Defining Risk

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Risk can be defined as the chance of not knowing what you are doing, leading to unexpected losses, the probability of an adverse outcome, or the extent to which extreme outcomes differ from the average. It has also been described as the gap between what investors think they know and what they end up learning about their investments, the financial markets, and themselves. In essence, risk is the difference between perceived knowledge and eventual truth.

WSJ columnist Jason Zweig and I tackle important topics like how to be a smarter investor, filtering out noise, why philosophy and history matters, and his new book, The Devil’s Financial Dictionary.

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