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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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The Most Important Thing Is … Controlling Risk

The Most Important Thing Is … Controlling Risk

(p.71) 7 The Most Important Thing Is … Controlling Risk
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter examines what is needed for successful investing: controlling risk. Outstanding investors are distinguished at least as much for their ability to control risk as they are for generating return. They take risks that are less than commensurate with the returns they earn. They may produce moderate returns with low risk, or high returns with moderate risk. But achieving high returns with high risk means very little—unless the investor can do it for many years, in which case that perceived “high risk” either wasn’t really high or was exceptionally well managed. Risk control is invisible in good times but still essential, since good times can so easily turn into bad times. It’s the investor’s job to intelligently bear risk for profit. Doing it well is what separates the best from the rest. This chapter presents comments and views from four renowned investors and investment educators.

Keywords:   risk, investors, return, risk control, profit, investment

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