Founder-led companies and ‘entrepreneurial investors’ make better, calculated judgements and tap into experiences which give them an advantage over more conservative investors.
Tag Archives | risk tolerance
With the strongest defensive assets earning close to zero and negative real returns, investors are looking at other ways to shock-proof their portfolios, but it invariably means taking on more risk.
The fear of sequence risk drives investors to take equity and risky asset exposures out of their retirement portfolios, but is this such a good idea? Looking back over the last 40 years provides some perspective.
The risk of internal fraud is a commercial reality of doing business, but how does a financial institution manage the optics of a low risk appetite and still communicate the message to employees that it is not ‘open slather’?
When investing capital, you expect the return to adequately compensate you for the likelihood of loss. Understanding both risk and reward is vital, so the more you know about ‘knowns’ and ‘unknowns’ the better.
We may already know how risk averse we are when it comes to investing, but how much of this is affected by ambiguity aversion. A better understanding of financial products could improve the investment choices we make.
We cannot afford to ‘make things up as we go along’. We need a plan that addresses short, medium and long term goals, and we need to take action to address those goals now, not later.
How experience determines financial risk preferences, by Joachim Klement. Short CFA Institute podcast recorded on 19 October 2012.