Risk is the Chance of not Achieving a Goal

Oct 1996

Over the years I’ve taken issue with a number of popular investment ideas.  One concept that I think the average investor understands much better than the supposed professionals is the concept of risk.  It’s really quite simple:  Risk is the chance (or probability) of not achieving one’s goals.  If you’re saving for your retirement and you don’t accumulate enough purchasing power by the time you retire, then you haven’t reached your goal.  If you are investing to preserve the purchasing power you already have and you buy stocks that decline, then once again you haven’t reached your goal.  That’s risk.