No Shortcuts in Evaluating Your Investment Risk

Early in my career, I worked for a big brokerage firm. Back then, I made a habit of seeking out the veteran stockbrokers and quizzing them about their careers. One day, I had a pretty extensive conversation about risk with one of those grizzled Wall Street guys.

I’ll never forget it.

“Let’s assume you’re moving into a high-rise condominium in Florida, and there’re only two units for sale,” he said. “One is the penthouse — beautiful view, amazing balcony, but it’s 37 floors up. The other is a garden-level walkout unit. Not the same view, but on the first floor, and your door exits right onto the street.”

Read the rest of the article on The New York Times.