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Fisher Investments Press author Michael Hanson believes risk is universal for investment—no exceptions. No risk, no return. Investment risk only varies by degree. Hanson says this because there are still folks out there who believe otherwise. Many think of the yield on US Treasury bonds as a "risk-free" rate, which is a misnomer usually originating from the capital asset pricing model (CAPM). Fisher Investments Press author Michael Hanson agrees even the "risk-free" rate is risky…it's just the least so. No matter if it's US Treasury bonds, CDs, or money market funds—they all bear some degree of risk; don't let anyone tell you otherwise. It's just that the risk of those instruments is very low—which in turn is why their yield is so low. Even the good-old US of A could default on its bonds one day—it's not impossible, just highly unlikely. Financial analysts think about risk in myriad ways. Fisher Investments Press author Michael Hanson won’t cover them all—just a few salient ones to challenge some textbook definitions of financial risk and uncover how limiting and often wrong they can be.
But we won't spend much time on calculation. Like we saw in Chapter 1, when it comes to understanding stock markets, math is best used as a way to describe and understand—not to seek precision in numbers. The crux of risk is to understand it as a concept. It's usually the attempt to calculate risk that causes trouble.
For more information or to purchase 20/20 Money by Fisher Investments Press, click here..
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