Risk_Premium_201
A respected hedge fund describes part of their investment philosophy like this: “Enterprises work best when they have access to capital priced to reflect the value they can create. Index funds, by the way, do not price capital; they only mimic the actions of those who do.”
Luke Burgis • 25 Anti-Mimetic Ideas
A portfolio can be set up to withstand 99 percent of all scenarios but succumb because it’s the remaining 1 percent that materializes. Based on the outcome, it may seem to have been risky, whereas the investor might have been quite cautious. • Another portfolio may be structured so that it will do very well in half the scenarios and very poorly in
... See moreHoward Marks, Paul Johnson • The Most Important Thing Illuminated
In short, all of us in the industry made a fundamental underwriting mistake by focusing on experience, rather than exposure.”
William Green • Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life
Our triangles present three main inversions, three ways to think differently. I’d encourage you take close note of each: First, we prioritize being “less wrong” over being “more right.” Managing risk is a priority over enhancing returns. This risk-first mindset flies in the face of most elements of the modern money culture. It also happens to be th
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