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The Globe & Mail – Why volatility doesn’t always equal risk
Theory vs Reality: how much risk is there in volatility? By Tom Bradley
For investors who have the luxury of time, volatility doesn’t equal risk, not in theory anyway. These investors can hold assets with a higher potential return knowing that short-term price swings are inconsequential. Long-term returns are what matter. Risk is holding overpriced assets, being too concentrated on one type of investment, and having no protection against inflation. Risk is having a portfolio that doesn’t fit with their objectives.
John Thiessen, manager of the Vertex Fund, captured this issue well in a recent note to unitholders…