wheel - 11:22 am on Oct 27, 2011 (gmt 0)
Risk is perceived and subjective. It's not cast in stone
No, risk is quantifiable and can be calculated. You can't calculate whether gold is going up or down tomorrow or over the next 10 years - but you CAN calculate the probability (the risk) of that happening as well as the error of your calculation.
Believing this is all heeby-jeepy witchcraft is why investment salespeople can sell such garbage to so many people and people are shocked when they crash. Because they start with things like 'how would you feel if your investments crashed, would you be OK with that because you're in it for the long term? Or would you want to switch to a different investment'. And people buy into that voodoo.
Worse, most people confuse risk with volatility - they are not the same thing. The stock market goes up and down in the short term, but it always goes up in the long term. So longterm, what's the risk of failure? Not much, not in an investment that's been going up for 100 years for any long-term measurement. But again, people look at the short term, over 6 months, or 3 years.