A Misconception About Investing Risk and Market Volatility
Volatility ≠ Risk When it comes to investing, there’s a big misconception that volatility equals risk. It’s something you hear all the time in the financial world—news headlines flash with “market volatility,” analysts fret over fluctuating stock prices. Many investors start to panic the moment they see red on their portfolios. But for those of us who take a long-term, value-focused approach, we know that volatility is not something to fear. In fact, volatility is our friend. Remember as I always mentioned: Crisis = Danger + Opportunities 危机 = 危险 + 机会 What Is Volatility, Really? Volatility is basically how much and how quickly the price of a stock or asset moves up and down over a given period. It’s typically measured by the standard deviation of returns—yes, all that maths stuff you might have learned in finance class. But don’t get too caught up in technical terms. Volatility just means the price is bouncing around more than usual. Now, many see thi...
