Risk

The possibility of loss, and how it is priced, managed and traded against return. In the saved posts filed here it appears in two settings: venture, where return and risk are inseparable, and how a founder’s or investor’s local context shapes which side of the bet gets weighed first.

• No return without risk. In Andy Rachleff on Generating High… (tweet), Rachleff’s line is that “Most VC funds want high returns without risk” and that “It doesn’t exist”: big money comes from things most people think are crazy, but only if you are both right and non-consensus (see Non-Consensus, Risk Management In The Age Of YOLO).
• Which side of the bet gets weighed. In An Interesting Thought Someone in… (tweet), Nik Milanovic relays a Nairobi observation: US founders, conditioned by runaway successes like Airbnb, Stripe and Coinbase, think first of upside, while in most other countries, without tangible tech-startup wins, people weigh upside and downside more evenly (see Downside Protection).
• Risk management as a craft. Saved posts on markets and managers that touch it: During a Change in Market… (tweet) (timing and risk management in a regime change, with Paul Tudor Jones in 1987 as the example) and Steve Cohen with Great Insights… (tweet).
• Risk in the library. Statistical Consequences of Fat Tails and Accidents in Nuclear Ships in the PDF collection link here.
• A reading list on risk. Anti-library entries that link here include Against the Gods (full title: Against the Gods: The Remarkable Story of Risk), Gambler (Secrets from a Life at Risk), Ergodicity, Crashed, The Missing Billionaires, Risk, Uncertainty, and Profit, Speculation and the Chicago Board of Trade, The Art of Speculation, Leverage — A Key to Success and Wealth, Margin of Safety (Klarman), Memo to Oaktree Clients and The Hour Between Dog and Wolf.

Where this appears

PDF collection

• Statistical Consequences of Fat Tails
• Accidents in Nuclear Ships

Books to read

• Against the Gods, Gambler, Ergodicity, Crashed, The Missing Billionaires, Risk, Uncertainty, and Profit, Speculation and the Chicago Board of Trade, The Art of Speculation, Leverage — A Key to Success and Wealth, Margin of Safety (Klarman), Memo to Oaktree Clients, The Hour Between Dog and Wolf

Podcasts

• Backing Bold Founders from Seed to Scale

Tweets

• An Interesting Thought Someone in… (tweet)
• Andy Rachleff on Generating High… (tweet)
• During a Change in Market… (tweet)
• Steve Cohen with Great Insights… (tweet)