Customer Quote by Charlie Munger
“Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return.”
About This Quote
Source Interview: Warren Buffett Annual Shareholder Meeting, 2015
Risk should focus on permanent loss and insufficient returns, not just volatility.
In simple terms: Risk is about loss and return, not volatility alone.
Key Takeaway
Prioritize capital preservation and realistic returns.
Themes
finance
risk management
investment
Mood
analytical
pragmatic
Type
advice
strategic
When to use this quote
- portfolio construction
- retirement planning
- business strategy
- risk modeling
Key Concepts
value investing
risk assessment
Questions to Reflect On
- Do you consider volatility in your risk analysis?
- How do you balance loss risk with return goals?
A Different Perspective
Volatility can still matter for short‑term decisions.
![“We regard using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns - for example, See's [a candy company owned by Berkshire] usually loses money in two…” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg)
![“They [Mc Donalds] take people and give them a first job, which enables them to get a second job. They do a very good job of educating troubled young people to be good citizens and they're probably more successful than charter schools.” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/a55/charlie-munger-458_be-good_they-mc-donalds-take-people-and-give-the_41809.jpg)
![“It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling to parlay their existing advantage into dominance on the Internet. But it is way less sure [that this will occur] than the certainty 20 years ago that…” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/8d0/charlie-munger-458_advantage_it-is-way-less-certain-to-be-a-wonderful_59627.jpg)
