The relationship between return and risk is widely acknowledged in investing – but, do we really give enough thought to the risks we take when we invest our money? Probably not. This is because risk is difficult to conceptualise and it’s most often not portrayed in ways that is very clear, nor apply directly to us.
“Are you crazy?”
That was the first thought that entered my mind, when a friend – let’s call him “Warren” – told me he wanted to start an asset management business.
Warren has just left his employer after a 20-year career, which I’d characterise as pretty successful. As a lead portfolio manager, he has managed assets on behalf of clients exceeding R50 billion and delivered good returns which ranked above average and sometimes top quartile in the performance surveys.