Risk vs Volatility

Most of us think that volatility is same as risk. Given a choice we prefer to work for the government or some big corporations. We prefer holding cash and fixed instruments instead of equities. Why? These options are less volatile and hence we consider them as less risky. This assumption is incorrect.¬†Volatility is not the…

Risk vs Uncertainty

For a long time I was assuming that risk and uncertainty are the same. But they are not. Risk are known unknown.¬†Uncertainties¬†are unknown unknowns. Former U.S. secretary of defense Donald Rumsfeld writes There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things…