In his 2001 Shareholder Letter, Michael Burry provided a great passage on risk management, and why it doesn’t need to be complicated. Here’s an excerpt from the letter:
Q1 2021 hedge fund letters, conferences and more
Although an outsider might think the goal of prevailing modern investment practice to be one of mediocrity, there in fact remains much more competition to achieve gains in the market than there is competition to record losses.
Laissez-faire security analysis paired to an entirely misdirected view of risk management nevertheless dooms most institutional portfolios to mediocre performance. In fact, traditional risk management — centered on minimizing volatility in various forms —...
