A Quote by Harry Markowitz
To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single security.
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My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of derivative securities.
We don't understand the equity market well, and so we deploy funds in fixed-income securities, and like any other securities, investment in those securities also need to follow the mark-to-market accounting principle.
Diversifying sufficiently among uncorrelated risks can reduce portfolio risk toward zero. But financial engineers should know that's not true of a portfolio of correlated risks.
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.
Just because a company's future is highly uncertain doesn't mean an investment in it is risky. In fact, some of the best potential investments are highly uncertain but have little risk of permanent capital loss.
Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as in the fall of 2008 - drives securities prices to especially low levels, they often become less risky investments.
A gentleman, is a rarer thing than some of us think for. Which of us can point out many such in his circle--men whose aims are generous, whose truth is constant and elevated; who can look the world honestly in the face, with an equal manly sympathy for the great and the small? We all know a hundred whose coats are well made, and a score who have excellent manners; but of gentlemen how many? Let us take a little scrap of paper, and each make out his list.
In some industries, we refer to risk taking as 'research and development.' At financial institutions, we often take risk by investing in securities.
The sale of Treasury bonds, notes, and bills finances the U.S. government, and those securities are, in turn, a primary vehicle for savings for a wide range of U.S. households. Treasury securities are also an important source of collateral within the financial system.
The Government Securities Act gave the Treasury Department some rulemaking authority over all government securities brokers and dealers. But the act also required these firms to register with the SEC.
Entire populations of market strategists, fund managers, and economists are employed to try and intuit for clients which securities to bet on for the best possible return each year - or quarter.
We have to uphold the EU's core values. These days, people are nervous and uncertain because of security threats. In this kind of atmosphere, fear and hatred are on the rise. We need to safeguard security, but we also have to be vigilant and avoid handing over all power to those who say they are here to ensure security.
O lust, thou infernal fire, whose fuel is gluttony; whose flame is pride, whose sparkles are wanton words; whose smoke is infamy; whose ashes are uncleanness; whose end is hell.
However, if one has been playing the buy-and-hold game with quality securities, one has been exposed to a substantial amount of market risk because the valuations placed on these securities have implied overly rosy scenarios prone to popular revision in times of more realistic expectation. This is one of those times, but it is my feeling that the revisions have not been severe enough, the expectations not yet realistic enough. Hence, the world's best companies largely remain overpriced in the marketplace.
The state should avoid all solicitude for the positive welfare of its citizens, and not proceed a step further than is necessary for their mutual security and their protection against foreign enemies. It should impose restrictions on freedom for no other purpose.
How is it that one day life is orderly and you are content, a little cynical perhaps but on the whole just so, and then without warning you find the solid floor is a trapdoor and you are now in another place whose geography is uncertain and whose customs are strange?
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