize your odds of error.
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Edge also implies what Ben Graham....called a margin of safety. You have a margin of safety when you buy an asset at a price that is substantially less than its value. As Graham noted, the margin of safety 'is available for absorbing the effect of miscalculations or worse than average luck.' ...Graham expands, "The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price."
High leverage is unsafe, not just for a company but the entire economy... LBOs are reducing the safety. Management loses the power to do many things. It has no margin for error and less margin for additional risk.
So one way to create an attractive risk/reward situation is to limit downside risk severely by investing in situations that have a large margin of safety. The upside, while still difficult to quantify, will usually take care of itself. In other words, look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.
Risk managers and investment bankers and actually, all kinds of investors took on more risk than they expected. So there was a failure of risk management. There was a failure to recognize how much risk there was in some of these securities that people bought.
There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong.
When we do an investment, we always ask, 'Can we affect the outcome? When buying a company, can we have an impact?' That's a different style of investing than a passive investor in the stock market. To me, that's how you're taking the risk out of it. You know what your capability is and how you can enhance value.
There are many diamonds in the world and if you lose your favorite, you can work hard, earn a lot of money and get another one to replace it. But the moments of your life aren't like that. Once they're gone, they'll never return. Each and every one is the most precious thing in existence. You can never meaningfully compare one moment with any other. You can never meaningfully compare your life with anyone else's. No matter how rich someone else may be, no matter how happy they look, no matter how enlightened they seem, they can never be you. Never, ever, ever. Only you can live your life.
No matter how much you're going to be criticized or no matter how big of a risk it is, the boldness is the thing that helps you
To laugh is to risk appearing a fool. To weep is to risk appearing sentimental. To reach out to another is to risk involvement. To expose feelings is to risk exposing your true self. To place your ideas and dreams before a crowd is to risk their loss. To love is to risk not being loved in return. To hope is to risk pain. To try is to risk failure. But risks must be taken, because the greatest hazard in life is to risk nothing.
No matter what you do, no matter how stupid, dumb or damaging you judge it to be, there is a lesson to be learned from it. No matter what happens to you, no matter how unfair, inequitable or wrong, there's something you can take from the situation and use for your advancement.
Labor never quits. We never give up the fight - no matter how tough the odds, no matter how long it takes.
There is no risk factor at all, the odds don't matter at all, because the odds of Law of Attraction are 100%.
Do you think the people who were trying to reach to the Everest were not full of doubts? For a hundred years, how many people tried and how many people lost their lives? Do you know how many people never came back? But, still, people come from all over the world, risking, knowing they may never return. For them it is worth it - because in the very risk something is born inside of them: the center. It is born only in the risk. That's the beauty of risk, the gift of risk.
There's always a risk that something goes wrong, like a structural failure. But you have confidence in the whole system and the measures that have gone into place to minimize the risk. Sometimes you land when your knees are clanking together and you say you're lucky to be alive. But you are - and you move on.
There's no safety in love. You risk the whole of life. But the great thing is to risk -to believe, and to risk everything for your belief.
Loving people, and allowing yourself to be loved, was only worth the risk if the odds were in your favor, but they quite clearly weren't. There were about seventy-nine squillion people in the world, and if you were very lucky, you would end up being loved by fifteen or twenty of them. So how smart did you have to be to work out that it just wasn't worth the risk?
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