Citing John Kenneth Galbraith, who said, “We have two classes of forecasters: Those who don’t know – and those who don’t know they don’t know,” Howard Marks Oaktree Capital recent letter to investors considered various market probabilities as it tackled volatility as an inaccurate measure of risk. [munger] Howard Marks recognizes the difference between volatility and investment loss He first considered the difference between volatility, used to measure risk in the Sharpe Ratio, and permanent loss, which represents real risk. “Permanent loss is very different from volatility or fluctuation,” he noted, then considered the reasons for permanent loss. Permanent loss…
Howard Marks Takes On Volatility As Measure Of Risk
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.
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