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Newsletter June 2017: How deep is your risk?

By 19th June 2017Newsletters

All investors know that they need to take risks in order to achieve returns higher than cash. If you asked ten investors if equities were more risky than cash, most would agree. But the true answer depends on how one understands risk. The investment industry has done a poor job of explaining risk as it relates to an investor and tends to equate risk with return volatility. This note suggests that three levels of risk exist: shallow risk, mid-depth risk and deep risk. Shallow risk relates to the sometimes brutal, but recoverable losses from equities, whereas deep risk is the permanent loss of capital. The latter matters more to long-term investors than the former.

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Tim Hale

About Tim Hale

Tim Hale is the CEO of Albion, a strategic consulting firm that works with many of the best wealth advisory firms across the UK. Tim's book, Smarter Investing: Simpler Decisions for Better Results, has been described as a 'must read' by Mark R Richardson, former CEO of Chase Asset Management. Tim graduated from the University of Oxford and is a regular speaker at leading conferences across the UK.

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