--- title: "Meaning & Key Takeaway of: Using volatility as a measure of risk is…" description: "\"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.\" — Charlie ..." image: "https://sms4smile.com/quotes/i/44c/charlie-munger-458_inadequate_using-volatility-as-a-measure-of-risk-is_1546219.jpg" --- # Using volatility as a measure of risk is nuts. Risk to us… ![“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.” quote by Charlie Munger](https://sms4smile.com/quotes/i/44c/charlie-munger-458_inadequate_using-volatility-as-a-measure-of-risk-is_1546219.jpg) [Download](https://sms4smile.com/quotes/i/44c/charlie-munger-458_inadequate_using-volatility-as-a-measure-of-risk-is_1546219.jpg) [Open image](https://sms4smile.com/quotes/i/44c/charlie-munger-458_inadequate_using-volatility-as-a-measure-of-risk-is_1546219.jpg) > “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.” [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. 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. ★ ★ ★ ★ ★ No ratings yet [Capital Risk](https://sms4smile.com/quotes/about/capital-risk-5768980/) [Customer](https://sms4smile.com/quotes/about/customer/) [Inadequate](https://sms4smile.com/quotes/about/inadequate/) [Loss](https://sms4smile.com/quotes/about/loss/) [Measure Risk](https://sms4smile.com/quotes/about/measure-risk-3844438/) [Nuts](https://sms4smile.com/quotes/about/nuts/) [Permanent](https://sms4smile.com/quotes/about/permanent/) [Return](https://sms4smile.com/quotes/about/return/) [Risk](https://sms4smile.com/quotes/about/risk/) [Using Volatility](https://sms4smile.com/quotes/about/using-volatility-5768979/) [Volatility](https://sms4smile.com/quotes/about/volatility/) ## Related quotes > [ We regard using \[a stock's\] volatility as a measure of risk is nuts. 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