July 28, 2013

Jason Zweig on Shallow Risk vs. Deep Risk

Shallow risk is as inevitable as weather. You can’t invest in anything other than cash without being hit by sharp falls in price.

“Shallow” doesn’t mean that the losses can’t cut deep or last long—only that they aren’t permanent.
“Deep risk,” on the other hand, is an irretrievable real loss of capital, meaning that after inflation you won’t recover for decades—if ever.

Read the article