Monthly Archives - May 2019

Risk and Volatility | Lesson from Warren Buffett | Sheaff Brock

The Lesson Warren Buffett Says Hasn’t Been Taught in Business School

“Risk is not the same as volatility, but that lesson has not customarily been taught in business schools,” Warren Buffett observes. “Volatility is far from synonymous with risk.” In a 2015 letter to shareholders, the Berkshire Hathaway CEO wrote about the difference between risk and volatility. Many investors, he observes, “conflate these concepts, costing themselves money.” Yes, stock prices will always be far more volatile than cash-equivalents, Buffett concedes, but over the long term, currency-denominated instruments are far riskier than [...]

Sheaff Brock Discusses Risk and Volatility | Child on Teeter Totter

Is It Smart for Investors to Equate Risk and Volatility?

Value means different things to different people. Therefore risk (the possibility of losing something of value) can also mean different things. For decades, investors defined risk as the chance of permanent loss of capital. Wherever there was volatility in the price of an investment, that meant there was risk. But are risk and volatility really the same? As Sheaff Brock Director Jim Murphy explains, understanding the difference between market volatility and market risk is a key skill for investors to have. Volatility is how [...]