We closely follow the periodic columns by Jason Zweig, who is the investment columnist for the Wall Street Journal. The following article, from the September 10, 2011 issue of the Weekend Journal is a bit of a financial history and talks about the difference between risk and uncertainty. Written on the 10th anniversary of the September 11, 2001 attacks, he makes the point that investors and the markets cannot possibly anticipate “macro” geopolitical events like the 9/11 attacks. These sorts of events, including earthquakes, tsunamis or systemic market failures like we experienced in 2008 are not measurable risks, but unquantifiable unknowns. They are “black swans,” completely uncertain and unpredictable, but they will always be part of the investment experience. One should not be dissuaded from taking on quantifiable investment risk in the long run by the fear of these sorts of uncertainties. We agree with his message and think this well constructed article provides some much needed perspective during these uncertain times. See the complete article here.
“The Age of ‘Macro’ Investing” by Jason Zweig WSJ
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