Risk and the Smart Investor
McGraw-Hill; 1 edition (August 19, 2010) | ISBN: 0071743499 | 288 pages | PDF | 2 MB
“De-risking your investments requires knowing that there is much you don’t know.”Risk exists because of one simple fact: Decisions are always based on incomplete information. Therefore, to meet your investment goals over the long term, you must learn to manage the risks associated with a decision-making process that is by nature flawed. Risk and the Smart Investor provides a framework for making such decisions.
Avoiding unrealistic promises of completely risk-free investing, world-renowned risk management expert David X Martin familiarizes you with the principles of risk management. Based on Martin’s experience in managing risk at several of the world’s largest financial institutions, this principlebased approach presents a unique perspective that helps you manage the risk in every investment you make.
Risk and the Smart Investor provides not only a framework for managing risk in today’s markets, it also prepares you to handle the next financial crisis—which is coming, sooner or later—by separating risk management into four separate processes:
* Assessment—know where you are, but accept the fact that you cannot know everything
* The Rules of the Game—determine your appetite for risk, diversify accordingly, demand transparency, and institute checks and balances
* Decision Making—consider all alternatives, fit your plans into specific time frames, and always have an exit strategy
* Reevaluation—continually monitor the outcomes of your decisions and learn from your mistakes
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