A Quote by David Dreman
A good starting point [in the measurement of investment risk] is the preservation and enhancement of your purchasing power in real terms.
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An underpaid man is a customer reduced in purchasing power. He cannot buy. Business depression is caused by weakened purchasing power. Purchasing power is weakened by uncertainty or insufficiency of income. The cure of business depression is through purchasing power, and the source of purchasing power is wages.
When I wrote my fictional novels, they always had a starting point of something real. Those images that are not real are exactly the same strength and power of the real ones, and the line between them is completely blurred.
Unlike return, however, risk is no more quantifiable at the end of an investment that it was at its beginning. Risk simply cannot be described by a single number. Intuitively we understand that risk varies from investment to investment: a government bond is not as risky as the stock of a high-technology company. But investments do not provide information about their risks the way food packages provide nutritional data.
There are challenges in terms of the measurement of VAR for what are known as nonlinear derivatives, where things like gamma and vega are important dimensions of the risk.
Cash - in savings accounts, short-term CDs or money market deposits - is great for an emergency fund. But to fulfill a long-term investment goal like funding your retirement, consider buying stocks. The more distant your financial target, the longer inflation will gnaw at the purchasing power of your money.
You need to have a lot of human judgment involved in the financial industry in terms of risk management, in terms of investment decisions, and things that really allow us to blend the best of technology and the human brain.
J.P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked, 'What should I do about my stocks?' Morgan replied, 'Sell down to your sleeping point' Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well. High investment rewards can only be achieved at the cost of substantial risk-taking. So what is your sleeping point? Finding the answer to this question is one of the most important investment steps you must take.
Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.
The business side of real estate investing is fraught with risk. Unlike purchasing mutual funds or savings bonds, with real estate, you can lose money; this is one of the reasons that seasoned real estate investors caution neophytes never to get too emotional about a property and always be willing to walk away.
The risk of an investment is described by both the probability and the potential amount of loss. The risk of an investment-the probability of an adverse outcome-is partly inherent in its very nature. A dollar spent on biotechnology research is a riskier investment than a dollar used to purchase utility equipment. The former has both a greater probability of loss and a greater percentage of the investment at stake.
There is no question that an important service is provided to investors by investment companies, investment advisors, trust departments, etc. This service revolves around the attainment of adequate diversification, the preservation of a long-term outlook, the ease of handling investment decisions and mechanics, and most importantly, the avoidance of the patently inferior investment techniques which seem to entice some individuals.
That it is logical, fair and reasonable to maintain the purchasing power of an hour's work in terms of goods and services the employee must purchase in his daily living.
There is no such thing as guaranteed high investment returns. Be wary of anyone who promises that you will receive a high rate of return on your investment with little or no risk.
Any measurement must take into account the position of the observer. There is no such thing as measurement absolute, there is only measurement relative.
The real investment in life is not so much in the house you have, or the car. Your real investment is what you carry in the heart, and if you carry that passion for anything that you do, then nothing can really stop you. You enjoy the greater moments of everything.
A startup job is an investment, after all: Venture capitalists may wager money, but you're staking something more precious - your time. And unlike VCs, you can't spread your risk by betting on a bunch of companies at once. Start with TAM. That's 'total addressable market,' and if it's not big enough, there's no point in talking.
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