Often mistaken for twins, volatility and risk couldn’t be more different.
Risk can be defined as putting 100% of your money in pork bellies and hoping for the best.
Volatility, correctly defined, simply refers to the regular, sometimes large, sometimes small, unpredictable movements of the equity market both above and below its permanent uptrend line.
Note the phrase ‘permanent uptrend line’.
Risk = Placing a firecracker in your nose and lighting it.
Volatility = Tolerating the ups and downs of the market.
Our current market is volatile, not risky. Let it run its course.