The Role of Risk in Investing

Understanding risk is crucial for investors, as traditional approaches often misrepresent its nature. Many investors focus on returns while failing to grasp that true risk encompasses potential vulnerabilities rather than predictability. The podcast highlights that major financial events occur unpredictably, suggesting that investors should seek to protect against unforeseen risks rather than trying to forecast specific outcomes. This perspective emphasizes the importance of a robust risk management framework that prioritizes protection against unanticipated events over simplistic volatility measurements.