A Dozen Things I’ve Learned from Charlie Munger about Risk
“Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return.” Risk has many different dimensions that must be considered including sources, magnitude, outcomes and decision making inputs. In terms of a definition, Seth Klarman writes that risk is: “described by both the probability and the potential amount of loss.” Charlie Munger emphasizes an important point in his quotation since it is the permanent […]