Thoughts on Risk

We are often asked to discuss our investment philosophy as it relates to our expected long-term returns. Many people making investment decisions today at very large, sophisticated institutions believe that an investment is less risky if it has a smooth progression of returns month after month and year after year.  We believe this type of thinking is pure folly.  It is akin to thinking that you are free from hurricane risk by living in New York. Most people living there now have no recollection of past significant hurricanes. In fact, New York bares the brunt of a significant hurricane about twice a century and is considered the third most susceptible metropolitan area to hurricane damage after Miami and New Orleans. Real risk is determined by the prospects of the underlying securities that make up a portfolio, and it is magnified exponentially by the degree of leverage employed. Taking large, leveraged bets and thinking your investments are safe because historical volatility has been low is simply crazy.


The statements and opinions expressed in this section are those of the author. Any discussion of investments and investment strategies represents the Funds' investments and portfolio managers' views at that time, and are subject to change without notice.


Past performance does not guarantee future results.