Candy Quote by Charlie Munger
![“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)
“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 quarters of each year - and some terrible businesses can have steady results.”
About This Quote
Source Speech: Berkshire Hathaway Annual Meeting, 1995
Risk should be defined by permanent capital loss or insufficient return, not by price volatility alone.
In simple terms: Risk is about losing money forever or not earning enough, not daily swings.
Key Takeaway
Focus on capital preservation and realistic returns.
Themes
investment
risk management
capital preservation
business analysis
Mood
cautious
analytical
Type
advisory
analytical
When to use this quote
- portfolio construction
- business evaluation
- investment decision making
- risk assessment
Key Concepts
value investing
risk definition
financial fundamentals
Questions to Reflect On
- How do you differentiate between harmful volatility and benign fluctuation?
- What metrics better capture true investment risk?
A Different Perspective
Volatility can be misleading if not linked to underlying fundamentals.
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